Barely Bair-able Backstabbing
Bank Lawyer’s Blog:
Via the San Antonio Business Journal come excerpts from an affidavit filed in the litigation between Wachovia and Citigroup over the failed attempt by Citi to take Wachovia off the outstretched hands of the FDIC, excerpts that show what we previously speculated: the FDIC was double-dealing Citi behind its back while publicly affirming its deal with Citi.
While waiting for his airline flight to take off on Thursday, Oct. 2, Wachovia Corp. President and CEO Robert K. Steel received an unexpected call from Federal Deposit Insurance Corp. Chairman Sheila Bair indicating that Wells Fargo & Co. was prepared to make a buy-out offer for Wachovia.
Bair encouraged Steel to ???give serious consideration to (the)
offer,??? despite the fact that Wachovia had only days earlier entered
into a nonbinding agreement in principle to sell its banking operations
to Citigroup for $2.2 billion. That deal also called for the FDIC to use taxpayer
money, if required, to limit Citigroup???s exposure to losses on
Wachovia???s $312 billion loan portfolio to no more than $42 billion.
Wachovia???s board voted on Sept. 29 to pursue the FDIC-assisted
Citigroup offer ??? shortly after the FDIC???s Bair had informed Steel that
Wachovia???s dire financial condition ???posed a systemic risk to the
banking system.??? As part of the pact inked with Citigroup, Wachovia
also entered into a binding ???exclusivity agreement??? that barred
Wachovia from negotiating with any other parties while the Citigroup
offer was still on the table.
The above facts are laid out in an affidavit sworn by Wachovia
President and CEO Steel. That affidavit is part of a federal lawsuit
filed earlier this month by Wachovia against Citigroup. The litigation,
which is currently pending in U.S. District Court in New York, asks the
court to declare the Wells Fargo offer for Wachovia ???valid??? and to find
that…