Citi: Wells Fargo blocked from buying Wachovia

Citi: Wells Fargo blocked from buying Wachovia

biz.yahoo.com

The fight over control of Wachovia intensified Saturday, as a judge temporarily agreed to block the sale of the bank by Wells Fargo, Citigroup announced in a news release.

State Supreme Court Justice Charles Ramos issued the order blocking the sale of Wachovia Corp., which Wells Fargo & Co. had agreed to purchase in a $14.8 billion deal.

Citigroup Inc. accused Wells Fargo of trying to cut off its earlier takeover offer of Wachovia's banking operations for $2.1 billion in a deal struck with the assistance of the Federal Deposit Insurance Corp.

(visit the link for the full news article)



Related AboveTopSecret.com Discussion Threads:
Citi vs Wells Fargo---Pig Fight!!!

This injunction lasts until Friday, Oct 10th when the case will be heard by Judge Ramos. Until that time, the ultimate fate of Wachovia remains up in the air; any significant loss of liquidity by Wachovia could result in the bank's insolvency.

We could potentially be looking at a similar situation as the Washington Mutual insolvency and subsequent seizure and bankruptcy filing if Wachovia is subjected to a "bank run" by its customers next week.

biz.yahoo.com
(visit the link for the full news article)

Some updates from today on what's turning into one heck of a court battle.

Yahoo

The battle for control of troubled bank Wachovia tilted toward Wells Fargo Sunday as a state appeals court blocked a lower court ruling that had favored rival bidder Citigroup.

In the Sunday night ruling, the Appellate Division of State Supreme Court threw out an order by Justice Charles Ramos issued late Saturday at the request of Citigroup; the order would have extended the time under which Wachovia and Citigroup had to complete their deal.

It was clear from documents filed in federal court Sunday that Wachovia was in considerable trouble when it agreed to the deal. Wachovia disclosed that it agreed to the deal "with the understanding that a seizure of its banking assets later that day by the Federal Deposit Insurance Corp. would occur" unless it accepted Citigroup's proposal.

The bolded sentence is most interesting. Did the Fed strong-arm Wachovia here? If they were truly insolvent (I suspect they were at least damn close to it), the seizure would have happened.

Um okay we bank at Wachovia, can you layman this article?
So far we have been told business as usual folks...

Originally posted by SEEWHATUDO
Um okay we bank at Wachovia, can you layman this article?
So far we have been told business as usual folks...

Layman's terms: Either Citigroup or Wells Fargo will buy Wachovia. They're currently fighting over who gets to do so in court.
Assuming SOME deal is not closed and legally so with either of those banks on Monday or Tuesday, though, I personally believe that Wachovia will "run out of money" and become insolvent. This means the FDIC would take over the bank like they did with Indymac and WaMu.

If the FDIC seizes Wachovia, it will be sold off...most likely to Citi or WF.

What you should do: your deposits are SAFE and you will not lose them (up to $250k per the new rules). IF Wachovia is seized, there remains an outside chance that red tape MAY tie things up for a day or two, so it's not a bad idea to have enough cash on hand to get you by for a short while. There is no need to rush to your local branch tomorrow and clean out your account.
Whoever winds up buying Wachovia will maintain the bank's standard checking/savings accounts. If that's all you've got there, then you're okay for now. You may see the name of your bank change down the line.

Why I believe Citi and WF are fighting over Wachovia: both are trying to become "too big to fail." IMO, Citi is in more trouble than most people realize; if they can score Wachovia, then they'd be high on the bailout list if/when they reach failure status. WF wants to leverage itself in the banking market.

Edit because I no spel gud.

[edit on 10/5/2008 by anachryon]

reply to post by anachryon


Okay Thank you!
Heres the thing, I believe Citi is on the cusp but I cannot see how Wells is not on the cusp.
Wells has to be a very huge mortgage holder (they are ours) I have really only known them as mortgage until a couple of years ago when they decided to branch out. How is Wells holding ground here when so many others are failing? I know for a fact that they dabbled with some sketchy mortgages and I believe they had a pretty big hand in this fiasco.

reply to post by SEEWHATUDO


I think WF is in bad shape too, but not in as bad shape as Citi. WF was able to make a MUCH better offer for Wachovia, after all. Whichever bank buys Wachovia, not only will it inch up in the "too big to fail" list, but it will also be able to take on Wachovia's assets (such as customer deposits). This will prop up the lucky bidder for the time being, maybe hold off a failure completely.

I'm not ready quite yet to think we've reached the point of no return, so I'm going to continue to work under the assumption that SOME banks will survive this.

Bloomberg

Citigroup Inc. walked away from its attempted purchase of Wachovia Corp., handing victory to Wells Fargo & Co. in a struggle for the nation's sixth-biggest bank.

Citigroup had offered two weeks ago to buy the Charlotte, North Carolina-based lender's banking operations for $2.2 billion in a government-assisted transaction. That bid was trumped last week by San Francisco-based Wells Fargo's $15 billion offer for the entire company. The two spent this week negotiating a possible split of the assets.

Looks like Wells Fargo will take Wachovia - the good and the bad.

Reuters

The Federal Reserve said on Sunday it approved the takeover of Wachovia Corp and its banking subsidiaries by Wells Fargo & Co of San Francisco.

The Fed's decision formally made Wells Fargo the victor in a battle between it and Citigroup, which also had sought to acquire the Charlotte, North Carolina-based bank. Citigroup dropped out of the chase last Thursday.

Looks like it's official now - Wells Fargo is "too big to fail" with this takover.