LOL
Wachvia and Citi and Wells a non story.
The IMF has said it is ready to lend to countries hit by the global credit crunch, using an emergency lending procedure first used in the 1990s Asian crisis. It has about $200bn immediately available to lend but can tap other sources.
HA HA this is even more funny than the comic section of the newspaper. If the IMF thinks 200 billion is going to do anything to stop this financial crisis then they are more complete idiots then I thought and I had a pretty low opinion of them already.
We are about to see the CDS on Lehman Brothers take about 1 trillion dollars from the stock market and give to super rich Arabs and Chinese and no one is reporting on this newest way of stealing money from Americans and giving to super rich Arabs and Chinese.
Soon the government will have no choice but to abandon the dollar all together and create a new currency. They have handled this so badly that we have no way out now but to abandon the dollar.
If they do create a new currency which they will have to only local bank account should be transfered to the new currency. This will keep super rich Arabs and Chinese from stealing our new money.
Forget it Wachovia, Wells Fargo and Citi Group are all now in the dust bin of history. Get a load of this :
Government officials are rushing to contain the damage. World finance ministers and central bankers will gather in Washington this weekend to brainstorm solutions for the global financial crisis,
Gee are we so messed up now. The same guys who stole our money and our tax dollars recently are now out to steal even more money from us. This is only going to matter things worse.
I am saying it agian for all those who are not listening move all your money from the top ten major banks and the stock market and into local banks. The local banks loan money to local businesses not to super rich Arabs and Chinese who are stealing our money.
Again please move your money and cash in your stocks before they steal all your money.
Anyone voting for Wells is voting to perpetuate the “GOLDEN PARACHUTE” ideal that clearly is out of line for a failed institute.
Think, GREED got us here, it needs to stop now. If Citi walks away then Wachovia needs to fail.
Find out how much Wells Fargo has in bad debt Mortgages on & off the books, and how many foreclosures they have completed this year ?
Wells is a bad deal, Wells Fargo is one of the major predatory mortgage lenders. Regardless of the offer, why would anyone think making it bigger is better ?? Helloo see where we are today, we will be bailing them out next.
No way read the history!
Why does Wachovia get a “do over” when Lehman did NOT??? Citi should have let Wachovia go bankrupt…..where would all the Wachovia jobs gone then ??? $7 versus $1??? GOD, the stupidity!!! “Tax deductible” deal equals taxpayer pain morons! I can’t wait for all the California toxic loans to go under…..try to do the math then!
You all fail to realize that Wachovia would have never made it past the next day without Citi coming to the rescue. Why should Citi lose the deal when they were the first to the table? Where was Wells Fargo a week earlier when Citi was saving Wachovia from closing completely? Wells should go away and find another bank. Citi will come out the winner in the courts. This game is not over.
WHO GIVES A….FED UP WITH THIS CRAP. BILLION DOLLAR COMPANIES GET AWAY WITH MURDER AND JOE TAXPAYER TRIES TO CHEAT A 1000 BUCKS FROM THE GOV AND GETS SCREWED BY THE IRS…WATCH 2009 TAX SEASON.
The Wells deal is going to end up costing the tax payer the same as citi’s deal down the road! Steel is in wells deal for the $250 million golden parachute!!! Citi is going to win the lawsuit since there was precedented cased winning the suits.
A couple more days like today it won’t matter to anyone, by the time Citi could make it to court they will be bankrupt. Best to figure out how to dump their toxic assets on the taxpayer instead of look for deposits to raid. Anyonw on the end of Federal Gov backed bailout deal will regret it right up until they are insolvent.
With all the silence coming out of Fannie and Freddie I expect to hear that their bailout didnt work and they will be coming back to the well again soon. AIG is already there.
Paul why not give us a piece on Credit Default Swaps – the real monster waiting in the wings ????
I am an employee of Wachovia and I’m glad we get to merge with Wells Fargo.
So many customers have said to me if we merge with them they are bringing over more deposits to us. If we were bought by Citi then they were going to close their accounts.
Thank you Bob Steele for guiding our bank and keeping it whole. Althought you tried to keep us independent, the press and panicked customers worked against you with a silent run on the bank.
By keeping us whole and not letting Citi break us up, you saved so many employee jobs, retained clients, and preserved shareholder value.
I know people are saying the package is too much, but I feel you deserve even more as you did what you were brought in to do.
We are no longer Wachovia by name, but Wachovia’s values in always putting the customer first lives on in the new Wells Fargo.
The taxpayer are getting the wrong end of the deal AGAIN with this ill-matched merger between Wells Fargo and Wachovia. When Wachovia cried wolf that they were on the brink of extinction it was Citi that came in and offer to buy their banking operations.
Since they left Citi at the altar for a more attractive offer – based on pure greed, they will get their due in court. I hope Citi is reading this and sues the crap out of Wachovia and Wells Fargo over the breach of contract – the exclusivity agreement. Sue BOTH of them to extinction!
Citi deserves either the original deal, or both compensatory and punitive damages for taking a risk, doing the right thing, and keeping Wachovia in business!
i’m also seeing many comments about the FDIC’s part in the Citi deal costing the taxpayers, when the FDIC is not funded by the government, but the banking industry. Quote from the FDIC site:
The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.
On the contrary – the taxpayers are going to pay for the $74B write-off that WF will be making! This is why WF suddenly got interested again.
I wouldn’t want such an unethical company as WF taking over my bank!
I am an employee of Wachovia and I can tell you first hand 95% of my customers I talk to on a daily basis detest Citibank. I have never experienced a situation were a company has such a bad perception of awful customer service as Citi.
Most of the customers swear they will close their accounts if we become Citibank.
With Wells Fargo you will not see much overlap (except out west but we have limited branch coverage out west) so it’s better for the employees on the east coast as you won’t see mass layoffs and branch closings.
Citi is expecting an infusion of 20-25% Wachovia deposits to give them a lift. Well that lift would be quit short as the Wachovia customers would take their money and run.
I thinks it’s fair four Citi to receive $4.2 billion from Wachovia and Wells fargo for their time and trouble, and get their banking house in order.
Citi should walk away. There are other fish out in this tumultuous sea. Besides, I think Wachovia is more of a dog than anyone expects. Citi is right to seek damages. Wachovia’s CEO signed a legal binding contract. Of course they’ll never see $60bn, but the game is shoot high and negotiate lower.
