Wachovia was a diversified financial services company based in Charlotte, North Carolina. Before its acquisition by Wells Fargo and Company in 2008, Wachovia was the fourth-largest bank holding company in the United States, based on total assets.[3] Wachovia provided a broad range of banking, asset management, wealth management, and corporate and investment banking products and services. At its height, it was one of the largest providers of financial services in the United States, operating financial centers in 21 states and Washington, D.C., with locations from Connecticut to Florida and west to California. Wachovia provided global services through more than 40 offices around the world.
The acquisition of Wachovia by Wells Fargo was completed on December 31, 2008, after a government-forced sale to avoid Wachovia's failure. The Wachovia brand was absorbed into the Wells Fargo brand in a process that lasted three years.[2] On October 15, 2011, the final Wachovia branches were converted to Wells Fargo.[4]
The company's corporate and institutional capital markets and investment banking groups operated under the Wachovia Securities brand, while its asset management group operated under the Evergreen Investments brand until 2010, when the Evergreen fund family merged with Wells Fargo Advantage Funds, and institutional and high-net-worth products merged with Wells Capital Management and its affiliates. Wachovia's private equity arm operated as Wachovia Capital Partners.[5] The asset-based lending group operated as Wachovia Capital Finance.[6]
The company got its name from the Wachovia Tract.
History
First Union
First Union was founded as Union National Bank on June 2, 1908, a small banking desk in the lobby of a Charlotte hotel by H.M. Victor.
The bank merged with First National Bank and Trust Company of Asheville, North Carolina, in 1958 to become First Union National Bank of North Carolina. First Union Corporation was incorporated in 1967.
By the 1990s, it had grown into a Southern regional powerhouse in a strategy mirroring its longtime rival on Tryon Street in Charlotte, NCNB (later NationsBank and now Bank of America). In 1995, however, it acquired First Fidelity Bancorporation of Newark, New Jersey; at one stroke becoming a major player in the Northeast. Its Northeastern footprint grew even larger in 1998, when it acquired CoreStates Financial Corporation of Philadelphia. One of CoreStates' predecessors, the Bank of North America, had been the first bank proposed, chartered and incorporated in America on December 31, 1781. A former Bank of North America branch in Philadelphia remains in operation today as a Wells Fargo branch
Wachovia
Historical data (2000–2008)
[36] Wachovia, excluding subsidiaries, was the fourth largest bank at the end of 2008.
2008 financial crisis
Exposed to risky loans, such as adjustable rate mortgages acquired during the acquisition of Golden West Financial in 2006, Wachovia began to experience heavy losses in its loan portfolios during the subprime mortgage crisis.[37][38]
On June 2, 2008, Wachovia chief executive officer G. Kennedy Thompson was ousted. The board replaced him on an interim basis with Chairman Lanty Smith. Smith had already replaced Thompson as chairman a month earlier.[39]
In the second quarter of 2008, Wachovia reported a loss of $8.9 billion and announced 10,000 layoffs.[40]
On July 9, 2008, Wachovia hired Treasury Undersecretary Robert K. Steel as chief executive in hopes that his experience would lead the company out of its difficulties.[41]
Controversies
Identity theft negligence
A May 2007 New York Times article described Wachovia's negligence in screening and taking action against companies linked with identity theft. With stolen identities, the companies used unsigned checks to remove funds from personal Wachovia bank accounts. In total, Wachovia accepted $142 million in unsigned checks from "companies that made unauthorized withdrawals from thousands of accounts", collecting millions of dollars in fees from them. According to Pat Meehan, a U.S. attorney for Eastern District of Pennsylvania, Wachovia received "thousands of warnings that it was processing fraudulent checks, but ignored them".[65]
On April 25, 2008, Wachovia agreed to pay up to $144 million to end the investigation without admitting wrongdoing. The investigation found that Wachovia had failed to conduct suitable due diligence, and that it would have discovered the thefts if it had followed normal procedures. The penalty is one of the largest ever demanded by the Office of the Comptroller of the Currency.[66]
Latin drug cartel money laundering
See also
- List of banks acquired or bankrupted during the Great Recession
- Watters v. Wachovia Bank, N.A., a United States Supreme Court case involving the bank and its mortgage-lending subsidiary.
External links
- (Archive)
- Wachovia Corporation Company Profile at Yahoo! Finance
References
- Gautam Mukunda. Persistence Is Overrated—Why Learning Is The Hallmark Of Great Crisis Leadership Forbes, retrieved 2020-06-30^
- Wells Fargo Completes Wachovia Purchase Wells Fargo, 2008-12-31, retrieved 2009-01-01^
- Scott G. Alvarez. The Acquisition of Wachovia Corporation by Wells Fargo & Company