A blogger at the Washington Post offers local examples of university presidents getting themselves and their universities in trouble by sitting – and doing nothing – on corporate boards.
… John Casteen III, who has just left the presidency of the University of Virginia, [was] a director of Wachovia Corp. for years, before the North Carolina bank racked up losses of $23.88 billion in 2008 and was forced into a shotgun merger with Wells Fargo National Bank, using taxpayer bailout money.
Wachovia stumbled because it got involved in subprime mortgages, notably by buying Golden West, a subprime mortgage lender. Casteen, who did not respond to questions, was on the board during that takeover and throughout all of the drama when the financial crisis hit in late 2007, spelling doom for Wachovia.
Today, Casteen is a defendant in a massive lawsuit brought on by pension fund managers who say they were cheated by Wachovia. If that weren’t enough, Wachovia has settled with the federal government by paying fines of $160 million for its involvement in the laundering of drug money through Mexican currency exchange houses, something that occurred when Casteen was on the board. In 2007, Casteen’s total compensation amounted to $243,500 from his service on Wachovia’s board and stock ownership…
The writer offers other examples.
August 19th, 2010 at 7:10AM
Does anyone else recall that it was Wachovia that managed the Commonfund short-term account that so many universities had their money in?
August 20th, 2010 at 8:33PM
Financial pundits had only positive things to write about Marion and Herb Sandler, the co-CEOs of Golden West Financial. This was from 1985 (when I started following these things) until about 2007. Casteen would have had no warning from the financial press that Wachovia was making a big mistake by buying Golden West.
If Casteen was asleep at the switch, so too were others. It’s just that Casteen was better paid.