Add Another CEO To That List

Wachovia's CEO, G. Kennedy "Ken" Thompson, has his bags packed and is all set to join his brethren on the list of former CEOs ousted by their companies.

It was a brewing storm for Thompson ever since he made a costly gamble and error back in 2006.

The reason for Thompson's ousting by the Wachovia Board of Directors stems from "The Thomp's" decision to acquire Golden West Financial in 2006.

You see, Thompson wanted to grow Wachovia across the country and saw a shortage in market representation over on the 'Left Coast'. He went after Golden West hard and, some argue, purchased it for much more than he should have. Of course the expensive purchase of that bank would have been justified if it actually helped Wachovia grow... and not just added to colossal liquidity problems and large write-downs.

Instead, a little thing called the subprime mortgage crisis hit the world hard and (surprise, surprise) the California real estate market was one of the hardest areas hit with home foreclosures and mortgages in default. Good thing Golden West had nothing to do with that, right? Actually, as it turns out, they were heavily invested in those mortgages and suffered major losses because of it.

Therefore, Wachovia which could have avoided a huge chunk of that subprime crisis, would be taking some big hits because of it. According to an article in today's CNN Money:

In early May, Wachovia revealed that its first quarter loss was in fact nearly twice as big as the total originally announced due to previously unrecognized losses on a life insurance portfolio. Shortly after that announcement, the board stripped Thompson of his chairman's title, naming Lanty Smith to replace him.

And so begins Thompson's Trail of Tears. For the first few months of this year, with all those losses announced, Wachovia's Board was defending Thompson well. Saying they had all their faith in him and these were just tough times they needed to push through.

Lanty Smith will be the acting interim CEO and is also in charge of finding Thompson's long-term replacement. But be on the lookout for him to appoint himself the permanent CEO. The current Pope did it, Dick Cheney did it during the Vice Prez search, and more recently the Wall Street Journal editor-in-chief searcher did it while looking for a replacement.

That's a fun trend, right? Pretend you're looking to hire someone new and then just pick yourself. Do you think those guys submitted and then reviewed their own resumes objectively like any other candidate?


CNN Money: Wachovia Ousts CEO Thompson, sites series of setbacks, June 2, 2008

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Wall Street Layoffs in Stealth Mode

The big banks on Wall Street have significantly improved their diabolical ways of axing employees.

Long gone are the days of the 1987 stock market crash, where whole departments were herded into large conference rooms to hear they were collectively fired. The current economic situation requires a lot more tact and finesse, or maybe not.

A story in the New York Times today describes the large numbers of Wall Streeters getting sent packing because of the current economic downturn. Citigroup, Morgan Stanely, Lehman Brothers, Credit Suisse, JP Morgan, Merrill Lynch and of course, Bear Stearns are all mentioned in the downsizing battle. The strategy seems to be:

1. Announce problems due to the credit crunch/sub-prime/recession fears/ weather/global warming, etc.
2. Lay off several thousand employees in a big firing blitz
3. Stay cool for a few weeks
4. Pick and choose several departments to ax over the next few weeks.
5. Repeat steps 2 through 4
6. Rinse

Even our own favorite biz babe, Meredith Whitney stepped into the fray. Quoted in the NYT article as saying:

“People will try to delay them for as long as possible,” Meredith Whitney, the banking analyst at Oppenheimer & Company, said of the layoffs, which she thinks are far from over. “It cuts to the bone.”

The hardest part about all of this was seeing all the incredibly awkward ways they delivered the metaphorical 'pink slip.':

The first clue that someone is gone can be e-mail messages that are returned to senders from a former colleague’s inactivated corporate address.

Ouch, harsh one! But it gets better:

Some Lehman Brothers investment bankers found out their jobs were in peril when they saw cardboard boxes and dumpster bins in the hallways in March.

"Uh... yeah. Everyone do me a favor and please ignore the boxes with your corresponding names and the phrase 'terminated' written in Sharpie."

But while all those 'gym rats and spa swans' are having the time of their lives over at Bear Stearns, women like this were getting the shit end of the stick:

In January, when Ms. JoAnne Kennedy was temporarily out of the office at JPMorgan because of surgery, her boss called to say her job had been eliminated. She did not return to her office and ended up asking the bank to send her the photos of her son that she kept on her desk.

The article also goes on to say how Tuesdays, Wednesday, and Thursdays are becoming the 'hottest' firing days in the financial industry. The thinking behind it is that the weekend leaves too much time for employees to stew over their redundancies.

Personally, I would much rather hear about it on a Friday, so I may spend the better part of the weekend crafting a hate-filled letter to my former boss who left me out to dry.

Let us know in the comments section some of the best/worst ways you've heard of 'letting someone go'.



New York Times: For Wall Street Workers, Axe Falls Quietly, May 16, 2008

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