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Wachovia Bank Losses Forces Game Playing

Wachovia today reported losses of over $8 Billion, well beyond any analyst’s expectation. With most of Wachovia’s losses coming from the mortgage market, which I would assume was made even worse by the purchase of Golden West and the Pick A Payment loan program, Wachovia is scrambling to prevent being a lame duck ripe for a takeover.

Right now they need to make their shareholders feel confident that Wachovia can turn this ship around quickly. So what do they announce? Wachovia is withdrawing from the wholesale mortgage business and will no longer do business with mortgage brokers. (Really? Did they really?… we’ll explore that more in second.)

The idea here is that since mortgage brokers have been unfairly held repsonsible for the entire mortgage snapfu that we are in, why not seperate themselves from the “evil mortgage brokers” and show investors that they have made major changes! This will allow them to put on a show to their shareholders to make them feel a little better about the major losses.

But this show is really just smoke and mirrors. Wachovia has not left the wholesale mortgage business… not entirely. Yes, the wholesale division of mortgages originated under the Wachovia name has withdrawn from the wholesale market. But Wachovia also owns another company that they bought and continues to originate wholesale mortgage loans under that company name. So you see, Wachovia isn’t out of wholesale… they just are playing smoke and mirrors again to make it appear that they are making changes.

Now I am not complaining that Wachovia is still doing wholesale. While the company I work for is set up as a direct lender, we also have the ability to broker as needed and we are set up with Wachovia’s wholesale division. What I am saying is that Wachovia is using the bad press about mortgage brokers to help make themselves come off better (by separating themselves from brokers.) At the same time they are still working with brokers to make good loans that are profitable! Talking out of both sides I think… They are learning well from Bank of America.

Folks, I share this with you because I am getting so tired of all the empty talk. Our banks are becoming as bad as our politicians in double talk and spin. There is no real accountability and they throw the blame on everyone else. If Wachovia can’t get their act straight it will mean major job losses and a major hit to Charlotte. I only hope that this new CEO will make sure the right people are held accountable and can make things right, for the sake of our region. But if this game of smoke and mirrors is any indication, its business as usual at the Big Banks.