New broom risk

2 June 2008

Its board finally ejected the architect of the disastrous Golden West acquisition. But shareholders should remain wary. Wachovia kept Thompson around long enough to raise its latest slug of capital. But a new boss may decide it needs more further diluting investors.

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Wachovia ousted Ken Thompson as its chief executive on June 2. It appointed its chairman, Lanty Smith, as its interim CEO. Smith will head a search committee to find a new chief executive.

Thompson was stripped of his chairman role in May after the bank reported a $708m firstquarter loss and cut its dividend by 41% in April. It also raised $8bn of capital at the time. Thompson was the architect of Wachovia's $26bn acquisition of Golden West Financial in 2006, which saddled the company with a large portfolio of option adjustablerate mortgages.

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