Wachovia is clearly on the ropes to pull this stunt: Wachovia appoints Treasury Undersecretary Robert Steel As New CEO.

Wachovia Corp., the nation’s fourth-largest bank, named Treasury Undersecretary Robert Steel chief executive on Wednesday, ending a nearly six-week search for a new leader.

The Charlotte-based bank also said it has set aside $4.2 billion pretax to cover bad loans for the quarter, leading to an estimated second-quarter loss of about $2.6 billion to $2.8 billion. The quarterly loss will equal $1.23 to $1.33 per share, excluding an expected write-down of goodwill. Analysts polled by Thomson Financial expected a profit.

“We love Bob’s background,” Smith told The Associated Press. “He has deep expertise in financial services, the experience in Washington with government, is somebody that’s really smart and can look at things from an intellectual point of view and can also get in the weeds and really understand details and manage quite effectively.”

My Translation: “We are praying to the Lord Almighty to avoid the debacle that beset Bear Stearns. This is really a publicity stunt but it’s the best hope we have.”

Smith added that “there’s a very proud connection” with Duke University, and that the two “worked very closely together” on the board of trustees.

My Translation: “Let’s muddy the waters with complete irrelevant nonsense about Duke University hoping to distract reporting on our seriously degrading pay option ARMs portfolio.”

Wednesday’s announcement of a new CEO may hush market rumors that Wachovia is an acquisition target, though the selection of Steel could also fuel questions about the relationship between Wachovia and Goldman Sachs (GS), which has been rumored to be interested in acquiring the bank. Wachovia last month hired Goldman Sachs to analyze its troubled loan portfolio.

My Comment: No one in their right mind would want to acquire Wachovia and no one is big enough to take them under as JPMorgan did Bear Stearns in a shotgun marriage arranged by the Fed.

Smith said Wednesday the company plans to remain independent, despite rumors of a possible takeover.

My Translation: “No one is stupid enough to buy us.”

And while Steel’s impressive resume could help satisfy restless shareholders, he doesn’t have experience running a retail bank, Wachovia’s forte.

Excuse me but exactly how well has Wachovia’s “experience” done? I think my dead grandmother could have run Wachovia better.

Wachovia is clearly grasping at straws in a tornado. But right now it’s the best chance they have. Those smelling another Fed orchestrated “take under” may very well be right.

Mike “Mish” Shedlock
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