7:20 pm ET
Oct 9, 2008

With the Citi/Wachovia Talks Done, Where Does the Fight Go From Here?

    • If the provision was tucked in after the original Citi-Wachovia deal was made, how could that be used in the court? Wasn't WFC being opportunistic waiting to find out if the bailout would pass or almost passed before making a bid while Citi was providing life support to Wachovia? When a deal brokered by the Fed goes bust, how would any more backstops initiated by FDIC and the Fed be taken seriously by any other bank? Can Citi sue the Fed too having compromised Citi's financial position and credibility?

    • One thing to notice. The week prior to Citi's offering, Wachovia's stock dove to $2/share. Even then, Wells didn't make a firm offer. On the Monday of Citi's & Wachovia announcement both stock soared. (Citi from 19 to 23) then, on Thursday when Wells stepped in, Citi's stock dropped like a rock (while WB still climbed). So, you be the judge, was Citi harmed from the deal-breaking? $4/share flux times outstanding shares + market harm = $60B.. (who can argue with banking math? ; )
      In the event a settlement award is given to Citi, just how do they intend to distribute it to the shareholders that they noted in the above article?.. More useless stock?.. : )

    • in our present economic crisis why would citibank spend money suing? seems like exactly what's wrong with this country - law suits - law suits !! what a postive way to spend money!

    • i totally believe vikram pandit proved he will be a ceo to be remembered.both wfc and wb just lined citi's pockets with a deferred cash windfall.he knows that in less than five years the lawsuit cash infusion will be far superior than wb net profit.hmmm .who out smarted who???

    • In his affidavit, Steel said FDIC contacted him about WFC bid. It seemed FDIC lobbied to have the provision put in.

    • Thank God!

    • I agree with SS but the WF bid came after the bill was passed... Also if you believe the Steel affadavit the way it must've worked was WF talking to FDIC and asking for the deal-jumper provision. The FDIC talking to Steel. The bill passing. And only then WF approaching WB... So unless Citi plan to sue the FDIC they've not got a hope. On the otherhand WF may pay out to give the FDIC a fig leaf... If this is correct then the settlement will come suprisingly quickly.

    • Citi did the right thing. The law suits facing all three of them from investors, WBs recently discovered load of bad assets, etc., they're better off backing off and taking the $60B, and let WFC take on the enormous risk. Serves them right for sitting on the pot, and serves WB right (when it all goes down) for using Citi then stabbing them in the back.

    • Sideline Spectator, actually WB traded between 8 and 12 Friday proceeding the merger news over the weekend. Next Monday when the C deal was announced, WB traded as low as 70 cents in the pre-market.

      C closed at 17.75 the day its "exclusivity agreement" wtih WB was announced. C closed at 18.35 the day WFC announced its merger contract, higher than the day C announced its agreement. C did rally in between those dates, but it goes to show C needed the WB deal.

      I think FDIC messed up.

    • Good luck with all that. I suspect that when C's stock falls to $11/share or less, WFC will buy them instead of paying the $60B. At that point it will be the less expensive option. Should take until this time next week for the stock to fall that far.

    • It's called assumption of the risk. Section 126 was in the original bailout bill before WB's liquidity crisis and its betrothal by the FDIC to Citi. It's also called pointing a gun at WB's general counsel and saying "Sign this or else." Was there an opportunity to negotiate in good faith and insert a fiduciary duty proviso as they do in consensual M&A? Or was this a shotgun wedding? It's very interesting that the very first deal done pursuant to the FDIC's new powers was exactly the scenario envisioned by the drafters of Section 126. If someone can reduce the burden on taxpayers by jumping the deal, then that's the risk of making a bid. Would Citi have declined to make its bid if its lawyers were aware that Section 126 allowed Wells to jump its deal? I doubt it. Wachovia was too much of a prize. Did WB go out and shop the deal? No. Was Wells aware of the exclusivity? No. Did WB fulfill its fiduciary duty to its shareholders? Yes. Everybody involved had clean hands. But Citi doesn't like the rules of FDIC assisted bank M&A, so it's suing its peers on the premise that it can make up its own. The federal courts will have the final say on that.

    • carole is right. going to the lawyers is what NY based banks do best. It's over. The NY legal market is going to take a big hit.


    • People are paying too much attention to the putting together of the deal. WFC could actually be getting in over its head. More bad assets in California, with its own home equity loans and auto loans about to sour, as prime loans there are verging on sub-prime as the CA economy craters. The WB loans are crap. Wachovia has an investment bank, which in a downturn is going to bleed. WFC has likely not planned for funding that as it's a retail bank. Citi needs the deposits, but they'll be other banks that will need to be acquired, but it will be piecemeal and better prices. WB was only a good deal with the FDIC structure. WFC is paying a lot and just like BAC it's stock will fall after, if not before.

    • WB is a dog with fleas and WFC is not any better. C took the high road on every occasion. Why do you think C bid what they did and WFC bid more? Because WFC didn't know how crappy WB's assets are. C structured the deal that way because of expecting poor quality assets. Now WFC is going to pay top dollar for a load of bad debt, even admitting today they were surprised to see how poor the quality of those loans are. Incredibly, C still would do the deal despite being stabbed in the back by WB...WB said today there were pleased with C's decision to drop it. I have an account with WB and I am going to close it tomorrow, as I will not do business with a company that begs for life, commits to a deal, accepts cash from buyer to stay alive, and then backstabs them at first chance. Unbelievable. We will see who has the last laugh...

    • The deal was signed before the bill became law.Does Section 126 have a retroactive provishion to past deals or all deals from the date the bill becomes law? how can Wells hide behind a law that was not in efect. Maybe they should have waited until Friday night to do the deal! Regardless this will be settled per the Govt. request within a week.

    • Gunslinger, I agreed with your assessment. However, from what I read, some speculated that WFC and WB were aware of the provision. Perhaps FDIC informed WFC. Perhaps WFC just has better lawyers than C, lol. FDIC is clearly behind the deal as in Steel's affidavit he stated he got a call from Bair informing him WFC was to make an offer and suggested he give it a serious consideration. This lets FDIC off the hook for the loss it had to cover (if incurred) for the C deal.

    • That's right, Section 126 has language that says it applies to any "existing or future" deal. It was pending legislation when Citi's exclusivity was signed. Citi had an opportunity to send in its lobbyists to defeat that section. Unlikely, though, since it was the brainchild of the FDIC. Even were it successful, there was nothing preventing Wells from putting up a rival bid to WB's shareholders. They had the final say. $7 bucks trumps $1.

    • C needed WB deposits to pad Tier-1 capital. C will be the largest bank to receive government investment. Shareholders, look out!

