Wall Street Folly

• Lehman Sues Barclays Capital
• America’s Newest Land Baron: FDIC
• Geithner under fire over AIG payments
• Audit Is Critical of N.Y. Fed in AIG Bailout
• New York Fed under fire over crisis bank payments
• TARP Can’t Save Some Banks
• Millions may have to repay part of stimulus tax credit
• Buffett’s Berkshire Discloses Exxon, Nestle Stakes
• Microsoft Co-Founder Treated for Lymphoma Read the rest of this entry »

Tags: AIG, Barclays, Bernie Madoff, Bill Ackman, GMAC, Goldman Sachs, Hedge funds, Lehman Brothers, Paul Allen, TARP, Tim Geithner, Wachova, Warren Buffett

Embarrassingly spurned by Wachovia, who ultimately found a better capitalized groom in Wells Fargo, Citigroup is reportedly in talks to buy an undisclosed regional bank, according to the Wall Street Journal.

Citigroup in Talks to Buy a Bank – WSJ

Tags: Citigroup, Credit Crunch

Citigroup abandoned its effort to enforce the deal that it thought it had to buy some of the assets of Wachovia, although with what it believes are `strong
legal claims against Wachovia, Wells Fargo and their officers, directors,
advisers and others” it sounds like it’s still pursuing legal action for breach of contract ant tortious interference. But now Wachovia can walk down the aisle with Wells Fargo in their own far superior deal that’s better for pretty much everyone involved except Citi.  According to Bloomberg:

Citigroup said in a statement that it
couldn’t reach an agreement this week on Wachovia because of “the dramatic
differences in the parties’ transaction structures and their views of the risks
involved.”

“We’re pleased Citigroup has abandoned its efforts to interfere with Wachovia’s
planned merger with Wells Fargo,” Wachovia spokeswoman Christy Phillips Brown
said. “We look forward to completing our merger with Wells Fargo, which we have
always believed is in the best interest of shareholders, employees, creditors
and retirees as well as the American taxpayers.”

Citigroup Hands Victory to Wells Fargo on Wachovia – Bloomberg

See press releases below:

Read the rest of this entry »

Tags: Citigroup

While the legal wrangling has been put on hold for another two days, the negotiationg between Wells Fargo and Citigroup over divvying up Wachovia’s assets goes on.  However, according to the WSJ there may be snags:

Read the rest of this entry »

Tags: Citigroup

Citigroup, in need of financing to buy the coveted Wachovia if it wants to remain in the game, is seeking deeper pockets since it clearly can’t compete with Wells Fargo’s bid, and can’t possibly go it alone. Our money’s still on Wells Fargo.  According to the WSJ:

Looking for added leverage in the
talks, Citigroup on Tuesday was trying to line up other companies, including
non-banks, to join its bid for Wachovia’s branch network. Citigroup’s goal is to
win a bigger share of Wachovia’s deposits, but not to take over the entire
company, one person said.

Citigroup Is Seeking Allies In Fight to Secure Wachovia – WSJ

Tags: Citigroup

International Risk Analytics’ Chris Whalen was being interviewed by Fox Business over Wells Fargo trumping Citigroup’s deal to buy the banking operations of Wachovia, and Citi’s response.  They were in a heated discussion, with Alexis Glick arguing that Citigroup claims it had an exclusive contract to buy Wachovia’s banking operations and that Citi was already providing Wachovia with liquidity.  Whalen argued that basically the FDIC can do whatever they want – that if a Wells Fargo deal is in the best interests of the FDIC, that any exclusivity contract essentially doesn’t matter if the FDIC doesn’t want to play ball — that the they can intervene and put the Wachovia subsidiaries into receivership.  He argued that by law the FDIC’s authority is absolute and that there is no appeal.  Any lawsuit would be against the Wachovia parent, which essentially wouldn’t have any assets.  Ms. Glick kept arguing and interrupting.  Then *CLICK*  and Whalen was gone.

Tags: Citigroup, Lawsuit

Citi Statement on Wachovia’s Breach of Exclusivity Agreement
New York – Citi today issued the following statement:

Wachovia’s agreement to a transaction with Wells Fargo is in clear breach of an Exclusivity Agreement between Citi and Wachovia. In addition, Wells Fargo’s conduct constitutes tortious interference with the Exclusivity Agreement.

The Exclusivity Agreement provides, among other things, that Wachovia will not enter into any transaction with any party other than Citi, and will not participate in any discussions or negotiations with any third party. The Exclusivity Agreement also provides that the parties would be irreparably harmed by any breach of the agreement and that the remedy of specific performance of the agreement is appropriate.

Citi was negotiating in good faith and nearly completed the definitive agreements required to consummate the Citi/Wachovia transaction that was announced on Monday. The value of the Citi agreement to Wachovia shareholders was substantially in excess of Wachovia’s closing price on Thursday, October 2nd. Citi has also been providing liquidity support to Wachovia Bank since Monday’s announcement.

Citi has demanded that Wachovia and Wells Fargo terminate and not proceed with any proposed transaction, any conduct in furtherance thereof, or any other act in violation of the Exclusivity Agreement. Citi has substantial legal rights regarding Wachovia and this transaction.

With or without this transaction, Citi maintains an unmatched, globally dominant franchise with strong liquidity, total deposits exceeding $800 billion and a Tier 1 capital ratio of 8.7% as of the second quarter.

Tags: Citigroup

Sounds like a huge fight is brewing: Fox Business News is reporting that Citigroup believes it has exclusive rights to the banking operations at Wachovia.  If we were a Wachovia shareholder, we’d fight for the Wells Fargo deal. The Citi deal sucked for Wachovia holders. 