The underhanded game here was played by Wachovia. Yes, they chose the better deal for shareholders but that doesn’t excuse or negate their legal obligations. In a time when lack of trust and confidence is driving the economy down that type of behavior isn’t tolerable.
The tragedy here is that the next time the FDIC needs Citi’s help to rescue a bank – possibly saving shareholders and taxpayers – it will never happen. That favor card was played and proved to be a headache for Citi.
Also, since Wells insists their deal is better for taxpayers they should be rendered ineligible for access to the $700bn TARP in the future if they find additional losses hidden in there somewhere.
Think about it! While Wachovia had its problems, why would the FDIC stand behind a deal (Citi) that could potentially cost the insurance fund billions($) & turn down a bid that benefited the shareholders of Wachovia, its employees with no upfront cost to the “insurance fund”?
Simple answer: The Citi deal was no bailout of Wachovia, it was an effort to shore up Citi, by providing it with a domestic deposit base, which it requires in order to offset the lose of its foreign deposit base. BOTTOM LINE: Citi needed the Wachovia deal to survive.
It’s amazing some the stuff that’s written here. Some intelligent, some very bitter people. Lucky me I have accounts at all 3 banks. They are all good if you’re good. If you can take care of your finances you won’t have any problems. But if you stray watch out, it’ll depend on who is at the branch. As for fees Citi overall tends to be lower, but that will depend what banking services you use.
As for the settlement I have two words for Warren Buffet. We’ll find out maybe in another 10-20 years how much the oracle of Omaha was not a loveable teddy bear an instead a ruthless businessman. This deal is going to cost the taxpayer as much as the Citi deal, your a fool to believe otherwise. What looks good upfront will dispate through your you know what. Just wait for the Fed to buy shares of Wells to prop them up so they can afford this deal. Of course W.B. will insure it’s a sweet deal. Of course Citi will get Fed help to with the bail out money.
The bottom line is the taxpayer is the loser. Warren Buffet is the winner. Forgot so is Steele.
Citi should walk away — and off a short pier.
Paul, your sub-point that Citi should find another bank to buy is flawed.
The continued concentration of a handful of huge banking organizations is not the solution — it is merely the snowballing of the next problem.
Citi needs more capital — not additions to its deposit base. One of two things happens in an acquisition in this mode: either the shareholders of the target are scr%wed (and Citi gets their equity, OR the shareholders are compensated for their equity and Citi’s capital base is further deteriorated. (OR BOTH!)
However, that’s not the worst part — it is that Citi itself is not strong, and potentially poses a risk to the FDIC insurance fund [which in turn has just taken on additional exposure of great magnitude, through the insurance of money market funds].
The bigger Citi is allowed to grow, the bigger the potential threat to the FDIC — which in turn becomes a potential threat to the overall monetary system [through its virtually unlimited access to the Fed and the U. S. Treasury].
How big does Citi have to be to attain “TOO BIG TO FAIL” status? As big as AIG, for instance?
Yes, that is where this juggernaut is headed — concentration of banking assets, reluctance to extend credit to the rest of American enterprise, continued merging-in of more of the weaker institutions, until Citi says: “Hey, taxpayers — I am officially too big to fail, so you have to buy my junk at some negotiated value.”
And we, the taxpayers, relying on some Paulsonesque character will have to turn over another 700 BILLION to some 35-year-old crony from Goldman Sachs whose next job may depend on how much he forks over to Pandit the Bandit.
No, this is the way to sure destruction. We need to be looking in the other direction: taking steps to strengthen the local banks that take local deposits and support local businesses. Let Citi sort out its own problems, and let the market free itself up without creating more and bigger problems.
BTW, I don’t mean to pick only on Citi, as BofA, JPMChase, and a handful of others are in the same business — growing so big that they can take all the risks they want to without fear of the consequences (does that sound familiar — it should).
Citi — go away. Mind your own business. Get out of the way of the Wells deal, and get over yourself.
Oh, I almost forgot — to Sheila Bair: “Nut up!”
I really wish people would stop saying that the Wells Fargo deal did not cost the tax payers any money while the Citi deal did. That is plainly untrue. Once needs to better understand what ultimately happens with Wachovia’s substantial “bad assets” on its balance sheets under the two scenarios. While the FDIC is not directly supporting the Wells deal, you can be certain that Wells Fargo will use its best efforts to unload those bas assets it has aquired through the Government’s rescue package. Under the Citi deal, while the FDIC is on the hook above $42 billion in losses, it also was to receive a sizeable collateral contribution by means of Citi equity.
Let’s also not forget that in the absence of the Citi deal, there would likely be no Wachovia to comment on today. Citi spent the better part of last week extending liquidity to Wachovia in expectation of the FDIC brokered acquisition taking place.
Finally, the additional value to shareholders could have been generated through the separation of Wachovia the commercial bank (the part Citi wanted) and the remainder of the firm’s investment divisions. Shareholders would have found that the latter of these two components makes up the significant portion of the Wells Fargo deal. Wells is not paying $7 per share for bank deposits.
I truly believe Citi is the victim in this scenario and ultimately I would hope they are compensated in some way that rewards them for stepping up and saving a financial institution that otherwise was destined to collapse and ultimately be sold off in auction, like Washington Mutual.
For those who oversimply this discussion by buying into the Share Price Comparison or “is the taxpayer on the hook?” arguments simply do not understand the complexity of the transaction or that ultimately, all the dirt comes out in the wash. That’s when the “taxpayer” will really see what it is on the hook for.
The Wells deal is going to cost taxpayers plenty of money when they start writing off the losses.
You need to think past the agreement a few years down the road.
Citi said it will “vigorously pursue” its legal action against Wells Fargo — the insane $60 Billion lawsuit. Insane because there is no way a failed $2.2 Billion deal creates $60 Billion in damages. But whatever. I think Wells will prevail in court. And in any case, any lawsuit filed by Citi will be irrelevant, because soon enough Citi will be bankrupt anyway.
The person below talks about the ethics of the agreement. What about the employees? There is nothing worse than not knowing who you are going to work for, especially with the current state of the market. Citigroup is consistantly laying off its people. Wells Fargo is safer. This deal is the best for the employees, shareholders, and taxpayers.
