Comments on: Everything you wanted to know about the Citigroup-Wachovia-Wells Fargo Debacle

By: James Larsen

James Larsen — Wed, 22 Oct 2008 01:25:32 +0000

Wrong on #4 –

126 ( 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 that, directly or indirectly–

`(A) affects, restricts, or limits the ability of any person to offer to acquire or acquire,

`(B) prohibits any person 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, including any liabilities, assets, or interest therein, in connection with any transaction in which the Corporation exercises its authority under section 11 or 13, shall be enforceable against or impose any liability on such person, as such enforcement or liability shall be contrary to public policy.’.

By: Robert Larsen

Robert Larsen — Thu, 09 Oct 2008 09:32:20 +0000

In Steels affidavit filed in federal court, he mentions that FDIC chairman, Sheila Bair, informed him of the WFC offer Thursday before any new discussions with WFC. And that she “encouraged” WB to consider the new offer. To me this indicates the FDIC was complicit in what you call deal jumping. I would like to hear your comments in regards to FDIC involvement in this part of the debacle.

By: Felix Sullivan

Felix Sullivan — Tue, 07 Oct 2008 16:00:18 +0000

Elizabeth,
This is an excellent summary. One small typo in section 1 which is understandable given the morning hours you posted this.

“The combined value of what Citigroup was paying and what Wachovia was retaining may well be higher than what Wells Fargo was offering for all of Citigroup.”

Should read:

“The combined value of what Citigroup was paying and what Wachovia was retaining may well be higher than what Wells Fargo was offering for all of Wachovia”.

In section 3, you might also want to add that the FDIC needs to pursue the “Least Cost Alternative”

So with respect to the Wells Fargo tax write-off’s

http://www.fdic.gov/regulations/laws/rules/1000-1500.html#1000sec.13k

“(ii) FOREGONE TAX REVENUES.–Federal tax revenues that the Government would forego as the result of a proposed transaction, to the extent reasonably ascertainable, shall be treated as if they were revenues foregone by the deposit insurance fund.”

By: Ben

Ben — Mon, 06 Oct 2008 16:28:51 +0000

Wrong on #4. 126 says clearly that such exclusivity is against public policy and generally contracts which are against public policy are not enforcable.

By: Frank Miller

Frank Miller — Mon, 06 Oct 2008 14:50:35 +0000

A good read, but the legal dispute hides the serious issue. Now, our big banks are fighting each other in a break neck race to consolidate which is being done for business survival rather than business gain. Unfortunately, the bailout will not help them much. They are suffering and when they suffer, we all hurt. Individual investors should start looking for ways to protect their money. This basically comes down to either taking your money out of the market and cutting discretionary spending or diversifying and investing some overseas preferably in Asia or parts of Europe. I personally use offshore bank accounts and they have helped me with diversification and asset protection. If you want to read more on why offshore investing is smarter, feel free to visit my website.

Best,
Frank Miller
http://www.theoffshorebankaccount.com