In August of 2000, I opened a checking account with SouthTrust bank. In 2004, SouthTrust was purchased by Wachovia. Today, as I opened my browser to check my fantasy football scores, I was met with the news that Citigroup is now buying Wachovia.
I can’t say that I’m surprised, but I will say that I’m disappointed. This didn’t have to happen. Quoting fromabout the acquisition -
Wachovia’s problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation’s housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West’s specialty, which let borrowers skip some payments. (Emphasis mine.)
Now, it appears, that Wachovia, at least in its current form, will go away. I’ll have to make a choice about whether to stay with the new company, Citigroup, or find another bank.
I’m getting sick and tired of reading about government bailouts, mortgage defaults, and bank failures. All of this could have been avoided if companies had followed solid lending practices and consumers had followed solid borrowing practices. Instead, companies and consumers fell in love with exotic lending and borrowing schemes, and now every tax payer will pay for their, combined, foolishness.