It seems pretty simple. Citigroup was willing to step in but only with some government (taxpayer) protection. Wells offer is without government (taxpayer) involvement. If Citi wants to do their original deal without government guarantees, then I’m all for rewarding them for stepping up by letting them move forward with their proposed acquisition. Otherwise, Wells offer should move forward for Wachovia shareholder approval. If the government does require that Citi receive some payment for walking away (and I don’t think they should), it should come from Wachovia shareholders pockets. Let them vote on it. If Wells deal is still better for the shareholders, even with the payment to Citi, they’ll vote for it. Unless they choose to do so, it doesn’t make sense that Wells should have to pay Citi to walk on top of their offer price. Any deal that is better for taxpayers and the Wachovia shareholders is the way to go.
1. The ‘exclusivity aggreement’ only precluded solicitation, negotiation, or permitting further discovery for a different suitor. None of those things happened. Wells offer came based on existing discovery materials from negotiations. No futher negotiations had taken place. So sorry, no foul on those grounds.
2. The only reason Citi was able to offer as ludacrisly low an amount as 2.2B is because the Fed/FDIC held a gun to everyone’s head and said “do a deal tonight (sun) or else”. This left Wells w/out sufficient due dilligence. Under those conditions Wells quite sensibly walked, they are no where near desperate enough to bet 2.2B on the deal.
Considering Wells Fargo’s brokered deal includes a $225M “parachute” for financial execs and Citigroup’s plan doesn’t it would be better for the shareholders and clientele if Wachovia stuck to their original plan
JFof NYC, I bought stock right before the weekend Citi deal and afterwards just before WF got involved. Sure, there was a deal struck however, like Chris from Charlotte said, all subject to shareholder approval.
A WB-WF deal is the best deal for all parties involved.
Hey people the bidding ended Sunday night and Wells didn’t show up. The next time this situation comes up, there maybe no bidders then who loses.
This has nothing to do with greed. Oh sorry it does (Bob Steele and his $255MM golden parachute). I guess Bob was insulted by Cramer when he ended up on his Wall of Shame that Monday so like a weasel he went looking to save his own skin.
I think Citibank should walk away. I have banked at Wachovia for 16 years and will take my money elsewhere if Citibank takes over. I have no problems with Wells Fargo.
Citibank should walk way. I hate Citibank and have banked at Wachovia for over 15 years. Will take my deposits elsewhere.
Lots of comments here that show that people really don’t know all the facts with respect to Citi Vs Wells…The issue is really is the battle between ethics and shareholder value. If you ask me, ethics and character should win out.
here are some facts.
1. Without Citi wachovia would have failed- Wells walked away when the FDIC needed someone to save Wachovia. Citi stepped up, Wells did not.
2. Citi had and EXCLUSIVITY agreement with Wachovia that was BROKEN! That means the wells/wachovia pact is ILLEGAL!
3. Citi supported Wachovia for almost 5 days before wells showed, if not for that support, Wachovia would be in bankruptcy
4. Taxes: The wells deal has just as much tax burden as the Citi deal. If Wells bought Wachovia, taxpayers end up paying for the losses on the books. That’s why wells is so interested…this is a tax benefit to Wells.
5. There is a $225MM payout to wachovia directors with the wells fargo deal and $0 payout with the Citi deal so there is a conflict of interest here. (reread ethics comment above).
6. The price: Citi paid $1 but would leave 2 Wachovia divisions intact that had a stock value of approx $6…so total value is approx $7. This is EQUAL to the Wells deal of $7 for all of Wachovia…Some people can’t do simple math!
7. Yes Citi has FDIC backing after $42B in losses BUT they’re giving up $12B in equity to the FDIC for thiS!!! In other words, the tax payers are gettign something for this…all tax payers get with Wells Fargo is a big BILL!…
Get your facts straight, Citi had the character to do the right thing here to save Wachovia and ultimately financial collapse…Wells Fargo is looking only for the interests of it’s top directors (not the shareholders)!
As a Wachovia employee, I can tell you that WF is the deal we want, the deal our customers want and the deal our stockholders want. We were blackmailed into taking the Citi deal (“or else we will close your doors”) due to a “silent” run on the bank, due to the the fear of bank failure in general instilled by the media and Paulson. With our new CEO, we were on the road to recovering from the disastrous Golden West merger when this occurred.
We employees are very proud of the Wachovia name and reputation. We feel WF has the same reputation on the left coast. Pay off Citi and allow us to remain “whole”, even if we have to lose our name.
We know that Wachovia / Wells Fargo deak is better but put yourself in Citi’s shoes… on the day that the Feds will suppose to takeover Wachovia, like WaMu the previous week, they sold themselves cheap, they could’ve been bankrupted and can be bought for a penny, Citi agreed to give them a lifeline with the Fed-brokered deal… So where was Wells Fargo that day? sitting in the sideline waiting for the 700B bailout to be approved before they jump in.
I 100% agree with Shane Williams. Citi is abviously a company that encompasses character and values. Wachovia and Wells Fargo, on the other hand, should really be ashamed of themselves.
Why should Citi walk away? They had a great deal, why should they care about Wachovia shareholders?
Citi is looking out for itself, as well it should be. It needs the deposits and it needs the expanded retail banking business if it wants to continue to compete with JPM Chase and BAC. The previous comment is right. Wachovia would have been seized by the feds a week and a half ago if it weren’t for Citi’s offer.
And there isn’t another bank out there that will give Citi what it can get from Wachovia.
Why would Citi give them millions in liquidity if there wasn’t some agreement in place?? Charity?? Goodwill?? Something is missing here. RC from Jacksonville is on the money with his comments.
Read the Washington Post…a deal with Wells could potentially be WORSE for taxpayers.
Citigroup and Wachovia entered into a legal contract (exclusivity agreement) and therefore the behind the scenes Wells Fargo-Wachovia deal is illegal. Had Citigroup not stepped in (when Wells turned their backs on WB), Wachovia would have been seized by the FDIC and would now be worth nothing. Citi provided liquidity and gave Wachovia a more than fair offer.
If the government doesn’t force Wachovia to follow through, I highly doubt that any other bank will offer the emergency relief that Citi offered to troubled banks like Wachovia in the future. So, count on more banks failing.
