We've had a lot of fun the last few months pointing out the high correlation between CEOs named Ken (Lewis, Thompson, Lay) and incredible financial debacles. First Ken Lay of Enron died, and now Wachovia has asked it's "Ken", Ken Thompson to retire. If you remember, perhaps the greatest sale (on the part of Mr and Mrs Herb Sandler) and the worst buy (that would be Wachovia and Ken Thompson) in recent history was Wachovia's purchase of Golden West for $26 billion back in the summer of 2006. We wrote about this on April 15..."Whats in a name?". As we now know, Golden West had a $117 billion "pick a payment" Adjustable Rate Mortgage portfolio. This product, also known as "Option Arms" could be the most deadly combination of
1. Fraudulent underwriting
2. Payment shock to the borrower AND
3. Risk to the ulitmate owners of the loans.
We wrote that perhaps Wachovia was confused as to what they bought because Golden West called their loan program "Pick a Payment" as opposed "Option Arms". Now Kenny Thompson gets to utilize the "Pick a Severance" program!
This portfolio of ONE HUNDRED AND SEVENTEEN BILLION will be generating spectacular losses for Wachovia for years to come. So while Ken Thompson rides off into the sunset, Wachovia's future delinquency, foreclosure and Real Estate Owned data will remind us of Ken for years to come!
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