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By Jonathan Stempel and Dan Wilchins

NEW YORK, July 9 (Reuters) - Wachovia Corp WB.N, the fourth-largest U.S. bank, named senior Treasury Department official Robert Steel chief executive, and said mortgage and legal problems would result in a $2.6 billion to $2.8 billion second-quarter loss, much larger than many analysts expected.

Steel, 56, has been under secretary for domestic finance since October 2006, playing a critical role in helping Treasury Secretary Henry Paulson manage the U.S. housing crisis and mounting losses for the banking industry.

The crisis has hit Wachovia hard. A $24.2 billion purchase in 2006 of California mortgage specialist Golden West Financial Corp saddled it with $121 billion of poorly performing home loans -- the main reason for the projected quarterly loss.

Steel's blend of government and private-sector experience might be a boon for Wachovia, analysts said. Before joining the Treasury Department, Steel had worked at Goldman Sachs Group Inc (GS.N: Quote, Profile, Research), where Paulson was chief executive. Steel retired as Goldman vice chairman in February 2004.

"The Wachovia board really reached for a star and they caught one," said Eugene Ludwig, a Comptroller of the Currency under President Bill Clinton and now managing partner at consulting firm Promontory Financial Group in Washington, D.C. "Financial companies are likely to be even more regulated than they have been, so his understanding will help."

Wachovia said the quarterly loss will equal $1.23 to $1.33 a share, excluding an expected write-down of goodwill that will not affect capital levels. Analysts, on average, had expected a profit of 19 cents per share, according to Reuters Estimates.

Steel's hiring fills a five-week void atop Wachovia since the June 2 ouster of Ken Thompson. Other big financial players to replace CEOs because of mortgage problems include Citigroup Inc (C.N: Quote, Profile, Research), Merrill Lynch & Co MER.N and UBS AG (UBSN.VX: Quote, Profile, Research).