Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
On May 31, 2007, Wachovia bought A.G. Edwards for $6.8 billion.
Where the Market Was
The Dow closed at 13,627.64. The S&P 500 traded at around 1,530.62.
What Else Was Going on in the World?
In 2007, Apple, Inc. debuted the iPhone. Major League Baseball published the Mitchell Report, a detailed account of the rampant use of anabolic steroids and human growth hormones among professional baseball players. A gallon of gasoline cost $3.38.
Financial Crisis Craziness Begins
In May of 2007, Wachovia and A.G. Edwards combined to form a financial services company that managed $1.1 trillion in assets at the time. The combined company was the second-largest U.S. retail brokerage firm.
After reporting a $2.3 billion profit in the first quarter of 2007, Wachovia reported a massive $8.9 billion loss in the second quarter thanks to its exposure to the subprime mortgage market. When Washington Mutual failed in September of 2007, Wachovia’s stock plummeted 27 percent and the company lost $5 billion in assets in a single day after a number of large clients withdrew funds en masse.
Within a year and a half of the A.G. Edwards deal, Wachovia’s market cap had fallen by $100 billion. By the time Wells Fargo & Co. took over Wachovia in October 2008, the buyout cost them just $15 billion.
By Wayne Duggan
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