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So stripping Ken Thompson of the Wachovia chairmanship was only the first step. Having walked him on to the plank three weeks ago, the board nudged him off the end by forcing him out as chief executive. That leaves the position of Kerry Killinger, who was relieved of the chairman’s title at Washington Mutual, looking more than precarious.

Why is Mr Thompson going now? Wachovia puts it down to a series of “previously disclosed disappointments and setbacks”. Most obviously, that includes the catastrophically timed acquisition of Golden West Financial. Paying $26bn to go large on Californian mortgages in 2006 is firmly in the banking M&A hall of shame. But Mr Thompson’s departure also raises questions about Wachovia’s second-quarter performance. The results are unlikely to be pretty.

As for Wachovia’s future, it seems extraordinary that only months ago Mr Thompson talked about buying Merrill Lynch. Now the focus for Wachovia – hammered by a first-quarter loss, a forced capital raising and a slashed dividend – must be to steady the ship. If anything, its plunging share price and mortgage problems make it a takeover target.

It could be attractive for a rival such as JPMorgan Chase, Wells Fargo or a foreign bank. That would require a chief executive to take a big bet on Wachovia’s mortgage exposure. Alternatively, Wachovia could be a merger partner for, say, Morgan Stanley or Merrill, if they want a stable funding base for their business.

With US housing still in freefall, investors should not expect a bidder to break cover right now. But if Wachovia gets significantly cheaper it could be too much to resist.

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