    • Well now, it's been four hours since Citi announced they would not seek injunctive relief. Still no announcement about a definitive merger agreement. What's the story, those Wells Fargo San Francisco lawyers been asleep all this time? Or maybe, just maybe, Kovacevich is changing the terms yet again? There is no "K" in integrity.

    • That's why Section 126 is there--to get the FDIC off the hook as much as possible. To get the taxpayer off the hook as much as possible. Okay, I'll admit we are still on the hook through the $7B bailout, but at least Wells is taking a much bigger slice off our hands than Citi was willing to. Oh, and the "suprise concentration of bad assets" rumor today? Even Citi released a statement saying it didn't know where that came from. Both Wells and Citi knew what they were buying when WB opened its books. Wells just wanted more time.

    • Wells and WB signed a definitive merger agreement last Friday.

    • Is it not possible now, that since Citi is claiming that they would still be willing to honor the original deal, that Wells made decide to back out of the deal as well?

      This fiasco has left all three firms with dismal share trading prices. Wachovia having faced a silient run on the bank, and its customer were on the fence during this debacle;moving out substantial deposits or closing accounts completely out of fear. The reported Wachovia deposit portfolio seems to change depending on which article.

      There may not be enough deposits currently on hand at Wachovia to keep Wells interested. Wells may think that Citi is the will winner of the mess and feel jilted again, thereby walking away from the deal. Unless there is a provision stating that Wells cannot walk away. I am not an expert, just my observation.

    • Citi better run than Wells Fargo? You must, and I mean, must be smoking something. Citigroup is a debacle of M&A activity without any legit integration by Weill or Prince.

      I put even money on Wells looking reasonably well in 5 years...and Citigroup less so. FDIC does not look "top shelf" amid all this nonsense.

    • Wells wanted more time, but Bair said it had to be signed that Sunday or she would seize WB. C saw an opportunity to steal WB's deposits and bank branches for $1 with the FDIC backing. WFC had originally offered $10/sh and asked for gov backstopping some losses (from what I read), but FDIC said no. After WFC left, FDIC was on the hook to give in since C couldn't afford to buy WB whole. Then FDIC had 2nd thought after agreeing to backstop any losses above $42B. It is also interesting the IRS revision came out on Tuesday last week which helped WFC make its final decision. I wonder if FDIC was also in on this.

    • I am just amazed about how much non-sense there is in these blogs. Please if you don't have a clue of what you are talking about, just take a pass and go to bed....
      (e.g. does George Patton knows what tier-1 capital is?)

    • I hope Citi customers remove their money from the bank in protest to Citi's behavior. They only offered Wachovia 2.1 billion. So where do they get 60 billion in damages? Pure greed!!!
      I suppose if Wachovia and Wells Fargo loose in court, are forced to pay the damages, and go under because of it then the tax payers will have to pay for this too?

    • What is the potential tort claim against Wachovia to which Prof. Nowicki alludes? I can understand a breach of contract claim, but where's the tort?

    • I'm no lawyer, but I think Nowicki is focusing on the small stuff.

      Citi should not simply ask for lawyers' fees and expenses. They should not demand the money they provided to keep Wachovia alive. They should not demand a breakup fee.

      Citi should instead demand a substantial portion of the total value created by their willingness to step in and prevent Wachovia's bankruptcy. And that value is the total value of Wachovia under the new tax rules and TARP program.

      This is why, to me, a demand well in excess of $10B seems reasonable.

    • I think this boils down to one single question: Did the FDIC broker the WFC-WB deal? If no, then C will collect several billions and will make it the costliest acq in the industry. If yes, then C suit will be dismissed although at a higher cost to taxpayers as the FDIC will get largely discredited

    • Pandit is a technical guy and not a gun slinger (no reference to WFC intended). He knows a good deal when he sees one (WB's deposits and junk assets with a backstop) and knows when to walk away from a bad one (with maybe a few bucks of settlement in his shareholder's pocket).

      I just hope WFC did not bite off more than they could chew. It won't be good for anyone if they did.

    • Okay, enough is enough! Now Citi had officially withdrawn, walked away, ceased fire on the merger talk. Let's focus on the economy again. Nonetheless, I still support Citi to go after punitive damage claims against WFC & WB. After all, an agreement is an agreement, whoever does not respect a singed agreement deserves to be punished and pay!

    • agree with EH 100%.

    • Citi tried to STEAL Wachaovia...wrong move that got caught. Now wants to be rewarded for their piracy!!!

    • Citi is so easy to give up hope on WB merger? I doubt so. Believe Citi does know somethings more that WFC didn't. Guess the dog(WB) didn't have an infection but cancer afterall. Cure is possible, but takes a long, looong time. As for the possible 60B for Citi, imagine its potential in 5 yrs time. Cheers for Citi.

    • If Citi's cash infusion (basically a loan) was just an interbank loan and not tied to any promise of a merger/acquisition, and they try to use that as a reason for tort, then any bank which lends to any other bank would have a right to buy the recipient bank on the cheap even if they don't want to be bought.

      I think it's important to remember that banks step in and work together to be good citizens by lending to each other, but those transactions are different than saying "I have a right to own you now."

      Citi could have used this overnight lending to build good will with Wachovia, but offering shareholders pennies on the dollar is not good will.

      If the infusion WAS contractually tied to the merger (and Wachovia took it) then this is a different story. Wachovia could have borrowed from anybody (including the Fed) and kept its shirt if this were the proposition made by Citi, so this highly unlikely.

    • Something tells me all of these people are going to meet again at the bottom of the vortex.

    • I am enjoying all of these humoristic capitalistic skits to no ends. Please continue my friends.


    • Let C sue WFC. When C stock tanks WFC can just buy them up. It would be WAY less than 60B. If C even lasts that long.

    • WF was the favored bidder for WB the night before the Citi deal was announced because it was willing to make a better offer than Citi. WF wanted more time for due diligence, and Wachovia wasn't stupid - so even though it had to accomplish something to to show the FDIC they're doing something, they knew that if they bought time with Citi, WF might finish its due diligence and make a better offer. This is probably why the window was "open."

      Citi, on the other hand, is a cuckold not because of Wachovia or WF, but because it was stupid in agreeing to such a worthless document. Wachovia was smarter than Citi, and knew there was another suitor. Citi managed this transaction very poorly, and I were a Citi stockholder, I'd consider that it is the same people who are supposedly going to turn around and "fix" the operational mess.

      Unless you think an Obama lives within Citi who can magically introduce 'change' (for the better) - this case really begs for management with a successful track record in operations management (not just saying "yeah, we'll lend you money").

    • Wrong move that got caught? Lets remember who came to initiate everything! Steel! WFC passed. C saved WB from going under. WFC offered a better deal after WB was saved!

      There is no denying that. If it werent for C, WB would not exist. 2.2b is better than nothing and... 15b does not compare with 2.b BECAUSE they passed at the right time.

