Wachovia Names CEO, Expects Huge Loss

Robert Steel, a former Goldman Sachs executive and undersecretary of the Treasury, will try to right a troubled ship.
Publish date:

Updated from July 9.

The good news:


(WB) - Get Report

has found a CEO.

The bad news: The new guy has some challenges ahead of him.

While naming former Treasury official Robert K. Steel president and CEO late Wednesday, the Charlotte, N.C., bank warned investors it expects to lose $2.6 billion to $2.8 billion in its second quarter, before goodwill charges.

That figure translates to a loss of $1.23 to $1.33 a share.

Wachovia said second-quarter results were hit by a higher provision expense, including $4.2 billion pretax to build loan loss reserves.

The company said that even though the goodwill impairment charge will further reduce reported earnings, it wouldn't affect Wachovia's liquidity or the company's regulatory capital ratios.

Wachovia's top job has been manned on an interim basis by Chairman Lanty Smith, since former CEO Ken Thompson was

forced to resign

in June. Thompson came under fire after the bank posted what ultimately was a $708 million first-quarter loss.

Smith will stay on as chairman.

Steel, 56, most recently served as under secretary for domestic finance for the Department of Treasury. He's a former vice chairman of

Goldman Sachs

(GS) - Get Report


"Bob Steel has been a friend and colleague to me for more than 30 years," Treasury Secretary Henry Paulson, a former Goldman colleague, said in a statement late Wednesday. "He has served the President and the public with ingenuity and dedication during extraordinary times in our financial markets. I know he will excel in his future endeavors."

Steel beat out rivals on Wachovia's short list that reportedly included former

Bank of America

(BAC) - Get Report

CFO Alvaro de Molina.

Wachovia shares fell 8% to $14.29 on Wednesday.

This article was written by a staff member of TheStreet.com.