From the Economic Justice Task Force. October 2013. Edith Sylla
Banks and lending. The Case of Wachovia.
In March of 1995 in connection with its Claiming Our Second Century, Renovation for Renewal Campaign, CUCC obtained a secured loan of up to $175,000 from Wachovia Bank. More than a hundred individuals and families had pledged over $460,000 for the project, which included many improvements to the sanctuary, construction of the Bradow and Hoffmann rooms, and much else, but that money was to come in over five years and so we needed money up front to carry out the project before the pledges came in. We began by going to a “personal banker” as they were then called at the Hillsborough branch of Wachovia, and ultimately agreed to draw on the loan as needed, paying interest on the amount taken out at Wachovia’s prime rate plus one half percent, paying interest only during a two year construction period, and thereafter paying back the loan itself in monthly installments over a three year period. As it happened, the pledges came in on schedule and we were able to pay off the loan ahead of schedule in April 1998. This is an example of the sort of excellent financial service to the community that one fervently hopes banks will provide.
In the course of the recent “great recession,” Wachovia bank experienced heavy losses. Having been deemed by federal regulators as “too big to fail,” it was forced in 2008 to accept its acquisition by Wells Fargo, whose company name now appears in large letters on the Hillsborough branch bank where we initiated our church loan in 1995. But the Wachovia that ceased to exist in 2008 was not really the same company as the Wachovia which had begun in 1879 and which had been so helpful to our church. In 1997 Wachovia had acquired First United Bancorp and American Bankshares Inc. in Florida, in 1998 it had acquired Jefferson National Bank and Central Fidelity Bank, both based in Virginia, and in 2000 it had purchased Republic Security Bank. Then in 2001, after rejecting a hostile takeover from SunTrust, Wachovia had accepted a merger with First Union Corporation based in Charlotte, in which First Union was the larger partner and surviving entity, but adopted the good name Wachovia. In 2003 and 2004, this new Wachovia, in an attempt to become a comprehensive financial services company nationwide, acquired the Prudential Securities Division of Prudential Financial (creating a full service brokerage firm with client assets of $532 billion), Metropolitan West Securities (with a portfolio of $50 billion), and, in a transaction valued at $14.3 billion, SouthTrust Corporation. In 2006 Wachovia became a major auto finance lender by acquiring Westcorp, and, through purchase of Golden West Financial/World Savings Bank (with over $125 billion in assets), acquired a 285 branch network of savings banks in 10 states and a large portfolio of option adjustable rate mortgages (ARMs). Then in 2007 Wachovia purchased A.G. Edwards retail brokerage firm for $6.8 billion. And then? During the subprime mortgage crisis that followed soon thereafter, Wachovia experienced such heavy losses in its loan portfolios that, after many twists and turns between alternative government regulatory agencies and other potential purchasers, it had to accept its demise and takeover by Wells Fargo.