      Simple example for you cause it seems you don't understand:

      You bid on ebay and win an item at $220. (this item will complete your collection)

      Then ebay (Bair, FDIC) tells the seller, even though the listing closed (agreement w/ C) you will get a higher bid from another person (WFC)

      A few days go by and the seller tells you... "Sorry, I don't want your $220. Someone else is offering $1500.

      Do you find this fair?????

    • An agreement is an agreement? Some agreements are unenforceable. That's what section 126 says about exclusivity agreements like the one Citi made WB sign--it's unenforceable and against the public policy of the United States of America and us taxpayers. It says there is no liability for breaching it. So it protects us taxpayers and banks that help protect us taxpayers like Wells. We got a capital markets assisted deal out of a run on a bank, not a taxpayer assisted deal where the gov't guaranteed losses in excess of what Citi wanted to take on. The statute did what it was supposed to do.

    • To Vladimir Putin, I salute to you comrade...

    • To Vladimir Putin, I salute to you, comrade....

    • The case is thrown out based on Sheila Bair (FDIC) and Treasury.

      High bid and no taxpayer cost; inclusive of case law supporting fiduciary mandate protecting shareholders. Texaco is old news and is trumped by current law.

      New York yields to the U.S. Court which has already indicated the advantage goes to WFC and WB.

    • It seems that Citi was trying to steal something and a bigger better thief came and took it out of thier slimy hands. WB has a profitable structure that if not for all these assumptions would have done very well. Trust me Citi needed WB more than WB needs them. Citi would have created a huge exodus of employees. They have messed up too many M&A's and should concentrate on getting those businesses operating property and profiatbly.

    • Wells Fargo will get apx. 23 billion in tax benefit. They are now paying apx. 11 billion for Wachovia($27.25 * .1991= $5.42 a share) If Wells goes to $20, they would then be paying only $3.98 a share or apx. 8 billion. Even at todays price, they are pocketing 12 billion over cost just to do the deal at the governments expense.They are essentially getting paid 12 billion to do the deal. Wells or Wachovia will probably end up paying apx. 22 billion to settle Citi's lawsuit for actual measurable damages that occured the day of the Wells announcement. Citigroup was down that amount. In early 1984, Pennzoil and Getty Oil agreed to a merger. But before any formal documents could be signed, Texaco offered Getty a substantially better price and Getty reneged on the Pennzoil deal and sold to Texaco. Pennzoil sued and won a 11.1 billion dollar judgement. This Wells/Wachovia agreement occurred the day before any law change and section 126 signed into law. The Wells/Wachovia deal occurred when it was 100% illegal. It's funny how everything worked out for the Goldman Sachs connection. Goldmans biggest owner also owns 9% of Wells Fargo. Treasury secretary Paulson was the former chairman of Goldman.The chairman of Wachovia was a Goldman Sachs former chairman. Paulsons pick to distribute 700 billion is a former Goldman Sachs employee.

    • Yes, that's true Section 126c says any agreements that restrict anyone from buying all or part of a bank are unenforceable. The provision says it applies to any transaction in which the Federal Deposit Insurance Corp. exercises authority.

      But remember that the provision doesn't apply to the Wachovia-Wells deal since it doesn't involve FDIC assistance.

    • I don't see the problem with Goldman and their employees. They hire and develope some of the best bankers on the street. SO what?
      Bob steel is a former Goldman and a former Undersecretary on the treasury

    • Yes is true. That Section 126c says any agreements that restrict anyone from buying all or part of a bank are unenforceable.
      HOWEVER, the provision says it applies to any transaction in which the Federal Deposit Insurance Corp. exercises authority.

      The Wachovia-Wells deal doesn't involve FDIC assistance therefore it does not apply.

      WB and WFC need to P.A.Y.

    • Bob steel in a goldman and a former undersecretry of the treasury with paulson.
      and is pretty good too.

    • Bob Steel is a scumbag.

    • Moneyman DO you own any WB stock? If you got $1 for it and than $7 I doubt youd call him a scum bag

    • You can't compare that 1 with 7. You miss the point Gorbachev. I am pissed that C is getting the shaft when they should not. I sold my positions with a looong time ago. I did not have to wait this long to see the stock almost fail. I loaded on C and now I am down 4 bucks because the SCUMBAG does not go with the agreed deal.

    • Gorba,

      DO YOU own C???

    • Section 126 of the Emergency Economic Stabilization Act of 2008

      (c) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—Section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)) is amended by adding at the end the following new paragraph:

      "(11) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—No provision contained in any existing or future standstill, confidentiality, or other agreement [e.g., the Citi exclusivity agreement] that, directly or indirectly—
      (A) affects, restricts, or limits the ability of any person [e.g., Wells Fargo] to offer to acquire or acquire,
      (B) prohibits any person [e.g., Wells Fargo] from offering to acquire or acquiring, or (C) prohibits any person from using any previously disclosed information in connection with any such offer to acquire or acquisition of, all or part of any insured depository institution [e.g. WB], including any liabilities, assets, or interest therein, in connection with any transaction in which the Corporation exercises its authority under section 11 or 13 [e.g., Citi's Section 13 style transaction to buy WB] shall be enforceable against or impose any liability on such person [e.g., Wells], as such enforcement or liability shall be contrary to public policy."

    • Will Citigroup make to Monday. They will be the next U.S. Bank to go under. Sell you Citigroup stock Friday along with your Morgan Stanley. What about U.S. Bancorp, when are they going to wake up and start buying. These are there type of prices cheap....

    • C is dead. They won't win any judgement, but that doesn't matter. They are the next bank on the ropes.

    • Some people are making out C to be a "holier than thou" bank. Did we forget they have written down 50B+ of the same toxic stuff? Much has been said and written and ultimately even though C gave a lifeline to WB, they lowballed by offering only $1. Even $5 for whole company which was half of the $10 Friday close should have been made, considering that Wells and Spanish bank Santander were in some kind of a fray. Cannot believe the Wachovia brand and the extensive branch network is worth almost nothing. Wonder how C shareholders will react if there is a run on that bank and a firesale in the weeks to come.
      Wells shares some of the blame for having walked away knowing fully well that WB was the best fit for them. Mr. Steel did the best he could have under the circumstances for the shareholders. Mr. Pandit should be prepared to do the same for his shareholders, should the situation arise. If not, he should be ousted by the very C shareholders who are crying hoarse now. That is how ironic this is!

