Goldman Sachs (GS) To Buy Wachovia (WB)? Please

Yesterday, we said it might take Wachovia (WB) six months to find a new CEO. It took less than six hours.

Former Goldman Sachs executive Robert Steel got the Wachovia nod. And his history with Goldman, combined with Goldman’s ongoing advisory role on WB’s battered loan portfolio, has sparked rumours of a possible buyout. FT:

The appointment of Mr Steel, who will work with Wachovia’s chairman Lanty Smith, may rekindle speculation of a sale of the bank to other financial groups such as Goldman or Wells Fargo. Goldman was recently hired to analyse the bank’s loan portfolio, especially loans made by Golden West, a Californian mortgage lender bought by Mr Thompson for $26bn in 2006 at the height of the housing boom.

Would Goldman really buy Wachovia? Highly unlikely. Goldman’s business is built on proprietary trading and institutional and high-net-worth advisory work. The last thing Goldman needs is a massive, crippled retail mortgage origination business. (Might they take the commercial banking part? They might. But still seems unlikely. JP Morgan and Wells Fargo are far more logical buyers.)

Meanwhile, that Wachovia chose an expert in risk-management with a background as a regulator, rather than an expert in retail banking, suggests that WB continues to be sadded with huge balance sheet problems.

And, of course, Wachovia also updated its earnings expectation for Q2, which it reports on July 22, and revealed a surprise $2.8 billion loss. There will also be a “unspecified goodwill charge” related to Wachovia’s disastrous takeover of mortgage lender Golden West.

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