Continued Mortgage Woes Prompt Executive Changes at Wachovia, WaMu
- Jun 03, 2008
Charlotte, N.C.– As the mortgage market fallout continues, Charlotte, N.C.-headquartered Wachovia Corp. fired its chief executive and Seattle-based Washington Mutual Inc. removed its CEO from his chairman’s post this week.Both banks are big players in the home loan market and have lost billions, which has had a huge effect on the stock market, according to the Los Angeles Times.On Monday, Wachovia–which became heavily involved in California’s adjustable-rate mortgage market in 2006–removed CEO Kennedy “Ken” Thompson. Wachovia had a $393 million first quarter loss and cut its dividend by 41 percent.In April, the lender agreed to pay $18.9 million to federal bank regulators as part of a settlement involving allegations that Wachovia had conducted improper customer telemarketing, the Times said. The Securities and Exchange Commission is currently looking into how the lender marketed auction-rate securities.Thompson lost his chairman title earlier in May. Wachovia’s new chairman, Lanty Smith, will serve as interim CEO.WaMu CEO Kerry Killinger lost his chairman’s title this week. WaMu had a $1.14 billion first quarter loss and reduced its dividend from 15 cents to 1 cent a share.At the bank’s annual meeting in April, shareholders approved an advisory resolution for the CEO job to be separate from the chairman post. Although the WaMu board was against the resolution, it accepted the vote, the Times said.