Wachovia bites the dust

Citigroup has agreed to take over troubled Wachovia Bank. I worked at Wachovia for a few years in the Nineties (pre-First Union buyout) and I remember the institution as competent, conservative in both its business and culture, and stable, if a bit staid and humorless. In other words, I cannot imagine the old Wachovia doing something as foolish as this:

Its current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation's housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West's specialty, which let borrowers skip some payments.

Really, who in their right mind makes a $150 billion bet, as the bubble was popping mind you, on something called “Pick-A-Payment”? It sounds like a game on the Price Is Right for goodness sake. Oh well, times change I suppose…