Aren’t we all forgetting the Wachovia/Citi deal was merely inked – “SUBJECT TO SHAREHOLDER APPROVAL?”
I’m no economist, but I am a shareholder. $7 vs $1 C’mon.
Paul Monica please keep your opinion to your self instead of publishing your won opinion on Cnn Money, which in my opinion should be a firm which is unbiased.
Few things I’d like to point out. Did no one hear that the Wachovia CEO and execs are sharing a $250 million if their deal with Wells go ahead? Why do you think Mr Steel and his people really trying to pair up with Wells. Also Wachovia CEO has millions of dollars worth of Wachovia shares ($16 million spent on shares a few months ago). So I don’t think he prefers Wells deal only because it “saves” his company.
Secondly, everyone is talking about Wachovia shareholders. How about the Citi shareholders who took on huge risk when the government broked a deal with Citi. Citi’s credit rating was also lowered as a result. So how ethical is it that the Citi shareholders have not been rewarded for the huge risk they took when they took on massive portfolio of bad-rotten loans?
Thirdly, most people don’t know that Citi had offered the equivalent amount that Wells has offered to Wachovia. So why are people still saying that the deal is “$1 from Citi or $7 from Wells”. It is more like “much more than $1 from Citi with saving it from going bust or $7 from Wells who ran away when Wachovia really needed their help”. Even when the deals are equivalent Wachovia CEO and execs chose Wells probably because there was no $250 million golden handcuffs for them in the Citi deal!
I think Wachovia employees and shareholders should be worried about Wells taking over Wachovia because Wells has clearly shown how ethical and responsible it is. Wells ‘walked away’ on Sunday night when Wachovia needed their help. In my opinion it ran away from all the responsibilities. That is why Citi was chosen to take over Wachovia that night. Therefore, Citi has every right to do proceed with the deal they have or get a huge payout from Wells/Wachovia.
Why should Citi waste their time, money and resources saving other banks and then let someone else come and take it. I think if Wells wants Wachovia then it should either buy it from Citi or pay the break up fee Citi demands.
I’d be ahamed to live in a country where there are no morals and have no respect for signed contracts.
All Citi is going to do by acquiring WB is prop up their own ailments. They are hurting for cash, and the WB deposits are a steal (no pun intended) for a paltry $2B. It’s not the righ deal for the investors, for the employees, or for the city of Charlotte. Asplit-up will do the most harm – it will mean large-scale layoffs, decimate the Charlotte commercial real-estate market, boost the unemployment rate, and make a lot of stockholders very unhappy. Unhappy stockholders means a lot of money spent (i.e. wasted) on a deal that may get, ultimately, voted down.
Move along, Citibank – please? Look at the bigger picture – do what is best for Wachovia, it’s employees, it’s customers and it’s shareholders, not to mention a very ailing economy, and do what causes the least impact from a tax burden on the US citizens. If Wells has the cash to cover the risk, let them do it.
forget Wachovia and Citi and Wells Fargo’s fight it’s kinda mute now that all the major banks are bankrupt.
It’s time for Bernanke to do what he promised to do and drop money from helicopters to people.
Call me crazy…but, wasn’t Wachovia going to go under on Monday, Sept. 29th if Citi didn’t step in after Wells had already walked away? It was only after an IRS rule change that Wells decided that Wachovia was a good investment after all…There would be no Wachovia to fight over if Citi had not stepped in on the urging of the Fed!
Why should Citi walk away now, just because they were able to make a better deal on Wachovia based on the situation at the time…that just sounds like good business sense!
I agree with the other comment about Citi going away being better for both Wachovia and the local economies involved. There’s going to be job cuts with WFB, but not so many as with Citi who is already staggering.
In addition, the stakeholders will at least get something out of a WFB deal. With Citi there’ll be nothing for the WB employees, nothing for the shareholders, and nothing for a large number of retirees whose holdings have collapsed. It’ll end up costing governments money that’s not covered by the bailouts and which they don’t have.
Last and not least, the government needs to hammer the crap out of CEOs who are laughing on their boats while their ineptitude and egotism has adversely affected thousands. The boards of these institutions should not be immune; they knew but were not acting as guardians of the bank’s stakeholders. Park ‘em all in Leavenworth.
I’m a current Wachovia account holder and, quite frankly, I’d rather NOT have EITHER Wells-Fargo or CitiGroup as my new bank….but, given little choice of anything else, I’d sooner see CitiGroup than Wells-Fargo….I’ve had a Wells-Fargo retail credit account before (paid it off ahead of time & closed it)….that account was riddled with time-bombs & “GOTCHA!” fees that I had to jump through hoops to avoid….geven that treatment as an indirect Wells-Fargo account holder, I’d rather not be a direct one….
what they are not telling Americans but what Paulson told the bbc.
No single government, not even that of the US – as Hank Paulson, the US Treasury Secretary, conceded last night – can contain the destructive power of deleveraging, of the de-facto lending strike, on its own.
In other words everything the US government is trying to do to stop this will not work and Paulson knows this. So people please before it is too late get your money out of the stock market. Paulson has just told everyone to get their money out.
My understanding is that at the time Wells Fargo came forward with their offer, that there was no signed/approved by the board of directors of Wachovia contract. It WAS NOT A DONE DEAL. So there is no breach of contract involved here. It’s like, Wachovia met with a buyer to sell a used car, an offer was made, Wachovia said “sure, it’s a deal, I just have to get my my wife’s okay because its actually her car (think of “wife” as “board of directors”). Then Wells Fargo pulls up, says, “hey, I’ll give you a lot more.” Wachovia is within their rights to say “hey, I’ll take the better offer!”
This is a business decision for Citi. If you can buy something for pennies on the dollar of what it is worth, you should. On the other hand is it right, especially when it involves FDIC money.
Christopher of New York invoked the “so what” test. His comment hits at the very causes of the current crisis. That is the business philosophy of “do whatever you can to make money regardless of the damage you do to others as long as it is legal”. If Citi continues to block the Wells Fargo deal despite the fact that it is better for the Wachovia shareholders and the taxpayers they reveal themslves as selfish, greedy and unscrupulous, but “so what”.
