Wachovia, Citigroup, Wells Fargo Drama Worries Fed

Last week, Citigroup and the FDIC seemed to be close to a deal to acquire the troubled Wachovia Corp. Then, on Friday, Wells Fargo swooped in and made another deal with Wachovia, acquiring it before Citigroup had announced its terms and -- significantly -- without the help of the FDIC.

As a result, now there are two claims to Wachovia. Citigroup claims that Wells can't have Wachovia. The justice system hasn't made up its mind yet, either, with a New York State Supreme Court Judge siding with Citi and a US Federal District Court Judge siding with Wells Fargo.

The Wall Street Journal points out that the last thing the Fed would like now is turmoil involving large financial institutions like Wachovia, Citigroup and Wells Fargo:

But the legal back-and-forth didn't appear to derail the discussions about splitting up Wachovia, said people familiar with the matter. Regulators and bankers are scrambling to quickly end the drama in part out of concern that if Wachovia remains in limbo when U.S. markets open Monday morning, it could further spook already jittery investors and bank customers.

Comments

[starpvb]

CITIGROUP IS A PRIME EXAMPLE FOR MAIN STREET'S DISDAIN FOR "FAT CATS" ON WALL STREET AS THEY HELP TO DESTABILIZE THE US ECONOMY BY CREATING MORE UNCERTAINTY IN THE MARKETS. THE BAILOUT BILL HAS AN FDIC PROVISION THAT MAKES THE EXCLUSIVITY AGREEMENT BETWEEN CITI AND WACHOVIA INVALID ACCORDING TO MY READING. THE FEDERAL RESERVE & FDIC ARE NAIVE TO THINK THEY CAN NEGOTIATE A SPLIT UP OF WACHOVIA AND ALL THE PARTIES WILL BE ABLE TO AGREE ON THE TERMS. TOO MASSIVE, TOO COMPLICATED, TOO LITTLE TIME. MAJOR SHAREHOLDERS SUPPORT THE WELLS FARGO BID FOR WACHOVIA. SEE www.marketwatch.com for MAJOR SHAREHOLDERS SUPPORT LETTER.
TIME FOR CITIGROUP TO CONSIDER THEIR OWN REPUTATION BEFORE THEY LOSE THEIR OWN SHAREHOLDERS AND DEPOSITORS BECAUSE OF THEIR "KEYSTONE COP" ROUTINES AND GREED IN THE FACE OF A NATIONAL ECONOMIC CRISIS.

[Maschine]

Shareholders get a better deal with Wells Fargo.....­Taxpayers get a better deal with Wells Fargo.....­its now time for the useless bureacrats and Citi to shut up and go to hell and get out fo the way.

If this goes Citi's way, i propose you we burn down the Whitehouse and take the government over.

[munki]

Fredlonsda­le... please scroll down... yes... here is an update...

http://www.businessweek.com/bwdaily/dnflash/content/oct2008/db2008106_642858.htm?chan=rss_topStories_ssi_5

Citi wanted to use taxpayers money to grow its asset and buy Wachovia for almost nothing...
like subprime..­. Fed financed bailout...

Wells bid better service the banking industry..­.

[fredlonsdale]

Wells Fargo wants to buy Wachovia with no Federal guarantees.

Citi wants to buy Wachovia with Federal guarantees.

Seems a little fishy to me. I can only wonder how the 700 billion will be used and who will benefit.. The sharks are circling.

[GravitonX]

By the way, I was part of an IT transition team in Bank One when we were acquired, i.e. sold by former Bank One CEO, Jamie Dimon, who made a cool $1 billion+ in the deal, to Chase. Normal acquisitions take YEARS to hammer out the particulars, i.e. departmental integration, etc. The overnight acquisitions you are seeing now are nothing more than ravenous greed in action and support for the coming argument that they are TOO BIG to fail.

[GravitonX]

No Money Down for banks that want to buy other banks. Follow-on bailout money will sure up the books. You watch.

Are you in the market for a bank today? LOL!

[8IZENUF]

AIG was too big to fail. With that philosophy, Why are we allowing three
investment bank companies to buy up all the others?

Is this a tactic to have the three buy everything up and then sell the worst to our rescue plan?

How do we define a monopoly?

[SmootyBooty]

jackals and scavengers gather at the site of the dying dinosaurs.­..

[SPQR1052]

Just as predicted but nobody was listening.­... So is this a tactic or strategy? I am confused.


"... force America into bankruptcy­.."

http://edition.cnn.com/2004/WORLD/meast/11/01/binladen.tape/

Watch video here:
http://www.barackobama-joebiden2008.com/binladen-bankrupt-us.flv


It has NEVER been our military or arsenal of weaponary which has protected us. IT has ALWAYS been our WEALTH.

[grantlingel]

this bailout plan is like putting a band-aid on a cut that deserved stitches.
http://grantlingel.blogspot.com

[munki]

Best interest of shareholders and taxpayers.
Citi wanted only buy part of it... stick to it and let Wells have the other half.
Citi - stop the ridiculous greed fight... because bottom line loser will be us TAXPAYERS.
Thank you.

[ricitizen]

Obama releases Keating 5 youtube documentary. Almost 31,000 views already.

See it. Send it to you every voter you know, regardless of party. Sunlight is the best disinfectant.

http://www.youtube.com/watch?v=g72BuIvMbWY

[rkimball]

what the feds aren't telling the people is that 3/4 of all the banks are in dire straights.
there is not enough bail outs to fix the problem. this fix is temporary. we are going down.

[mariegachelin]

Wachovia would have failed had it not been for its deal with Citi. Clearly, Wachovia used Citi to keep it afloat until it could shop for a better deal, smart but deceptive move. Not fair. And yes, for those of you who will say that fairness has no place in business and in law, think again. Fairness is why there are laws and regulations. Ethics and trust must matter.
If Wachovia is allowed to get away with this tactic, then people will lose faith.
Wachovia signed an agreement and accepted money as part of that agreement, Wachovia approved with Citi’s announcement of their deal, then, Wachovia is bound. No one wants to take responsibility for anything now and days it’s a shame.

[munki]

There's no ethics in Citi, if you ever worked in banking...
The logic here is BEST interest of shareholder and taxpayers.­..
Wouldn't you agree? Our money is at stake and if this prolong...
we may have another tab coming our way as Citi was to use bailout money...
(see earlier reports)

[shengirl]

the feds were concerned there would be a run on Wachovia, they pushed them to allow Citi to buy them. But Citi was only going to buy one of three parts of Wachovia. Wells Fargo was going to buy it all, with their own money, not bailout funds. $7 a share for Wachovia stock, way more than Citi was going to pay. I agree, all this batting is not reassuring to Wachovia customers. Time for someone to step in... again.

[markcp]

The current "talk" is to split Wachovia branches between Citi and Wells Fargo. What wisdom is there in this? Brick and mortar branches do not equate to profitability, as evidenced by the expansion of Wachovia into near insolvancy. The real money is made in the back-end data centers where the loans are serviced and the accounts are managed. The real battle would be over who gets the portfolios of incoming generating loans (and there are many!) and the profitable business operations which do exist. The FDIC chairwoman has already tried to split the baby in half, but Wells Fargo has cried out that it will take responsibility for all of the baby. What is so Solomonic about trying to divide this baby?