Also, per Briefing.com:

10:12      WB Wachovia: Statement by the Board of Governors of the Federal Reserve and the Office of the Comptroller of the Currency  (6.88 +2.97)  -Update-
    A new proposal to acquire Wachovia has emerged from Wells Fargo (WFC). The Citigroup (C) proposal has undergone extensive review by the Federal Reserve and the Office of the Comptroller of the Currency. We have not yet reviewed the new Wells Fargo proposal and the issues that it raises. The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability.

10:09      WB Wachovia: FDIC Chairman Sheila Bair Comments on Agreement to Merge by Wells Fargo and Wachovia (6.90 +3.00) -Update-
    "Since the close of our bidding process, Wells has apparently re-assessed its position and come forth with this new offer that does not require FDIC assistance. It should be emphasized that both the Citigroup proposal as well as the new Wells proposal would stand behind all creditors including depositors, insured and uninsured. Under either proposal, all banking customers of the merged institutions would be fully covered with no disruptions in service. "The FDIC stands behind its previously announced agreement with Citigroup. The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest." (WFC, C)

Tags: Citigroup, FDIC, Fed

It’s a stock for stock deal where Wachovia shareholders will get .1991 shares of Wells Fargo.  The deal was valued at $7 a share. No FDIC intervention was required.  Wachovia is trading in the mid 6’s in the pre-market, up from the $3.90 close.  Wells Fargo is also higher, trading at around $35.50, up from yesterday’s 35.16 close.  Citigroup is taking a hit, trading below $20, down from a $22.50 close.

"We at Wachovia have great
admiration and respect for the people andbusinesses at Wells Fargo and we are
extremely pleased to join forces with this outstanding company," said
Robert K. Steel, President and CEO of Wachovia Corp. "Today’s announcement
creates one of the strongest financial firms in the world and is great for all
Wachovia  constituencies: our shareholders, customers, colleagues and
communities. This deal enables us to keep Wachovia intact and preserve the value
of an integrated company, without government support. The market presence and
composition of our businesses, along with our service-oriented cultures, are
extraordinarily complementary and this combination creates great potential for
sustained stability and growth."

The full press release is below:

Read the rest of this entry »

Tags: Citigroup, Credit Crunch

Tags: Credit Crunch, Jim Cramer

GuestOfAGuest shows us that investing in $1000 worth of beer would have
been a way better investment than blowing the same amount in either (or all three) of AIG,
Wachovia or Lehman Brothers shares.  (We note that hey seem to have left off common stock dividends in their calculations, but even when those are factored in, the beer drinkers still would have won.)

Tags: AIG, Lehman Brothers

Shades of WaMu, although in Wachovia’s case, Citigroup is assuming the senior and subordinated debt.

Citigroup Inc. will acquire the bulk
of Wachovia’s assets and liabilities, including five depository institutions and
assume senior and subordinated debt of Wachovia Corp. Wachovia Corporation will
continue to own AG Edwards and Evergreen. The FDIC has entered into a loss
sharing arrangement on a pre-identified pool of loans. Under the agreement,
Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of
loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC
$12 billion in preferred stock and warrants to compensate the FDIC for bearing
this risk.

Here’s the press release from the FDIC

Read the rest of this entry »

Tags: Citigroup, Credit Crunch

Wachovia says they don’t have "liquidity issues" (at least as of today) but they’re nonetheless reportedly testing the merger waters. The toxic debt laden bank is reportedly in preliminary merger discussions with Banco Santander, Wells Fargo and Citigroup.   The stock got nailed today, closing at $10, down  $3.70.
achovia reportedly in talks with three suitors – MarketWatch

Tags: Banks, Citigroup, Credit Crunch, M&A

Those Morgan Stanley talks with Wachovia?  They’re on "indefinite hold" — and more likely, permanent hold:  Mitsubishi UFJ Financial now plans to buy a 10-20% stake in MS.

MUFG says to buy 10-20 pct stake in Morgan Stanley – Reuters

Wachovia merger talks on hold – Financial Times

Tags: Morgan Stanley

CNBC’s Charlie Gasparino is reporting that the Morgan Stanley / Wachovia talks are no longer preliminary — they’re official and advanced

Tags: CNBC, M&A, Morgan Stanley

Per Briefing.com:

16:35      MS Morgan Stanley considers merger with Wachovia – NY Times  (21.75 -6.95)

NY Times reports Morgan Stanley, one of the two last major American investment banks, is considering a merger with the Wachovia (WB) or another bank, according to people briefed on the discussions. Morgan Stanley’s chief executive, John J. Mack, received a telephone call on Wednesday from Wachovia expressing interest in the Wall Street bank. Morgan Stanley is considering other options as well. Other banks have also expressed interest in Morgan Stanley. The talks are preliminary and no deal may emerge.

Tags: M&A, Morgan Stanley

Screw the spin, just tell it like it is: Wachovia’s CEO Ken Thompson was given the boot, shown the door, axed, terminated, pink slipped, ousted, fired.  But this is how the company’s press release reads:

Wachovia announced today that its current
Chairman, Lanty Smith, has been appointed interim  Chief Executive Officer,
succeeding Ken Thompson, who is retiring at the request of the Board.
Ben Jenkins, currently Vice Chairman and President of the General Bank, will
serve as interim Chief Operating Officer

"who is retiring at the request of the board.  Hilarious.

Tags: Credit Crunch, Revolving Door

Turns out that a $315 million write down announced by Wachovia was thanks to the meltdown of one of Citigroup’s funds.  Fifth Third’s loss was disclosed in a April lawsuit.  And a third, yet unnamed bank is also apparently a big loser….

Read the rest of this entry »

Tags: Citigroup, Credit Crunch, Hedge funds