A DEAL’S A DEAL!!!!! The turmoil in the markets does not mean that we throw our principles (AND LEGAL SYSTEM) out the window. The contract should be upheld and Wells should BACK OFF!!!!! I feel sad for the losers in this, but things will only get worse if we fail to honor contracts.
Americans should all just walk away from the top ten banks in America. All they do is steal your money, charge you high fees and then when they have stolen all your money go to the government and get them to let them steal your tax money.
HA HA what a joke for a government we have at least in the old days the crooks use to be thrown in jail and the money they stole from people returned to the people. Now a days they reward the crooks with your tax dollars.
I say everybody get your money out of the stock market and the major banks before they steal it all. Put the money into your local banks where they will loan it to local businesses instead of giving it to the super rich Arabs and Chinese.
Please get out now before the bottom falls out.
Thanks to everyone for some great comments today. Couple of clarifications though.
First, to k shamash. I don’t own shares of WFC, or for that matter, C or WB. The only stock I own is that of my employer, TWX, in my 401(k) plan. Everything else is in mutual funds.
Anyway, I also wanted to point out that I am not advocating that WFC simply be awarded WB. I recognize that there was a legal contract. But contracts are often broken. And rather than fight over who gets WB, I think WFC should just pay C a break-up fee so that C can move on.
I also realize that Citi did probably save Wachovia by agreeing to the FDIC-brokered deal. That gave WB a lifeline that kept them from failing. That said, since Wells came in later with a better offer, I see no reason why Wachovia should be forced to take the Citi deal if Wells is willing to pay Citi a break-up fee.
Finally, while it’s true that Wells probably felt more comfortable doing the deal once it looked like the bailout would pass, it’s still worth noting that Wells wanted to buy the entire company for a higher price. And I think that’s better for shareholders, employees and customers.
PRL
Where’s the taxpayer outrage. The FDIC thought they had to broker this deal because no one else would take Wachovia. That was not true the FDIC made a mistake and should pull OUR money off the table. That would mean the Citi deal would no longer be able to be enforced as originally agreed upon thus voiding the agreement.
Sheila take my money off the table NOW!!
YES,YES,YES!!!
Putting tax payer money at more risk is unacceptable. They should move on and find another potential somewhere else.
If Paulson is looking at equity stakes in banks perhaps the best thing for Wachovia is for them to directly inject $ via an equity stake.
I agree with one comment the FDIC may be trying to save 2 banks here. Citi and Wachovia. One risk is what if Citi continues to be weak after the deal they are larger and become a bigger problem to solve.
Clueless. This is called brinkmanship–Citi wants to get as much as they can, that’s business. To say they should say: “Oh, we got outbid, and despite the fact that we have leverage, we should walk away from a fat payday.” Yeah, that makes a lot of sense.
Wells Fargo isn’t fronting FDIC money. But what if the losses sink Wells? Then the FDIC is on the hook for even more. The issue is much bigger than price per share, and frankly, if Citi pushes the issue, it’s not up to the shareholders to decide.
Wachovia/Wells should pay Citi to go away. Thinking Citi should walk away without compensation after a breach of contract is dumb.
It’s disconcerting to see people advocating the dismissal of property rights. Citigroup has property rights to parts of Wachovia so why should Citigroup walk away, without compensation, from that which belongs to them? I’ve heard people say because it’s what’s in the best interest of Wachovia shareholders but that doesn’t pass the “so what test.” So what selling to Wells Fargo would be in the best interest of Wachovia shareholders? The Wachovia board is charged with representing their shareholders and the Wachovia board entered into agreement with Citigroup, the agreement memorialized by Wachovia’s accepting a liquidity line, but for the existence of which, Wachovia would not exist today.
If Wachovia wants to be bought by Wells Fargo then they should convince Wells Fargo to buy out the Citigroup property rights, because, Wachovia agreed to sell Wells Fargo, Wachovia has not the legal right to sell…
I’d also like to add that any breakup of Wachovia, or any deal that involves tax payer money, will see my deposits be taken elsewhere.
As a Wachovia customer, I’d prefer that the Wells Fargo deal go through, but with this one proviso: they should be enjoined to pay Citi a sum for punitive damages for intruding on their deal.
I’m not an advocate of “breach of contract”, but: 1) I’d rather not foot the bill for Citi’s deal, though my tax dollars, 2) I’d rather not have to worry about how my accounts will be split up, since Citi is wanting to have Wachovia broken up so that their deal can be successfully brokered, and 3) I’d prefer to see that this be dealt with fairly, which is why although I’m in favor of Wells Fargo’s deal I also think they should have to pay Citi punitive damages (as a suggestion, Wells Fargo pays Citi the $2.16 billion they were going to pay for Wachovia, plus at least a matching sum for punitive damages; that would seem fair, I think).
If the FDIC wouldn’t have jumped the gun and seized Wachovia, we wouldn’t even have to be discussing this. This is a prime example of what happens when the State intervenes, both the taxpayers and the shareholders get the shaft.
Were was Wells Fargo when Wachvoia was about to go
under on Sunday. They had no capital to open for business
on Monday and Citi bailed them out. I think Wachovia’s
top brass got greedy with the golden parchuttes included
in the Fargo deal. Also I think both Wells and Warchovia
should be suffer some monetary damages – one for not
honoring a binding agreement and the other for ignoring
the agreement.
WALK AWAY? If Citi has not stepped in on That Sunday morning, Wachovia would be seized by FDIC and market would have seen another big bank FAIL. Wells walked away from buying Wachovia because they did not see a benefit at that time, all of a sudden Tax law changes, $700 Billion rescue bill passes and Wells see an opportunity to intervene. If anything Wells should be fined for this, this is bad business practice and clear interference with a signed agreement. If Wells deal goes ahead, It will prevent any stable bank from listening to FDIC requests to rescue any failing bank. Wells have plenty of other banks available to go after. Any judge will see Citi’s Exclusivity agreement and will rule against Wells.
I am not a conspiracy theorist, however. This whole deal smells like one. You ask questions w/ logical answers like “which is better $7 per share or $1″. It is so clear that Wells’ offer is better on so many levels. What smells is the FDIC’s response. If the Wells deal IS better and DOESN’T cost them/taxpayers, why doesn’t the FDIC endorse it?
