How NOT to Get Fired as Wachovia CEO

Here are a few tips for the new guy, whoever he or she may be

1. Stop the Bleeding
"The first thing they need to do, which is the first thing you do in any crisis, is stop the bleeding," says John Stamas, managing partner of Defender Capital, a local investment management boutique. More specifically, says Tony Plath, associate professor of finance and banking at UNCC, "you gotta clean up that Golden West portfolio."

Ken Thompson's ultimate downfall was his ill-timed $24 billion purchase of California-based mortgage lender Golden West. He bought it just before the subprime mortgage crash, and Golden West was deep into all sorts of complicated, risky loans that turned out to be ticking time bombs. "They need to identify their true exposure and do the best they can to raise capital to ensure that they have enough money to survive the rest of the write-offs that they're going to face," Stamas says. Translation: figure out what the losses will be, then make sure you have enough cash on hand to cover them.

2. Get Back to Basics
The blue-blood boys on Wall Street chuckled when the Charlotte banks started to play on their turf of true investment banking. They aren't laughing anymore—because they're in this mess even deeper than Wachovia and Bank of America are. See, the bread and butter of our banks is what's called "retail" or "commercial" banking—checking and savings accounts, CDs, and the like.
"Most people would say that the big commercial banks like Bank of America and Wachovia need to get back to their roots," Stamas says, "and realize that they got into areas of the market they may not have understood....They need to refocus on what they know."

3. Get the Right Team and Culture in Place
Still with us? OK, now that you've stopped the bleeding and focused on your core strength, it's time for Wachovia to be Wachovia again. Plath thinks that Thompson let the Golden West culture supersede Wachovia's. "Somewhere along the line they lost sight of what's right for the customer and what isn't right for the customer. And that's just not Wachovia's style. . . . The stuff where we gain fee income by letting a telemarketer represent the name of the bank and market to senior citizens? That kind of stuff just has to get cut out of the management hierarchy and the culture of the bank."

And the case should be made plainly. "The first marching order for the CEO is to sit down with Golden West and remind them of who owns whom, and if they don't like it, hit the road."

4. Hedge Your Bets
There's a chance that none of the above may work, and that the stock price will continue to falter. "They're extremely attractive and they're extremely cheap right now," says Plath. "It's a really critical time in the juncture for that franchise. If they're going to save it, they're going to need to do everything right for the next six months."

5. Good Luck. You'll Need It