Wachovia Corp. began losing deposits in April 2008 after announcing losses related to loans inherited in its 2006 Golden West Financial Corp. acquisition, according to a report released today.
That outflow preceded a "silent run" on the bank in September 2008 that helped prompt the bank's sale to Wells Fargo & Co.
After announcing a first-quarter loss of $350 million in April 2008, depositors withdrew $15 billion in the following weeks, and lenders began reducing their exposure to the bank by shortening terms, increasing interest rates and lowering loan amounts, according to the Financial Crisis Inquiry Commission report.
By June, the bank had launched a "liquidity crisis management plan in anticipation of an even more adverse market reaction to second-quarter losses that would be announced in July," Angus McBryde, then Wachovia's senior vice president for Treasury and Balance Sheet Management, told the commission.
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Wachovia's board ousted chief executive Ken Thompson in June and later replaced him with Bob Steel, a former Treasury Department official.
As part of a 633-page analysis of the greater financial crisis, the report chronicles Wachovia's near-collapse in 2008, including moments previously covered in other publications and in a public hearing held by the panel in September 2010. But it also provides new details from interviews with key players.
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