Quote:
Originally Posted by MikeWaters
FDIC steps in with Wachovia. Arranges for "purchase" by Citi on excellent terms, with FDIC as a backstop.
Then Wells Fargo comes through with an offer an order of magnitude better for Wachovia stock holders, Wachovia accepts.
Now Citi objects and says the Wells Fargo deal is a breach of contract.
AND WE ARE TO BELIEVE THAT THIS FIRE SALE BY THE GOVT. WAS NECESSARY, AS THERE WAS NO PRIVATE ENTITY WILLING TO STEP IN?
It's interesting how in two weeks, capitalism has been abandoned.
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Wells Fargo was at the negotiating table and walked away because of fear over mounting losses in loan portfolio. A law change came about at the time that would allow banks to write-off losses from acquired portfolios that changed the entire dynamic and lead to Wells Fargo swooping back in to make the deal at the last minute. This specific tax code change meant billions to the bank since the anticipated lifetime losses from Wachovia's portfolio is estimated at $74B. The tax benefit will more than likely cover the entire $15B cost of the transaction.