Until today, Sovereign Bancorp (NYSE: SOV) was the largest surviving savings and loan in the U.S. But Spain's Banco Santander SA brought that to an end by offering $1.9 billion for roughly 75% of Sovereign's shares; Santander already owned about a quarter of the American bank.

The terms of the deal were quite favorable for the Spanish bank. Santander's original minority stake cost over $2 billion. But Sovereign has lost over 80% of its value in the last year, and this dramatic decline allowed Santander to pick up the rest of the bank at a pretty good discount.

That decline did not go unnoticed by former Sovereign CEO Jay Sidhu, who blasted the policies of his successors in an interview with the Philadelphia Business Journal. He charged that the activist investors who engineered his departure in 2006 are responsible for the bank's decline and unfavorable acquisition. He cited Ralph Whitworth of Relational Investors in particular, saying that Whitworth's "strategy was totally dead wrong." In particular, Sidhu charged, Whitworth made changes in the bank's risk management procedures that ultimately led to the bank's decline: "Every single action taken under his leadership of the risk management committee destroyed value. You need a long-term view with prudent risk-management strategies and not the short-term view of a hedge fund manager."

This charge has a familiar ring. Short term profits replaced long run viability -- something that happened throughout the banking industry. And Sidhu knows what he's talking about. In 20 years, he took Sovereign from an IPO worth $12 million to a banking giant worth $12 billion in 2006. Too bad the Sidhus of the world lost out to the Whitworths; we're certainly paying for those losses now.