Wachovia (WB) talks the talk

Posted Oct 22nd 2008 1:05PM by Todd Harrison
Filed under: Analyst Reports, Bad News, Wachovia Corp (WB)

Minyanville contributor Minyan Peter dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

I will make my visit to the soap box this morning very brief. When I read comments like the following from Wachovia (NYSE: WB) this morning, my skin crawls:

"The $18.8 billion in noncash goodwill impairment reflect[s] declining market valuations and the terms of the merger with Wells Fargo; the recognition of the impairment affected the retail and small business, commercial, wealth management and asset management subsegments. The goodwill impairment charge has no impact on Wachovia's tangible capital levels or regulatory capital ratios, because goodwill is deducted when computing those ratios."

Let me put what Wachovia just said in plain language:

'In hindsight, we paid $18.8 billion more than we should have for the businesses we bought. But it doesn't matter. The cash went out the door long ago. And because the regulators were at least smart enough to realize we were overpaying, they didn't let us count the $18.8 billion as capital. So none of this should bother you.'

So when you open your next brokerage statement and your stocks are worth less than they were last month, try expressing your feelings like you are the CEO of a one of the world's largest financial institutions:

"The $10,000 in noncash impairment that I took this month reflects declining market values, but that's okay, at least I didn't have to write a check for $10,000 this month."

Feel better?

I sure do.

Now I will get off my soap box.

Tags: Analyst Reports, Bad News, Wachovia Corp WB, WachoviaCorpWb

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Reader Comments (Page 1 of 1)

10-22-2008 @ 7:42PM

winslow said...

If all of these arrogant CEO's over the last 10 yrs knew that their heads were on the plate for terrible business decisions, this never would have happened. If the CEO's and Boards are not responsible, then who? Our system let's these characters walk away (with an amassed fortune, by the way)