    • 1. Citi and Wachovia signed the exclusivity agreement. This is legal and binding.
      2. Days later any future rules cannot apply when they did not exist when that agreement was signed!
      3. This week Bof A had to agree to $8.6 Billion in penalties for it's aquisition months earlier of Coutrywide's junk. Wells will spend months deciphering the JUNK it has just purchased from Wachovia. The same JUNK that put Wachovia out of business.
      4. Citi's stock fell over $4 when the BETRAYAL was made public last Friday.
      5. Citi saved Wachovia and it's shareholders from complete bankruptcy by supplying liquidity and CONFIDENCE to the Wachovia depositors preventing a financial RUN on Wachovia.
      6.Citi committed its full financial support to Wachovia because it believed it made a SOLID Exclusive deal.
      On Monday, Wachovia ACCEPTED the full financial support of CITI thus ACCEPTING the deal with Citi. Wells was present in the same negotiations and left Wachovia to fail figuring it would buy the pieces in Bankruptcy.
      6. The Fraud committed by Wachovia and by Torturous Interference by Wells, whom Citi had demanded Wells cancel it's deal while presenting it's Exclusivity agreement. Wells jumped into the NOOSE when it refused to walk away thus deliberately helping the CRIME committed by Wachovia.
      7. Citi promises The INDIVIDUALS representing Wachovia and Wells will be PROSECUTED to the fullest as well.
      8. Wells Fargo had it's own Subprime Bank which was SHUT DOWN. How many Billions did Wells lose with their subprime adventure?? Has Wells disclosed their subprime losses??

    • Two quick points:
      1. Pandit’s big mistake (not discussed anywhere that I am aware of) is that he got too cute. If he simply offered to buy the whole bank (but with government assistance), a standard merger agreement could have been completed and signed before markets opened on Monday. But Pandit wanted to buy some assets and not others. There is no way such a complicated deal could be fully documented in the few hours before the market opened. So Pandit instead opted for the exclusivity agreement. And lawyers, being lawyers, let the documentation process drag on for too many days.
      2. Does anyone know what the draft purchase agreement between Citi and Wachovia provided as to a break-up fee if there were a higher bidder? If there is a break-up fee specified in the draft, it should create a ceiling for the damages that Citi can claim for the breach of the exclusivity.

    • FDIC approached Wells on Thursday to make a better offer. All that crap you posted above means nothing because the government intervened.

    • for weeks we have listened to CNBC commentators and analysts allegedly disclose unusual information that HAD the EFFECT allegedly to drive down the price of wells fargo stock...

      who benefited from this allegedly ?

      one might argue the ONE SIDED disclosure of information, such as CITI SOURCES, so often mentioned it was a JOKE, made one wonder how the regulatory agencies could stand by and let this happen when publically traded stocks were moving with what we now know were allegedly INNACURATE REPORTS ?

      there is ZERO accountability at CNBC...so far...

      for certain in an all stock deal between wachovia and wells, the price of the stock was MATERIAL...but the greed of the media to attract listeners is as great as the greed of wall street that MAIN street is angry about

    • To smokedsalmon -- can you share a bit more about the "Wells Fargo Subprime Bank" that was shut down?? As an employee and a shareholder, I'm simply not familiar with this "failed venture".

    • 1) C and WB agree on merger with FDIC support, sign exclusivity agreement, Sheila Blair knows about the agreement.
      2) C pumps $s to WB and keeps it afloat
      3) Sheila B call WFC, convinces them TARP would pass and that they can confidentally make a new offer. Adds the Unenforcibility clause into the bill
      4) WFC makes offer to WB. C CEO gets call from WB CEO with head of FDIC in the same line.
      6) Bill passes, becomes law
      7) FDIC claim they stand behind C
      8) C files lawsuits- Blocking the deal, Damages
      9) Freeze on litigation. C, WFC work towards deal which fail and C walks away
      10, C files withdraws Block deal lawsuit, enforces Damages claim/interference against WFC, WB
      11, C extends lawsuit to include the FDIC- circumstances under which the TARP bill was drafted (insertion of unenfocibility)
      12, Courts start to review TARP- Media writes up articles to the effect that the courts are having a look at the TARP. Systemic risk in on the high.
      13, Some resignations seen at the FDIC
      14, WFC withdraws bid.

    • As to this Nowicki woman that the WSJ keeps quoting, doesn't anyone wonder where she came from? With many excellent law schools in NY why isn't the WSJ interviewing a local law professor, instead of one from a hick law school? Is it true that Ms. Nowicki is a former Sullivan & Cromwell lawyer? Didn't Sullivan & Cromwell represent one of the parties in this mess?

    • Question to the blog regarding the FDIC's insertion of text into the bailout package.

      1. How can the legislation be passed and apply retroactively to this deal? The exclusivity agreement was already signed prior to the bills signature into law.

      2. As I understand no law can specifically be written to target only one individual or company. It could be construed by a court since this is the first time the FDIC has ever used this open market power and that this has never happened before or since that it was unfairly targeting Citi. Could you make a case in this instance?

    • I am one person who believes in integrity, since WB absolutely does not have any, I am withdrawing my deposits, my brokerage and bringing it right over to Citi. Hopefully I am not the only one.

    • I love all the whining Citibank shareholders. Keep crying babies!!! you lose! Sure maybe WFC will toss you a couple of cents to shut you up for good, but it will be a pittance.

    • MC - Go ahead and move yer paltry account. They won't blink an eye. Have fun when C goes into receivership.

    • I am one person who believes in integrity, since C tried to rape Wachovia, they absolutely do not have any, I am withdrawing my deposits, my brokerage and bringing it right over to Wells Fargo. Hopefully I am not the only one. But sadly I will be.

    • If the legislation states, and it does in this case, that it applies for future and existing agreements then its applicable. In this case- the agreement was broken before the bill became a law. I'm no lawyer but I heard of a criminal case at a time when Kidnapping was punishable by death in some states. What happend was that the convict got gassed as he commited the crime before the law changed.
      >>>>>How can the legislation be passed and apply retroactively to this deal? The exclusivity agreement was already signed prior to the bills signature into law


      Don't worry will make sure not to make the same mistake twice. Coming to the aid of another institution at 12:00 AM on Monday morning when another leaves the table and the government begging you to help save a bank and avoid systemic risk; yea, putting yourself on the line and getting a deal done between midnight and 4:00 AM, saving both equity and debt holders, when the one who walked away couldn't get it done until the FDIC tripped over itself to introduce legislation in a fast moving bill and Treasury slopped enough money around that it was impossible to ignore. Yea, that was the dumb move not protecting yourself against everyone in the deal, but saving Wachovia was the absolute right one.

      I'm proud of Citi and Pandit today because I can say they did everything right. Unfortunately, there are people in this world they will screw you and your mother out of a dime. You know what you do with those people. Absolutely nothing. No business, no communication, nothing. Enjoy that 20% that came out of my stock price on Friday last week when the entire market was trending higher.

