Deputy US Treasury chief named to head Wachovia bank

WASHINGTON (AFP) - Wachovia Corp named US Treasury Department Under Secretary Robert Steel as its new chief executive Wednesday after the commercial banking giant ousted its previous CEO over hefty mortgage-related losses.

Treasury Secretary Henry Paulson said in a statement that his friend of more than 30 years "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," Paulson said.

Like Paulson, Steel is a former senior executive at the prestigious investment bank Goldman Sachs.

Since October 2006 he served as treasury under-secretary for domestic finance, acting as Paulson's principal advisor on the issue and guiding fiscal policy and operations, and playing a key role in the rescue in March of troubled US investment giant Bear Stearns.

With less than four months until the presidential election, Steel will not be replaced, but his portfolio will be shared by other Treasury officials.

Steel, 56, takes the reins at Wachovia, the fourth largest US bank in terms of assets, succeeding Ken Thompson who was ousted by the board of directors in June as they sought to stem hefty losses tied to troubled mortgage loans.

In a statement issued by the Charlotte, North Carolina-based bank, Steel said: "Clearly, there are challenges ahead in our current climate, but I am encouraged that most areas of the company continue to perform well."

Wachovia this year has been struck by a series of setbacks.

Like other US banks, Wachovia has seen its profits squeezed dramatically by the housing market slump and mortgage-related losses. Such losses have roiled domestic banks and big foreign banks that snapped up US mortgage securities during the housing boom.

Wachovia's earnings declined late last year and it announced a first-quarter 2008 loss of 393 million dollars, compared with a profit of 2.3 billion dollars in the same period of 2007.