Wachovia has suffered an $8.9 billion loss due to the lingering mortgage crisis and has sworn off of wholesale lending discontinuing that sector of its business effective Friday.  What’s to blame?  Well in all actuality, Wachovia can start with itself.  The bank has been reckless in its expansion buying up all kinds of smaller lending institutions like a drunken sailor picks up women on shore leave.  Anybody that’s been in the business or even had an account at any of a number of local South Florida banks may well likely have seen their branch bought up by these guys.  Apparently one of these reckless acquisitions included Golden West Financial Corp.

Wachovia has been suffering from its 2006 acquisition of Golden West Financial Corp. The bank paid roughly $25 billion for the California mortgage lender known for exotic loans.

The so-called “Pick-a-Payment” loans, which Wachovia inherited from Golden West, have proved a headache for the bank and a lightning rod for shareholders, defaulting at higher rates than other mortgages.

Wachovia recently discontinued offering the “Pick-A-Payment” loan option, which allows customers to pay a less-than-full interest payment on all new home loans. The bank also had hired The Goldman Sachs Group Inc. to conduct an analysis of its loan portfolio and advise it on strategic alternatives

Oops!  What did Wachovia Chairman Lanty Smith have to say on the matter?

“These bottom-line results are disappointing and unacceptable,” Chairman Lanty Smith said in a statement. “While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility.”

Nothing like concise language, eh?  Nice of them to accept some measure of responsibility given that their acquisition practices have been as imperfect as their lending criteria.  Nice to see that they’re tossing the brokers under the bus, not to mention their announced 10,000 layoffs,  and ending their wholesale lending business.  I’m sure that will set all things right.  What Wachovia needs is to be SAVED FROM ITSELF!  Banks have got to start taking responsibility for the fact that their quality control issues where it concerns their mortgage portfolios are just as much their own fault.  If the industry is to be fixed they need to start from the TOP down, not the bottom up.  Let them set the standards and then make the industry comply with that.  It should be noted that here at Bayside, we refused to originate even a single one of these toxic instruments.  But you’ve got to love the banks putting all the blame for the mess at the mortgage brokers door.  They can’t stand that we originate the majority of mortgages in the country- and they will use any excuse to drive business away from us and into their bastions of higher rates and much worse service.  Hey - think I’m making it up - give us a try, you’ll see the marked difference in how your handled with a company like ours vis a vis - the Wachovia’s of the world.