    • I also share your point of view that-> "no law can specifically be written to target only one individual or company"
      or in other words goverment should be fair to all individuals and companies and US government is. FDIC as far as I know is quasi government. They can and have been in the past, as evident from thier picking the winners and losers, partial. So if the FDIC was involved in drafting portions of the the rescue bill and C is able to prove that they tried to coax WFC into WB. Then C has a case.

      Comment by CM - October 10, 2008 at 12:28 am "

      Here is your timeline
      6:00 PM, Sunday, Sept. 28th
      Dick Kovacevich informs Bob Steel they will be unable to complete any deal without substantial government assistance.

      Shortly there after, Shelia Bair calls Bob Steel advises that any deal will require substantial government assistance and that FDIC was viewing the situation as posing a systemic risk and therefore was exercising its right to facilitate an open bank assisted transaction. SB directs RS to commence negotiations with Citi.

      12:00 AM, Monday, Sept. 29th - Citi begins negotiations with regulators

      4:00 AM, Monday, Sept. 29th - Regulators accept Citi's bid.

      6:30 AM, Monday, Sept. 29th. Wachovia holds a telephonic board meeting. Bob Steel informs the Board it has two options: (1) holding company file bankruptcy and banking operations accepted into receivership or (2) to negotiate the transaction with the FDIC and Citigroup. Board votes in favor of the FDIC / Citigroup transaction. Citi, Wachovia, and the FDIC enter into an Agreement-In-Principle outlining basic terms of the transaction.

      Basically, the FDIC if Wachovia not take the deal was going the way of WaMu. Be damn lucky my stock and capital was standing by to save Wachovia then float it in one of the toughest funding environments ever experienced by financial firms. So do not talk to me and tell me Citi was raping Wachovia. You have problems. You talk to the FDIC, but one thing you should realize is that you have no rights. The bankruptcy code is divided into banks and everyone else. We're not making widgets here, we're talking about people's livelihoods and savings - a few Icelandic folk could tell you a thing or three about it right now.


    • A C Shareholder - That 20% drop will seem like a pittance as C circles the drain. Enjoy your stock at zero, then Wells Fargo can buy you!

    • Wachovia was a dead duck on Monday morning, if the Citi Knight had not bailed it out. Wells Fargo showed clear lack of integrity and uprightness...bank with them???

      Comment by Pop - October 10, 2008 at 1:00 am

      Jeez Pop what a nice thing to say. As someone who worked for and saw the implosion of Enron from the inside, I can say I know what unethical behavior can do. In fact, I keep my Enron Code of Ethics book around and look at it from time to time to remind me just what's right and what's wrong and what the consequences can be. So just keep ripping it, I'll be able to sleep this evening all the same and not have to fool myself that my poor behavior was somehow justified.

    • I think citi has a very strong legal case.
      Not sure why the anchors on CNBC and wsj are so biased against citi and Pandit in general? they portray it as a evil middle east bank or is it just me

    • Gunslinger and others:
      You are misreading Sec. 126(c) of the TARP act. It does not make the Citi - WB exclusivity agreement unenforceable. Nor was it any sweetheart provision for WFC's benefit. Nor does it serve to prevent WFC from making a bid for WB.
      What 126(c) is really about is agreements between two bidders. It is a provision that makes an agreement for one bidder, or both bidders, not to bid for a distressed bank unenforceable. It is modeled on a standard provision in the Bankruptcy Code (in Sec. 363), similarly probiting collusion among bidders. It is intended to facilitate full and open market bidding for a distressed bank, just as one does not want bidders for a debtor company in a bankruptcy to be able to collude to hold back and let the company get weaker -- and therefore cheaper -- when it is trying to make a sale during bankruptcy.
      All a lot less exciting than the over-interpretations that have been kicking around. But I'm not surprised that Ms. Nowicki has too little background in distressed M&A to recognize the context from which 126(c) came.

    • The net effect of Section 126(c) is to shift from Wells to the federal Government a potential tort claim under a takings theory.

      As to Wachovia vs. Citigroup, Wachovia - to the extent it becomes part of Wells - becomes a contract claim against Wells as the successor in interest to Wachovia and that depends on who Citigroup is suing. At the end of the day Wells will write Citigroup a check for $1 to $3 billion.

      The bottom line here is that

    • At the end C is going to win 60 billions for being used by WB and for try to do business with companies like WFC that have no idea on how to do ethical and clean negotiations!

    • The legislation was drafted well before WaMu toppled, which then resulted in a run on WB. It was not aimed at WB, Citi or any other specific bank. In many cases, the retroactive application of civil statutes, especially those which are expressions of public policy, are lawful. In this case, the fact that WB's shareholders held veto power over Citi's proposed deal will be a material consideration of the federal court in deciding whether it is lawful to apply the federal statute to an existing exclusivity agreement that covers a nonbinding term sheet. The federal law interest (protecting taxpayers) and the North Carolina state law interest (protecting WB's shareholders) are significant in this case. Since the question of whether a Board's fiduciary duty trumps the exclusivity agreement turns on North Carolina state law and not NY law, WB and Wells should prevail under both federal and state law. Since the proposed federal statute had been published well before Citi drew up its exclusivity agreement, it becomes more difficult for Citi to object to the law's application to its agreement since Citi had constructive notice of the possibility of its passage, had an opportunity to lobby against it, and therefore assumed the risk whether or not the proposed statutory provision caught the attention of its lawyers and lobbyists. Citi assumed the risk it would benefit WB in the interim, it failed to include a breakup fee in its exclusivity agreement to cover that benefit (perhaps thinking that the specific performance clause was legal, which it wasn't), and now it wants to go to court to try to get something out of the deal based on "principles of fairness"? Citi is a sophisticated financial institution with big law firm representation, and now they want a court to give them a break up fee? On a $2B acquisition, the normal M&A breakup fee, had it been negotiated, would have been a fraction of what they are claiming. But it wasn't part of the deal, or if it was, it was just another term in the non-binding term sheet.

    • Bidders? I see bidders mentioned in Section 363 of the B Code. I don't see bidders mentioned in Section 126. I see no modeling either. Nice try though.

    • Here is the reference to an agreement among bidders in the B Code. I wonder why they read so differently if one was modeled after the other?

      Section 363

      (n) The trustee may avoid a sale under this section if the sale price was controlled by an agreement among potential bidders at such sale, or may recover from a party to such agreement any amount by which the value of the property sold exceeds the price at which such sale was consummated, and may recover any costs, attorneys’ fees, or expenses incurred in avoiding such sale or recovering such amount. In addition to any recovery under the preceding sentence, the court may grant judgment for punitive damages in favor of the estate and against any such party that entered into such an agreement in willful disregard of this subsection.

    • There are more lawyers in this country than the whole world combined. Many ex-presidents are lawyers, most politicians are lawyers. Obama & wife are lawyers. Bill & Hillary too. and on and on ...................

