Treasury Official Linked to Wachovia’s Top Job

By Rick Rothacker, The Charlotte Observer, N.C.

Jul. 9–The latest name to surface as a possible candidate to be Wachovia Corp. chief executive is U.S. Treasury Department official Robert Steel.

Steel, under secretary of the treasury for domestic finance, joined the department in 2006. Like his boss, Treasury Secretary Henry Paulson, he is an alumnus of investment bank Goldman Sachs Group Inc.

A knowledgeable source said the search to replace Ken Thompson, who was ousted June 1 after a series of missteps, may be nearing a conclusion but didn’t comment on any possible names.

Chairman and interim CEO Lanty Smith is “working very hard” on the search, the source said. “It won’t be long,” the source said.

Steel, 56, is a Durham native and is chairman of the Board of Trustees at Duke University, his alma mater. Steel could not be reached for comment. A Wachovia spokeswoman declined comment.

Interim CEO Smith earned his law degree at Duke and served on the board of trustees from 1997 to 2003. The bank last month said it hired Goldman Sachs to analyze its troubled loan portfolio.

Steel joined Goldman Sachs in 1976 and retired in 2004 after rising to vice chairman. He served as a senior fellow at the Center for Business and Government at the John F. Kennedy School of Government at Harvard University from 2004 to 2006. In his current treasury department role, he serves as Paulson’s principal adviser on domestic finance and leads the department’s activities involving the U.S. financial system and related economic matters.

Steel would bring to Wachovia a gold-plated resume that could help satisfy restless shareholders. But he doesn’t have experience running a retail bank, Wachovia’s forte.

As the Charlotte bank’s search for a new CEO extends beyond a month, speculation is mounting over who will take charge at the nation’s No. 4 bank by assets. Possible names have ranged from former Bank of America Corp. chief financial officer Al de Molina to insiders such as interim chief operating officer Ben Jenkins.

The bank also faces ongoing speculation that it could be a takeover candidate by a rival. Bringing Steel would bring new stability but possibly stoke rumors of a possible tie-up with Goldman. Smith has said the board wants Wachovia to stay independent.

Thompson was asked to retire as the bank wrestles with rising losses from its ill-timed 2006 acquisition of Golden West Financial Corp., at the peak of the housing boom. The bank last week said it would stop making mortgage loans that have an option that can increase a customer’s loan balance, a one-time Golden West staple.

The bank’s stock is down more than 60 percent this year. Late this afternoon, the shares were down more than 5 percent to $14.68.

Wachovia reported a $707 million loss in the first quarter. The bank is set to announce second-quarter earnings July 22 and may be seeking to have a leader in place by then.

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