Monday, June 2, 2008

Wachovia Sacks CEO Over Credit Losses

It was announced today that Wachovia's board has asked CEO Ken Thompson, 58, to retire.

Wachovia Bank posted a $393 million first-quarter loss. It had set aside $2.8 billion earlier this year to cover losses with problem loans.

Wachovia had stepped in to provide credit enhancement for bonds for both the Convention Center and Marriott Hotel after other banks and financial institutions had declined. According to the PKF Feasibility Study of 2006, the project is so fraught with peril of heavy losses that there was speculation that Wachovia's bailing out the project was quid pro quo for some other benefit elsewhere in the state.

In almost the last act of the former commissioners and the first act during the short period of a county majority on the LCCCA board (prior to the resignation of county appointee Tom LeCrone), the Authority agreed that its revenues would first go toward debt service. This protects the county from possibly (perhaps likely?) having to pay half of the interest expenses on over $40 million in borrowings.