    • Section 126 of the Emergency Economic Stabilization Act of 2008


      “(11) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—No provision contained in any existing or future standstill, confidentiality, or other agreement [e.g., an agreement between Citi and WFC] that, directly or indirectly—
      (A) affects, restricts, or limits the ability of any person [e.g., Wells Fargo or Citi] to offer to acquire or acquire,
      (B) prohibits any person [e.g., Wells Fargo or Citi] from offering to acquire or acquiring, or (C) prohibits any person from using any previously disclosed information in connection with any such offer to acquire or acquisition of, all or part of any insured depository institution [e.g. WB], including any liabilities, assets, or interest therein, in connection with any transaction in which the Corporation exercises its authority under section 11 or 13 [e.g., Citi’s Section 13 style transaction, or WFC's offer, to buy WB] shall be enforceable against or impose any liability on such person [e.g., Wells], as such enforcement or liability shall be contrary to public policy.”
      No, it doesn't use the terminology bidder, but it is modeled on the Sec. 363 principle of no collusion among potential acquirer/buyers/bidders. It simply isn't about an agreement between Citi and WB.

    • Hey, how about this? In this system we have, where we have shareholders that own a part of the company, shouldn't Wachovia shareholders decide whether they want 1$ or 7$ a share? What a novel idea, in this climate where the government is confiscating shareholders' equity, i.e. property. Isn't that that what Castro and Chavez did? I think it is.

      So F--k Citibank.

    • According to WSJ two Saturdays ago, WFC walked away in the original takeover negotiation of WB on Sunday & wouldn't return WB's phone calls, FDIC then hustled C to take over WB & to put up funds to keep WB from collapsing the next day (Monday).

      This should be considered as "done deal".

      Whether Sec 126 can now be used to invalidate this "done deal" will be decided in litigation, in court.

      What I am raising here is "moral hazard", "integrity". If FDIC could renege on C just because WFC's new offer was better, then how can anyone trust our government's promises in the future? Next time when Treasury, Fed Reserve or FDIC calls Vikram Pandit, JPM's Jamie Dimon, or any other banker to take over another troubled bank, I would hope that Jamie Dimon & Vikram Pandit tell the govt to take a hike & hang up their phone.
      I hope C can win its case against WFC & WB.

    • The saddest and most prominent salient point in this matter is that an agreement with Citi was willingly and cunningly breached. It reinforces the unfortunate successful seduction of business by greed and avarice. The tools of lying, fraud and deceit are the links to this debilitating behavior.

      It's led to the financial peril that we face today. Pandit did the right thing in standing up for Citi. Wachovia did the thing that is most underhanded - and they did so with full knowledge and skilled deception. Directly contrary to their own code of ethics, they've set the tone for their future - hopefully not ours.

    • pandik sold his hedge fund to citi for 700mm/900mm and it went bust

      he is an alleged perfect example of wall street greed gone wild

      Did he give the money back to citi bank shareholders ?

      citi has led the credit defaults with its simply supersiv dummy structures...

      why do we need citi at all
      let citi's foreign depositors see what they can do...its a foreign bank with an american address and an overpaid ceo...

      if citi got wach pandik would have been paid a lot of money in bonus for firing thousands of americans

      he called wachovia emplyees "lottery tickets' he can take his greedy hands back to india where they pay people 5 dollars an hour...

    • Citi did provide liquidity, but any other bank would have also. Bair said that depositors are protected. Do you think she was relying on Citi? No, that would have triggered a run on it. It is pretty obvious that the FDIC is guaranteeing depositors, but doesn't want it to be generally known for fear of giving WB an advantage over other banks.

    • all that is needed from Wachovia is to sell its toxic loans to the government program for an interest, in this way the politicians can exploit benefits of their government rescue plan.

    • Unless the case is tried in Kangaroo Court, I don't see how Wells Fargo could be liable:

      (1) Section 126 of the bailout bill discussed before.

      (2) There is no indication that they knew anything about the exclusivity agreement.

      (2) There were no negotiations after the exclusivity agreement. Wells, relying on WB, simply signed an agreement which had been sent to them previously.

      (3) WB chose the date to approve the agreement, not Wells. WB could have signed it on Monday and they would have been in compliance with the agreement. They thought that the FDIC would put them in receivership, if it wasn't done by Friday.

    • Citi appears to have acted in bad faith. Based on Bob Steel's affidavit, they tried to add a deal killer that wasn't in the original terms, namely a scheme to pay off preferred shareholders at 45 cents on the dollar. These shareholders would have to vote on the asset sale as a class and it would take 66 2/3% approval. If they did not approve, Citi would have been able to buy selected branches in NJ, FL and CA at fair market value, which is apparently what they really want.


      Citi just got too cute.

    • Did anyone else notice:

      1. No mention of "definitive agreements" being off limits in the Citi exclusivity agreement? It mentions "aquisition proposals", which is "offer, proposal or inquiry". Wouldn't that be different from a "definitive agreement", which is "A document that settles or describes the terms of a business transfer in a final and conclusive form. "-- In other words, Citi seemed to go to great lengths to ensure Wachovia would not negotiate, or seek other bids; knowing that their own proposal would be subject to a shareholder vote in the end regardless, so it would be a moot point.
      2. Paying attention to detail and forward thinking: Who didn't do their homework? The whole document obviously is focused on preventing Wachovia from seeking or negotiating other offers. The document clearly states that Citi doesn't want Wachovia to negotiate with anyone else. Wachovia didn't negotiate anything. If Citi wants to sue someone, maybe they should look at the legal mind on their payroll who told them that the verbiage in this document covered everything possible to prevent a sale to someone else.
      3. In paragraph 1 of the Citi's document, they refer to the "term sheet" as being non-binding.
      So let me get this straight... Citi is suing Wachovia for damages for doing something that was clearly NOT off limits in an "exclusivity agreement"- this agreement even defined the term sheet signed as NON-BINDING. They are essentially going to ask a court to award them damages on the fairy-tale assumption that a Citi deal would have passed a shareholder vote when it is now obvious that Citi didn't want to put the verbal terms they agreed to in writing (what would remain in Charlotte). With regards to "financially supporting Wachovia for 4 days"...since no binding merger agreement was made, if Citi provided support, any reasonable person would assume that they did so at their own risk, because they went into this fully knowing that no deal is final until the shareholder vote took place. Not to mention the fact that everyone seems to be turning a blind eye to the fact that even if the exclusivity agreement was binding, that Wachovia didn't breach it because Wachvoia did not negotiate or seek another bid, The FDIC brought the Wells' definitive agreement to Wachovia's attention, and encouraged them to take it, and they did- no negotiatons necessary.
      Now looking forward... Citigroup's actions to attempt to block the WFC/WB deal relying on a contract that was poorly worded on Citi's part, not to mention NOT APPLICABLE to the events that actually transpired, knowing full well that they did not have a legal leg to stand on, could only be interpreted as a willful act to intentionally harm WFC and Wachovia's shareholders by initiating unsubstantiated litigation for the purpose of causing an adverse affect on the companies' respective stock values. That alone should open the door for litigation against Citigroup by about 360,000+ employees and non-employee shareholders.

