"That you may ruminate"

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Posts Tagged ‘Wells Fargo’

…On Banking Litigation.

Posted by Steve on October 5, 2008

Well, this didn’t take long. Honestly, I’d hoped I was wrong (despite the fact that I hate being wrong, as it’s a blow against the very core of my self-image and makes me feel like much less of a man) when I smelled a lawsuit in Citigroup’s previous press releases regarding Wells Fargo’s intervention in the FDIC-arranged sale of Wachovia’s banking assets to Citigroup.

So, Citigroup’s gotten a temporary injunction blocking the sale. My hope is that it’s quickly resolved, because dragging this out through litigation won’t be good for anybody.

Thing is, I, of course, don’t know whether or not there really was an exclusivity agreement; whether or not, if an exclusivity agreement exists, it was violated; whether or not any exclusivity agreement between Wachovia and Citigroup, if it exists, can hold up in court; or whether or not the terms of any exclusivity agreement, if it exists, nonetheless allow for the eventual sale of Wachovia to someone other than Citigroup.

Here’s what I opine, though: I hope there isn’t an exclusivity agreement, since as I understand things, the FDIC told Wachovia they were going to be sold to Citigroup. I could be wrong, since everything I know is based off of the companies’ press releases and the reporting on a few web sites, but I take that to mean Wachovia was never offered to other interested parties (like Wells Fargo), or that Wachovia actually wanted an exclusivity agreement with Citigroup. So, in light of Wachovia having someone they want to sell themselves to, it doesn’t strike me as right for them to have been made to sign an exclusivity agreement. It especially doesn’t strike me as right for Citigroup to be able to get specific performance of Wachovia-is-sold-to-them as compensation for the exclusivity agreement’s violation, and that specific performance seems to be what Citigroup’s asking for.

Thing is, a merger of Wachovia’s entirety with Wells Fargo seems like it’ll be better than a breaking-up of Wachovia with part of it going to Citigroup for everyone who isn’t Citigroup. As in, better for Wells Fargo, better for everyone associated with Wachovia, better for the FDIC, and by extention better for the public at-large. And as they say, “The needs of the many outweigh the needs of the few.”

Posted in Economic Activities, From the News | Tagged: , , , , | Leave a Comment »

…On Banking News!

Posted by Steve on October 4, 2008

My employer is a company. This company uses Wachovia for the majority of its banking. So, last week, my employer issued a statement to all employees regarding the announced sale of Wachovia’s banking elements to Citigroup and specifying the expected impact on things like our payroll and retirement and ability to pay our subs and where the clients need to mail the checks when the pay us and etc. Whether or not any impacts are predicted to exist, and if there are any what they are, is not an appropriate topic for this blog and I’m not going to talk about them. I mention that my company took steps to answer our curiosity about that sale’s impact on us only because I expect they’ll send around a new version of the statement next week, in light of the announced sale of Wachovia’s entirety to Wells Fargo. I’ve got to say, I like that Wells Fargo stepped in and did this, since the Citigroup sale would’ve included payments by the FDIC, and this apparently doesn’t. That’s a good thing. On the other hand, knowing as little as I know about the conditions and state of Wells Fargo, Wachovia, and Citigroup, I don’t know if this is a risky investment by Wells Fargo or not. I do know it’ll make them much more of a nation-wide bank, as right now, for instance, there are 0 Wells Fargo branches anywhere in Georgia, the Carolinas, Virginia, and Tennessee, while Wachovia’s got plenty of branches in those states. I also know that a recent IRS action, which I think is REG-102822-08 (but I’m not certain of that, and won’t be until I can confirm it with my dad, who’s a CPA that specializes in tax stuff), may make a loss on this still into a good move for Wells Fargo and its shareholders and depositors. I assume either move’s good for Wachovia employees and shareholders, and unlikely to impact Wachovia depositors much. I know this is terrible news for Citigroup, on the other hand, and they’ve made it pretty clear they aint gonna step aside all quiet-like. I smell litigation! Which, most likely, isn’t good for anybody involved.

Also, I wonder how much this was spurred by that financial-sector bailout bill, which passed after the House changed its mind. My praise for the House for rejecting that is now rescinded. Downside of trying to blog about current events, I guess: the damned things keep changing on you. Although, since I don’t often have any reason to praise her, (since I disagree with her positions on a great many issues), let me give my congratulations to my House member, Thelma Drake, for voting against the financial-sector bailout and thereby casting her vote in a manner I approve of. Now if only she’d voted against the domestic automaker bailout, too.

Posted in Economic Activities, From the News | Tagged: , , , , , , | 1 Comment »