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Credit Crisis claims More Victims
The credit crisis has claimed another victim. Ken Thompson the CEO of Wachovia was forced into early retirement this morning at Wachovia bank (WB), the nations fourth largest bank, Charimna larry Smith will act as interim CEO while the board searches for a successor. The bansk said that there are no more changes planned among top executive officers. Smith said that the change came earlier than Wachovia had hoped and was precipitated by no single event but rather the recent string of setbacks and losses caused the board to act. Smith said It's been our hope and expectation that Ken would serve for several more years," Smith said during a conference call with reporters. "We certainly wanted Ken to succeed. This is earlier than any of us wanted or chose."
Wachovia had announced a loss for the first quarter of $293 million and cut the dividend by 41%. They also had to set aside loan loss reserves of $2.8 billion. Most of the troubled loans were part of the acquisition of Golden West Financial in 2006. Thompson oversaw the purchase and had assured investors that everything was fine at the bank. Many think the Golden West deal was the beginning of the end of Thompsons reign at the Charlotte, NC based bank and financial services company.
Ken Thompson was the only casualty in the financial services industry Monday Morning. Kerry Killenger lost his seat as Chairman of the Board at Washington Mutual (WM) this morning although he will remain on as CEO. The bank said that the move was made to improve corporate governance. Stephen Frank will now assume the Chairman's title at Washington Mutual. The company has also been hit hard by the current credit situation, losing over $ 1 billion in the first quarter. They also had to set aside $3.5 billion to cover bad loans. The change is effective immediately
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