Are they in bed w/ Citi on this possibly???
Or maybe they’re feelings are just hurt because they worked round the clock to make the deal to “save” wachovia.
The deal that Citi worked out was ideal…for THEM! They get the lucrative deposit business and take NONE of the risk. It begs the question, who does Citi own at the FDIC?
Where was Wells when the FDIC was set to break Wachovia apart? Citi came through to keep ALL of Wachovia bank from going to the FDIC. So Citi deserves the shaft? I don’t think so. And the ‘no cost to taxpayer’ idea means nothing if Wells buckles under the strain of Wachovia losses. They may have waited until the bailout to meddle in Citi’s deal thinking that it was the key to avoiding crippling losses…but we may find the mailout is a drop in the crisis bucket.
Citi had a deal and FDIC is backing the deal for a reason. Don’t be fooled by the Wells and media hype – it is far more complicated than face value.
The FDIC relied on JP Morgan Chase to rescue/bailout Washington Mutual – protecting WAMU’s customers. They did the same in turning to Citi to protect Wachovia’s customers. If they allow Wells to screw this up, what bank would ever answer the FDIC’s next call?
Being a shareholder in Wachovia, I feel the government let them almost fail by not doing something with the rescue/bailout package earlier. Sure Citi says that it saved Wachovia over the now famous weekend before the bailout was passed. But as it stands now, why should Citi, who could very easily end up in the sites of short sellers itself as Wachovia did, be allowed to buy Wachovia and put the tab on the American people for the bad assets Wachovia owns when the Wells deal will be better for every single person in the U.S.-shareholders and citizens.
These are extraordinary times and this deal with Citi needs to be dropped, and they better hope they don’t end up the same way Wachovia has.
Don’t you get it the FDIC isn’t forcing a deal with Citi to save Wachovia; it’s doing it to save Citi.
I agree Wells should be the buyer. However, the math didn’t add up quite correctly in the section discussing what the FDIC would be on the hook for if CITI won the bid. A $312 billion pool of loans minus the $42 billion Citi is willing to absorb would leave the FDIC holding about $270 Billion not $280 billion. These type of errors in an article lead one to question the reliability of the entire article.
Didn’t Wells want to buy Wachovia in the first place for more than Citi was willing to put up? How did Citi end up getting to pay next to nothing for Wachovia’s deposits if Wells was interested in Wachovia’s entire business?
Well personally I think wells should take the hike. The deal was brokered by the FDIC with citi after wells walked away. Odds are citi would have like to have just as much time as wells fargo did to look at the books but the FDIC was going to take over without a done deal so they said will take it but you got helps us with the possible losses incurred from this. Meanwhile wells walked becuase they could not get the time to view the books in full. I say make wells pay a fee or take the walk.
The Headline should also include “Better for Wachovia Customers” …ie Wells Fargo
If Citi takes over my Wachovia branch, I’ll be looking for another bank.
As a customer, it appears to me that Wells Fargo wants to be fair to all parties invloved, and CitiBank looks like they just want my money. They won’t get mine.
For its own sake and those of its shareholders CITIgroup should concentrate on staying solvent, avoiding any strategies that could put any additional stress on its balance sheet, including acquiring parts of Wachovia.
Nick in Raleigh,
Citi should walk away from this deal… if not, the unemployment rate in Raleigh, and Charlotte for that matter, will most certainly rise… Wachovia has many employees in Raleigh, some of them you may know, that will most likely be affected by the Citi/FDIC takeover, however with the Wells acquisition these people would probably stand a better chance at retaining their jobs… so that is one reason that you should want the Wells deal and not the Citi deal… This one is for the employees!
Now, lets say the Citi deal goes through, many of those people are laid off and now they can not pay their mortgages… they may live in your neighborhood and here comes a foreclosure in your neighborhood… the house becomes run down and looks bad, now no one wants to buy in your neighborhood because they don’t like the look of the rundown house, and they are concerned about the rest of the neighborhood getting like this… now your property value falls. This one if for you personally!
Remember, this deal was done in the middle of the night, over the weekend and there was really no fair bidding process in place… so not only do we not know what the market value of Wachovia’s loan portfolio is we don’t even know what the value of the whole bank is… for the FDIC to structure this deal, in the matter that they did, overnight, with no notification to shareholders, and to now force the shareholders to loose any equity that they had and will have is a shame and the shareholders should have some say at this point… This one if for the shareholders and the rest of the markets!
From what I understand, Wells was already in a “Due Diligence” phase on purchasing Wachovia, therefore the agreement that was in place with Citi has no relevance because Wachovia did not solicit another bid… it was already in progress, and the FDIC should admit that they should not have interfered, and do what is best for the shareholders of Wachovia… not themselves and Citi.
In conclusion, if Citi does continue to pursue the Wachovia deal, it would show all of their customers, employees, and shareholders that they are not concerned with the well being of any of them… the customers, employees, or shareholders.
Also, they are acquiring Wachovia for approximately $2 Billion, and they are suing for $60 Billion… that is as ridiculous as the purchase price of $2 Billion.
As a customer of Wachovia I will just say this one thing to Citigroup shareholders and executives. If you take over branch operations of Wachovia in New York where I am. I will move every last penny from my accounts to a competitor. Whether it be JP Morgan Chase, Capital One, or even Sovereign Bank. I want no part of you. There is a reason why your retail banking business has not expanded on its own. You are a horrible bank. Your fees are massive and unending. Your branches are dark, sterile, and unwelcoming. Except for those that always have paper all over the floor. I despise you as a bank. And as a business overall. I am also well aware that I will not be the only one who leaves if you take over. So those deposits you think you will be getting. You won’t.
CITIGROUP SHOULD LOOK AT THE BIG PICUTRE AND DO WHAT IS BEST FOR THE COUNTRY AND NOT JUST FOR CITI. DON’T WE HAVE ENOUGH GOING ON RIGHT NOW. CITI’S OFFER WAS TOO LOW TO START WITH.