    • Citi at least demonstrated character and values, unlike Wells Fargo and Wachovia.

    • Section 126 aimed SOLELY at collusion among bidders? Let's see, BofA gets together with Wells and says, you Wells, GO BABY, buy WB! I'll stay out of this one. Or JPMorgan says to BofA, let's stay out of this one, but let's let Wells GO BABY and buy WB. Like how likely was that as a concern of the FDIC when it wrote Section 126? Oh, let's declare that kind of collusive bidding (or should we say no bidding) agreement to be unenforceable. The parallels of Section 126 of the Bailout Bill to Section 363 of the B Code are strikingly dissimilar from a public policy perspective. We cannot have in this country a situation where a troubled bank enters into an exclusive bidding arrangement with another bank that lowballs the public interest by saying you FDIC take the lionshare of the risk and I'll skim off the top. Which kind of agreement do you really think, as a taxpayer, concerned the FDIC? Nice try though.

    • The best part about contrasting Section 126 of the Bailout Bill with Section 363 of the B Code is that, assuming 126 were aimed solely at collusion among bidders, there would be no liability for either party having entered into that collusive no bidding agreement. No liability, can you imagine that? That's what Section 126 says! I guess the FDIC wanted to turn anti-competitive antitrust principles on their head. Is that what Section 126 was about? Section 363 does just the opposite--it says the collusive bidder can be liable for punitive damages. So which is it--no liability for deal jumping in the public interest? Or no liability for collusive bidding agreements not in the public interest? Sounds like a bankrupt argument to me.

    • Why hasn't WB stock risen back to $7?

    • For everybody saying C has integrity get a life. THEY are one of the banks that got us into this mess. WFC is a consevative bank and that is why they are able to do this deal and not C. Only the strong survive. C will be gone in a year.....

    • It will never be in the public interest to have Congress invalidate contracts. It will never be in the public interest to allow anyone to encourage the breaching of contracts. If contracts are no longer sacred or no longer enforced
      because someone can claim it is in the public good, we no longer have the rule of law. This is why the market has been in freefall since the WFC/WB deal came out and the bill was signed. Credit markets will never function if contracts can be invalidated willy-nilly based on some claim of public good.

      Atlas is shrugging.

    • CTYankee - that really sums it up. thank you for cutting to the truth of the matter.

    • Agree with CTYankee.

      At the end of the day I hope WFC never has any intention of moving from being a "Consumer" bank to becoming a bigger player in the Institutional client space. Because I can tell you that as both an institutional client and as a businessman I do believe in the sanctity of an agreement and good faith between two parties and at the end of the day who do I respect more: the party who walked away to let me die only to come back when things were more advantageous or the party who stuck by me first. Enough said.

      I know who my business is going to.

    • Just read this and I find it incredulous that Wachovia would refer to this liquidity support as "routine intraday funding". NOBODY was going to provide Wachovia liquidity when their shares hit a low of 75 cents on Monday and they were going to be declared insolvent. The C agreement and subsequent liquidity support was the umbilical cord that kept WB alive for the week. It would not have been done if C did not believe the Letter of Agreement and Exclusivity Agreement had the good faith backing of both WB and the FDIC. This news is not going to fare well for either WB or WFC in the eyes of a judge.


      Citi: Gave Wachovia 'Substantial Liquidity' Before Wells Bid
      Dow Jones
      October 10, 2008: 03:13 PM EST

      NEW YORK -(Dow Jones)- Citigroup Inc. (C) provided "substantial liquidity" to Wachovia Corp. (WB) in the days before Wachovia accepted a competing bid to be acquired by Wells Fargo Corp. (WFC), Citigroup said in court documents.

      In a court document unsealed Friday, Brian Leach, Citigroup's chief risk officer, said the banking giant, on average, furnished Wachovia with $1.2 billion in intraday liquidity as daylight overdraft lines in the four days after it reached an agreement in principle to buy Wachovia's banking business.

      That was about $900 million more than Citigroup had furnished to Wachovia under an existing intraday liquidity arrangement in the prior two weeks, Leach said.

      Wachovia took issue with Citigroup's interpretation of events. "Citigroup appears to be referring to routine intraday funding in the ordinary course of business," said Christy Phillips-Brown, a Wachovia spokeswoman. "To the extent Citigroup is implying that they provided some form of extraordinary funding support that 'rescued' Wachovia, this is not true."

      Last week, Wells Fargo reached an agreement to pay $15.4 billion for all of Wachovia, just days after the federal government helped negotiate a deal in which Citigroup would acquire the Charlotte company's banking business for $2.1 billion.

      Late Thursday, Citigroup said it planned to drop its efforts to block the Wells Fargo-Wachovia tieup. On Friday, the U.S. Federal Trade Commission granted antitrust clearance for the Wells Fargo deal to proceed.

      Citigroup has said it planned to pursue damages claims against Wells Fargo, Wachovia and their directors for breach-of-contract and tortious interference in a lawsuit originally filed in New York State Supreme Court in Manhattan. Citigroup is seeking $60 billion in damages. Wachovia has filed its own suit against Citigroup in federal court.

      The banks are still tussling over where the case should be heard. Wachovia filed motions to move the state case to federal court on Friday.

      In his court declaration filed by Citigroup under seal on Wednesday and unsealed Friday, Leach said Citigroup provided Wachovia with a maximum intraday liquidity of $1.3 billion as daylight overdraft lines on Sept. 29 - the day the Citigroup deal was announced.

      Leach said Citigroup furnished Wachovia with $800 million in such liquidity on Sept. 30; $1.6 billion on Oct. 1 and $1.2 billion on Oct. 2.

      On Oct. 3, Wells Fargo announced it had reached an agreement to acquire all of the Charlotte, N.C., bank.

      "Following entry into this agreement-in-principle, Citigroup provided substantial liquidity to Wachovia in response to requests from Wachovia's Chief Financial Officer, David Zweiner, and other Wachovia treasury personnel,' Leach said.

      Leach also said Citigroup supported Wachovia's credit during the period by " engaging in a number of assignments and novations that required Citigroup to replace third parties as counterparties to Wachovia on transactions totaling approximately $127 million."

      Last Friday, Citigroup said it had been providing liquidity support to Wachovia Bank since the agreement in principle was announced on Sept. 29.

