Bankers on the Run

J.P. Morgan Chase & Co. on Wednesday marked the 25th anniversary of its sponsorship of the five-kilometer "corporate challenge" foot race through some of the hillier portions of New York's Central Park.

Despite temperatures in the high 80s and an ozone alert, more than 800 Morgan Chase employees - including 100 from its private bank - showed up to run, the banking company said. The event included nearly 26,000 running or walking executives from more than 800 companies.

This year's corporate challenge will include 19 races in 15 cities throughout the summer.

Morgan Chase's newly minted head of private banking, Maria Elena Lagomasino, said she wanted to use Wednesday's race to kick off a two-day off-site powwow with her department, which started off the year with layoffs, has gone through some top management changes, and has generally been forced to endure a tough market environment.

Ms. Lagomasino insisted that the unit's morale is strong. "The whole goal is to beat the competition," she said during an interview just hours before the race.

Notably absent from the ranks of racing Morgan Chase executives was the company's top athlete, chief executive Bill Harrison, who is still recovering from a broken collarbone he suffered this year in a skiing mishap.

Defending the Deal

Former Wachovia Corp. chairman and chief executive John Medlin has been doing his part to help the company's planned sale to First Union Corp., sitting for interviews with local newspapers and with Wachovia's internal publications.

In his most recent comments, posted Monday on an internal employee Web site, Mr. Medlin said that the deal caught many by surprise but shouldn't have. "People have said that a merger between Wachovia and First Union is unthinkable, but the once unthinkable seems to happen regularly in these unusual and fast-moving times."

Mr. Medlin, who retired in 1993 and turned things over to current chairman and CEO L.M. "Bud" Baker Jr., said the marriage of the two North Carolina superregional banking companies makes sense in a changing industry. Four of what once were New York's largest banking companies have combined to form J.P. Morgan Chase & Co., he said.

Though he, like Mr. Baker, also discussed a merger with SunTrust Banks Inc., which is pressing its own bid for Wachovia, Mr. Medlin said First Union is a more natural fit.

"Wachovia and First Union grew up in North Carolina, which always has allowed statewide branching," he said. "SunTrust grew up in Georgia and Florida, where until the early '80s financial service companies had to have a separate bank in every county. Making the transition from a decentralized banking model to a centralized one takes years. SunTrust did not merge its 28 banks in Georgia and Florida into one until last year, and the vestiges of the decentralized way of operating remain."

(Not So) Sure Thing

As if the outlook for investment banking were not grim enough, with deal flow slowing to a trickle thanks to market conditions, some on Wall Street are learning the hard lesson that just because a transaction is announced does not make it a done deal.

And as General Electric Co.'s $47 billion takeover bid for Honeywell International is scrutinized by European regulators for its threats to competition, a couple of major Wall Street firms could lose advisory fees for the deal.

Bear Stearns Cos., which advised Honeywell, said it is watching the proceedings closely. Asked this week what effect the furor across the pond had on second-quarter earnings, Sam Molinaro, Bear Stearns' chief financial officer, said that for now it is business as usual.

"The numbers at the end of May still probably include the Honeywell fee," he said, but "it seems to be changing minute by minute."

Chase Manhattan Bank, which advised GE, will not report its second-quarter earnings until next month, by which time a decision on the deal is expected to have been made. European Union competition experts are scheduled to meet Monday to consider a plan to block the deal.

From Cabinet to Fire

Bruce Babbitt, secretary of the interior in the Clinton administration, has joined the team of lawyers helping Washington Mutual Inc. sort out the web of environmental procedures involved in completing the long-delayed development of a Southern California real estate project.

This year the former political bigwig joined Latham & Watkins, a Los Angeles firm that has been advising the Seattle thrift company for several years on environmental strategy for the development of Ahmanson Ranch in Ventura County.

He became part of the Latham & Watkins team that is working on the project last month after "a discussion about where we could bolster our resources," said Tim McGarry, a Wamu spokesman.

The company has been wrestling with local community and environmentalist opposition to the real estate development project since it inherited Ahmanson Land Co. - the developer that owns the tract of undeveloped ranchland - in 1998, when it bought H.F. Ahmanson & Co.

Opposition has come in the form of lawsuits - 17 so far - public protests, including calls for a boycott of the company's banking offices, and calls from politicians ranging from tiny City Councils to the Los Angeles mayor's office to halt the project or at least change its parameters.

Further stalling the project were unexpected events, such as the identification of two rare or endangered species on the ranch property, that have posed legal obstacles.

A particular hurdle, action on a supplemental environmental impact report that is now in the hands of Ventura County officials, has pushed the scheduled groundbreaking date back to 2003.

Mr. McGarry is careful to point out that Mr. Babbitt will not be involved in any lobbying on Wamu's behalf.

His role "is to help us ensure that the environmental community has an accurate understanding of the project and we have an accurate understanding of their concerns," the spokesman said.

By Liz Moyer, David Boraks, Niamh Ring, and Laura Mandaro

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