Citi and Wacchovia entered into a contract. They should be legally held to it. Where was your brilliant contributor’s mention that this Johnny come Lately deal mostly benefited Wacchovia’s CEO to the tune of $225 million golden parachute? That’s what is at issue here! Citi’s contract averted Wacchovia from being seized entirely. Citi should sue the crap out of Wacchovia and Wells Fargor for Tortiou Interference with a contract. If Wells wanted to purchase waht was left of Wacchovia from the Citi deal, then fine. But saying that Citi, which saved Wacchovia’s entire seizure, shouldn’t be entitled to the contract and deal mad is absolutely absurd and absolutely NOT LEGAL. Call me crazy for thinking our country is based upon laws!
find another bank? That is as rediculious as the notion that they should just walk away. The only reason wachovia isn’t bankrupt and its shares worthless is because citi stepped in and bought them. Was it it a fair deal? Could they have paid more? Who cares! They saw an opportunity to quickly and cheaply expand their branch network and deposit base and they took it. But what about the shareholders of wachovia? Boo hoo. This isn’t a charity bake sale. People lose money, other people make money. This is america. If you don’t have the stomach to invest, buy a CD. If shareholders did any homework, they would have jumped ship months ago. A deal is a deal and what WF is doing is illegal. Take the emotions and the perfect news angle away and this is cut and dry.
Regarding comments from Nick of Noth Carolina: Citi, walk away. We are not talking about two people buying/selling a house for 300 thousand dfollars. We are talking about billions and billions and billions of Taxpayer dollars being given away — given away. Citi should walk away. Maybe Nick doesn’t pay taxes.
Again Paul you are missing the whole point here. Now after looking under the hood both Citi and Wells Fargo want to back out of the deal. Half of Wachovia’s loans have not had any payments on them for 6 months now. A lot of them are no properties that do not even exist nor do the people who took out the loans exist.
HA HA the Wall Street bankers just stole all the money Wachovia had on deposit.
Right the bankers are going to solve this mess when all they know how to do is steal your deposit money. And now that Paulson has the keys to the tax payer’s Treasuary he can start to shovel out the money to these thieves.
If Citi doesn’t walk away, I’m pulling my Wachovia account. I don’t care if they only own 20%, there is a reason depositors chose Wachovia over Citibank and for me personally, I feel Citibank is a bunch of crooks who can’t be trusted. If Wachovia knows whats good for their future, they’ll shed Citi or a lot of depositors.
Maybe Citigroup can find additional capital to raise there bid for Wachovia from there chairman. He got paid $600 milllion for his hedge fund which was later written off and closed. Visionary and intelligent leadership at Citigroup?
Obviously the Wells deal benefits Wachovia shareholders but what does it mean for business when agreements can be ignored because something better comes along.
Citi is the largest hog in the barnyard.
Having stuck its snout deeply into the public money trough, it would be out of character to back away in the public interest. But yes, it should.
The crisis being faced by the world today is primarily one of a lack of confidence. Confidence will not be restored if government or it’s agents, the media or public pressure seek to undo contracts entered into in a best effort at the moment to rescue companies. Undoing a deal would further destroy confidence and fuel the ongoing crisis. The price we are all paying for the lack of confidence in the system is too great and Citigroup should be applauded for stepping up to help put a stop to the collapse. Wells Fargo needs to buy something that is for sale, not something that has already been sold, regardless of whether or not the terms were ideal. The opportunities are out there and they could opt to conduct themselves in a way that will better support the big picture and restore confidence that obligations will be honored.
Citi should walk away from the deal. I am a Wachovia Employee in NYC and the impact could be horrible for our employees and customers. Citi has wellover 80 branches in Manhattan so what would they do with the 27 Wachovia Branches & Employees… Lay them off!
Wachovia Clients would lose Big Time! Thousands of cleints open their accounts down south and move around the country and vice versa. This woulc cause huge confussion & customer impact if there is a split.
Citi just wants the large deposits here in the North East because they can’t get them theirselves!
Are you kidding me? Walk away? Nick from Raleigh is right on with his home analogy.
I can’t believe this article even got published on such a well respected site!
Wells had their chance. Wells was at the same table as Citi, but they chose to walk away. Sorry, you missed your opportunity. If they wanted it bad enough, they should have stepped up. What gives them the right to come back a week later and say “Hey, we want it now?”
As for job losses in Charlotte, there are going to be losses regardless of who wins. Citi is not abandoning Charlotte. They are going to have Charlotte be the HQ for their retail operations.
I agree that $7/share is better for shareholders, which I am, but I believe the remaining business units of Wachovia will be able to bounce back. A smaller, more focused unit will make it easier to start turning a profit.
The media is making Citi look bad in this case. If I were in their place, I’d fight it with all my might as well.
The government forced Citi/Wachovia into this, they should honor their word.
I wouldn’t call you crazy, border line stupid/short sighted. If Citi did not step in Wachovia would be basically out of business. Read the disclosures by Wachovia to the Judge. Second Wells offer is a good offer, but late, after the fact. If this ok with you then let’s rollback to WAMU and take care of their stockholders. Don’t be so selective.
Go Home Citigroup!! Leave Wachovia alone. If you can’t make a deal without Fed assistance, but Wells can, then suck it up and walk away. Stop being a sore loser.
Citi should let Wells buy Wachovia and proceed with the $60B lawsuit.
The Wachovia and Wells folks will have to swear under oath that they had absolutely no contact with each other from the signing of the exclusivity agreement until the formal offer was made.
Then subpoena the phone records, depose the secretaries, etc., and see how much Wells/Wachovia will pay to get their execs out of a perjury trap.
last i check nick they never signed a agreement?? WFC can bid higher which they did and that means that citi rather crying to checkbook it up and either pay more or sit down and shut up..
I am of the thought that Wachovia’s shareholders will reject any of Citi’s proposals (since they know there is a far superior offer waiting in the wings), so it probably doesn’t even matter except for headaches for management and the FDIC. Does nobody else agree that shareholders will vote down the Citi deal?
WALK AWAY We are all better off with wells. Citi needs to move on to antother offer today. Wells/Wachovia should pay citi to move on once the dust settles.
To the author, sorry you lost money on WFC.
The taxpayer IS on the hook regarding the Wells offer, otherwise they would not have made the offer.
The Wells deal although better for Wachovia shareholders, allows Wells to IMMEDIATLEY Tarp any toxic waste on Wachovia’s balance sheet- exposign taxpayers from the moment wachovia is taken over.