      At the time, Citigroup said its support for Wachovia exceeded an open line of credit Wachovia had already established with Citi before the deal. Citi also said the support continued even after Wachovia announced it had agreed to sell all its operations to San Francisco-based Wells Fargo.

      However, Wachovia disagreed on Sunday that it had received any monetary support from Citigroup since the deal was announced.

      Wachovia told Dow Jones Newswires at the time, "Wachovia is not aware of Citigroup providing any additional direct funding or liquidity to Wachovia since last week's announcement."

      -By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com

      (Matthias Rieker contributed to this report.)

    • It's amazing how Citi-known for no service to the retail customer-and it's shareholders distort the facts:
      C and WB had a non-binding agreement which is unenforceable anyway
      2)Citi attempted to deprive WB shareholders of the right to have their board vote
      3) All so Citi could get a firesale price,at the taxpayers enforced by the FDIC in the middle of the night....and they even think that firesale price is therefore an entitlement

      Why don't they get their own financial house in order and get on with it? There are other distressed banks who need buyers..the question is, do they have the financial strength and skillset to run
      a failed bank?

    • Iceman , WB may be a dog with flea.. but they are now the Biggest dog! I luv Corp America.. dog eat dog. So Wells and Wachovia two smaller dogs just ate a bigger DOGs (citi) lunch.. lol I luv it.. I hope Citi goes bust...

    • I agree with all the others saying Citi is next ..They can survive without the Wachovia deal...

    • I agree with all the others saying Citi is next ..They can't survive without the Wachovia deal... They are in alot of trouble and needed this deal to just survive.. They are next on the chopping block..Citi shareholders get out NOW! Before you see your stock price go to $0.01. And lose you butts.,..

    • Citi has always been a Customer NO Service bank and will fail in the near future because of it... Good Bye Citi..

    • Citi has always been a Customer NO Service Bank and will fail because of it in the near future.. Good Bye Citi.. its about time ..

    • Rather interesting how Shareholder votes can be bypassed by WB mgmt. And I suspect had WFC not violated the exclusivity agreement the WB/C merger would have been passed without WB a shareholder vote as well. The Legal hole just keeps getting deeper.


      Wachovia won't seek shareholder OK to issue stock
      Wachovia gets NYSE permission to bypass shareholder approval for preferred stock issuance
      October 10, 2008: 07:16 PM EST

      NEW YORK (Associated Press) - Wachovia Corp. said it won't seek shareholder permission to issue preferred shares as part of its acquisition by Wells Fargo & Co. in a move approved by the New York Stock Exchange.

      The bank, which is being acquired by Wells Fargo for about $11.7 billion, said in a statement Friday that waiting to secure shareholder approval for the issuance would "seriously jeopardize the financial viability of Wachovia."

      Shareholders will still vote on the acquisition deal, which much also receive regulatory approval.

      The Charlotte-based bank said it would mail investors a letter explaining its plan to issue the shares without a vote and then issue the preferred stock 10 days later.

      San Francisco-based Wells Fargo hopes to complete the deal by the end of the fourth quarter.

    • Polecat.. you are wise beyond u years.. I to see Citi being gone in 1 yr or less.. they are in troubled times and need capital to survive at the expense of their shareholders.. My option is ..RUN ..RUN like Hell from Citi right now.. They are next for the axe..

    • Why do so many people speak of Citi and its CEO with such hatred? Citi is one of the most respected US-based bank in the Global marketplace. Most international travellers will tell you that people outside of US recognize Citi brand more than Wells (which is non-existent) or BofA. We are in a global market and let's not beat down the one US bank that means something in the global world. Especially when it is the only one with integrity in this "dog-eat-dog" drama we have witnessed.
      Do people dislike Citi because it is run by a non-white CEO in a white-boys-club of our "US Financial Industry"??

    • Let's be Fair ... Please see Citi for what they really are .. just common Thugs!.. They tried to force Wachovia into a deal that would have crashed the tax payers and Wachovia shareholders.. just common Thugs.. When the shareholds and taxpayers resisted they got their nose in a wad and cryed foul... on a deal that was never realy signed.. bad for them but good for the tax payer..Citi will be remembered as such ..just common THUGS trying to steal a Company for nothing !!

    • I was under the impression that Citi would have completed the deal to buy some of Wachovia's assets and the taxpayers would only step in under certain circumstances?

    • I really applaud Vikram Pandit for his decision. In a industry full of egos, he was smart enough to not overpay for a bank full of toxic assets. Indeed, C was up 10% yesterday whereas WFC less than 4%. Also Moodys just announced that they may downgrade WFC rating so good luck with raising the $20B in stock they need to pursue this deal. Maybe this is why WB is trading at barely $5 instead of close to the $7 offered by WFC.

      PS. Isn't it interesting that WB will not have a vote on the WFC deal?. I guess it wasn't really about the shareholders but about the exec's +$200MM golden parachutes.

    • Gunslinger (if you are still around): On your interpretation of Sec. 126(c), it doesn't do anything. In the Citi - WB exclusivity agreement context, it would read:
      Section 126 .. (c)...:

      “.. UNENFORCEABILITY OF CERTAIN AGREEMENTS.—No provision contained in any existing or future [agreement, e.g. the Citi - WB agreement] that, directly or indirectly—
      (A) affects, restricts, or limits the ability of any person [Citi] to offer to acquire or acquire,
      (B) prohibits any person [Citi] from offering to acquire or acquiring, or (C) prohibits any person [Citi] from using any previously disclosed information in connection with any such offer to acquire or acquisition of, all or part of any insured depository institution [WB], including any liabilities, assets, or interest therein, in connection with any transaction in which the Corporation exercises its authority under section 11 or 13 [Citi’s Section 13 style transaction] shall be enforceable against or impose any liability on such person [Citi], as such enforcement or liability shall be contrary to public policy.”
      You can't substitute Wells for Citi in that formula, because there was no agreement not to do anything with Wells. But to Citi, it doesn't result in any restriction whatsoever because they are bidding.
      Of course my reading is coherent from a public policy perspective. It is exactly the point in Sec. 363 of the Bankruptcy Code: it would prohibit BA and Wells from agreeing that only one will bid for WB, and the non-bidder gets paid (or traded something else) to stand aside on this one. That hazard has been seen to be quite real in the bankruptcy sale setting; people will try to collude on the biddding so that the debtor can't wait any longer and has to take what the collusive bidder is offering. Those are facts I have seen myself in bankruptcy auctions: three bidders, and one of them contacted the other overnight between two days of hearings, saying 'you don't want to bid any higher for this debtor company, and we'll make it worth your while to stand aside.'
      126(c) is entirely about agreements not to bid, not about lockup agreements not to solicit bids.

    • gunslinger has it right.

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