More Trouble
Apr 27th, 2008 at 10:48 am by Susie
Guess it’s time to find a new bank:
Wachovia(WB - Cramer’s Take - Stockpickr) is being investigated by federal prosecutors as part of a larger probe of alleged laundering of drug money, according to a published media report.
The report, in Saturday’s Wall Street Journal, cited people familiar with the matter.
It said Wachovia is talking to the Justice Department about reforming its compliance system and faces a possible deferred-prosecution deal that would give the government significant oversight of the bank. A Wachovia representative said the company is cooperating with the investigation, the report added.
The probe is related to the alleged laundering of drug revenue by Mexican and Colombian money-transfer companies, the report said. Wachovia is one of several large banks that officials have investigated because of relationships with such companies, according to the report. Wachovia and “some other” U.S. banks cut off their ties to Mexican foreign-exchange companies in December and January following inquiries in the government’s investigation, the report added.
The probe comes on top of other recent problems for Charlotte, N.C.-based Wachovia. On Friday, the bank agreed to pay as much as $143.9 million in restitution and penalties to end an investigation into telemarketers who allegedly used their relationships with Wachovia to steal money from individuals. Wachovia has also suffered from the fallout of the subprime-mortgage meltdown. Its 2006 purchase of Golden West Financial gave it significant mortgage exposure, and it recently had to raise $8 billion in capital to bolster its financial position.
I switched to a smallish local credit union years ago. Mega banks suck. Smallish credit unions treat you like you own the place - because you do. Every depositor is a share holder and the CU overall does not run at a profit.
What happened with the OCC? Did they wake up from their nap about the usury going on with all these institutions backing the paycheck credit loan sharks? Is the credit crisis so bad that Wachovia can’t afford its bribes — er, campaign contributions anymore?
The OCC preempted state attorneys general from regulating the credit card industry, the banking industry, and anything that represents cash changing hands, so the bigger story is what are they hiding that’s worse?
In return for this stellar corporate leadership, the CEO got his salary of $1,090,000 but not his bonus. Oh, and a stock option award representing 20% of his target equity
incentive award economic value for 2007 performance, valued in the proxy report at $11,250,000. I guess they showed him what the price of failure is.