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 Saying Goodbye to An Old Friend
by Tom Campbell
October 3, 2008
There’s a sadness spreading across North Carolina, almost like going to the funeral of an old friend. Wachovia Bank, one of the venerable jewels in this state’s business and finance crown has fallen; taking along with it a proud heritage of what has been good about and for our state.
The Wachovia heritage was epitomized by icons like John Watlington, Archie Davis and John Medlin, conservative leaders who were also promoters of good for North Carolina. This homegrown bank, the example of dignity and sound business principles, had a genuine stake in our collective wellbeing.
The beginning of this sad ending started in the “buy or be bought” environment that was so contagious in the last twenty years of the twentieth century. At first Wachovia was reluctant to pay premiums to buy or merge with other hometown or regional banks, but they finally coalesced. In 2001 Wachovia was essentially bought by Charlotte-based First Union National Bank, although at the time it was represented as a “merger of equals.” First Union had become a statewide player after Cliff Cameron sold his mortgage company, Cameron Brown, and came to run the newly constituted company. First Union was an eager player in the merger/buyout environment, but by the time of the Wachovia purchase had image problems and indigestion from some of the deals they had made. The move of corporate headquarters to Charlotte was more than symbolic; they kept the Wachovia name but the First Union management ran the corporation.
The new Wachovia appeared for awhile to be doing well, competing as it was with cross-town rival Bank of America. New acquisitions were absorbed and most, but not all, proved profitable. But the housing boom and an inordinate desire to earn better returns on the flood of cash coming into the bank, coupled with unbridled ambition and exceedingly poor management decisions by both the new Wachovia management and its board resulted in the purchase of the pick-a-payment lender Golden West Financial in far away California.
The shame to the demise of this once-proud corporate asset to our state is that the ones being punished are the shareholders, many of them still from North Carolina, and the employees. Wachovia stock, trading not too many months ago in the -60 range will now yield per share. Despite pressure from the FDIC to make a deal with Citigroup, Wachovia directors made a better deal with Wells Fargo that should lessen the blunt. Wells Fargo’s west coast footprint will mesh well with that of Wachovia’s east coast network, a much happier scenario than the shotgun wedding pushed by the feds. But in addition to the significant loss in investment, the thousands of jobs sure to be lost, and the loss of a major corporate headquarters in our state, there is the overwhelming remorse over losing a long-time friend.
The men and women who built and led this bank, the many employees who prided themselves on customer service, the stockholders who were proud to have shares in their portfolio, and the depositors and customers will mourn the ending of Wachovia. Thank you, old friend. We hate to say goodbye. |
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