Yes they should continue fighting for Wachovia. After WaMu failed, Wachovia is really the last national bank that I forsee failing and therefore the last national bank that Citibank can acquire. Citibank has previously ignored branch banking, only existing in LA, Las Vegas, Chicago, Dallas, Miami/Palm Beach and NYC/NJ. We already have tons of Wells Fargo’s here in Colorado, I’d like to see a Citibank branch open up out here.
I think a solution is that Citibank should get some of the Wachovia branches in places that already have Wells Fargo (Utah, Colorado, Arizona etc).
If you agree on some price when you are verge of collapse then once steadied yourself you sell for more and ditch the original agreement
Where is the law and more of Ethics ??
As a Wachovia Employee I can tell you there is great excitement over Wells Fargo. Even before the Golden West fiasco, Wells was always a bank we eyed for a West Coast merger if the price was right. Unfortunately, the board got greedy in the mean time. Now the price is right on us!
If CITI wins anything, expect a major employee and customer defection in the markets they get.
The part that continues to bother me is that the government probably knows more about Citi than anyone outside of the company and they continue to push for Citi’s involvement in this deal. To me that says things may not be as great as Citi would like the world to believe…
Who is this schmuck, and how do I get his job. How do you come up with the taxpayer hit, when WFC is just buying Wachovia because of the tax shelter it will provide? Second, if any deal is better for the employees it is the Citi deal. Citi had already announced (prior to this behind the scenes craziness) that they were going to consolidate their banking operations into WB’s. Get the facts straight knucklehead.
Just shows there is no end to most people’s greed! I love that one CEO got punched, should have used a ball bat though he could have hurt his hand!
Citi should walk away; Wells should “give ‘em a buck” for their effort.
If they litigate this it will cost billions in lawyers’ fees and take years, and Wachovia will be worthless long before the trial is over, as the depositors will have fled. Then, there will be appeals …
Wells should take over Wachovia, get it done, and keep the taxpayers’ dollars out of the picture.
Citi will certainly find more, cheaper banks to buy if they just take a ride over to the FDIC’s junkyard daily or weekly and look. It’s true that most of it will be investment banks (rather than commercial banks), but you just bid lower for rustier assets.
We’re a long way from done, but the game is now moving to the finish.
This is not even NEWS. If you Mr Author like to give your own comment and ideas, put it in your own blog and not under the news section of the CNNMoney homepage. We don’t have to listen to your own feedback.
Paul,
You are stupid. Each deal would cost the government about 21 Billion – either in tax breaks for Wells or coverage over 42 billion for C. Furthermore, if the government does not back C in this deal and says that section 126(c) absolves WB from the deal that it signed, who in their right mind will step up to help out (C did keep WB from being insolvent) the next time a bank goes under? Answer – no one. The FDIC would then guarentee itself that it would be stuck with any additional banks that go under.
Walk Away? Does a signed agreement mean nothing? Where was Wells Fargo with their offer when Wachovia was about to be put into receivership.
What should happen is the FDIC Chairman should be fired or resign for meddling in a done deal.
If I sell my house for $300,000 and sign an agreement to do so, but John Doe comes and offers $350,000 should I just ignore the first offer and take the new, higher offer? I could. But I bet I will get sued if I do it.
How good would it be for anybody if contracts became meaningless because there will always be someone that the new deal is better for. Perhaps WFC should buy the bank from Citigroup if they want it so bad
Citi and Wells Fargo now want out as they realize just how bad Wachovia is. This is funny Wall Street bankers trying to rip off other Wall Street bankers. HA HA everybody get your money out of their banks and the stock market before they steal it all.
After all they have stolen 1/3 to half of your money already and 700 billion dollars in your tax money as they are lining their pockets with the bail out money.
WOW Wall Street bankers are now evicting innocent renters as they foreclose on dead beat investors.
So these are the people you want to trust your money with after they have stolen about 1/3 to half of it?
Please do not give your money to these crooks. It’s bad enough they stole your money now they are stealing your tax dollars also. Paulson is one of them and I saw him and Bush laughing the other day after the bail out was announced.
Gee people do not listen to these crooks. GET YOUR MONEY OUT NOW!!!!!!!!
Ummm – DUH! – Look for another bank. Hasn’t Citi caused enough strain with this already uncertain market just to keep us all in the dark. Yes, Citi is not all to blame. The FDIC should learn to keep there fingers out of a situation. Wachovia would have certainly had a fair deal in the first place. Citi should either Pony up and offer more or shut the heck up and look for another bank. Learn from this mistake Citi and move along please.
While CNN and others have painted Citi as the culprit…let’s not forget some key points. Wachovia…along with the FDIC, approached Citi for help. Loaded with $130B of toxic mortgages from the Golden West acquisition and on the very brink of failure, Wells elected to not walk…but run away from Wachovia as a potential acquisition. They wanted nothing to do with helping them out.
Citi stepped in literally moments before Wachovia collapsed, and agreed to a deal…absorbing up to $42B in bad debt write down before the Feds would have to step in. Citi immediately began funding Wachovia to keep them solvent and began working the details of the deal. Citi committed to Wachovia and the Charlotte, that they would merge retail banking operations into Wachovia…keeping them “at home” in Charlotte.
48 hours later, legislation was passed making it more favorable for one bank to merge with another and take large tax deductions related to write downs of the acquired banks balance sheet. This is when Wells decided they wanted to play ball again. Literally in the wee hours of the morning, Wells was sneaking into Wachovia headquarters after Citi personnel had left…to scour the books and drum up a deal behind the backs of the FDIC and Citi.
When Wachovia Senior management was faced with the prospect of reaping multi-million dollar golden parachute packages…they jumped on Wells offer and took a “talk to our lawyers” attitude with Citi.
Everyone called Citi “the Heavy” in trying to sustain a deal they entered into in good faith…at the urgent request of Wachovia and the Feds. Because Citi’s deal was entered into prior to the tax law change…the Wells Deal was actually going to cost the tax payer more. Plus…with the passage of the $700 “Rescue” plan…Wells assumption of bad debt from Wachovia is more of a tax payer liability than when Citi agreed to incur the first $42B of losses.
Make no mistake…Wells is no hero in this deal. Citi will likely prevail in the lawsuit…costing the Wachovia shareholders plenty.