Please submit a comment. Printer-friendly page Wachovia Corporation by Alex Coffin, References: Pamela L. Moore, "From Absent to No. Gilded Age Banks and banking. UNC Press. Coffin, Alex. Origin - location:. Forsyth County.
Thank you for letting us know about the broken link. Erin Bradford, Government and Heritage Library. Wells Fargo's Second Proposal On October 2, during the period Citigroup and Wachovia were negotiating a final merger agreement, the board of directors of Wachovia received a communication from Wells Fargo that included an offer from Wells Fargo to acquire all of Wachovia's stock by merger.
On October 3, , Wachovia's board of directors voted to accept the Wells Fargo offer, and the parties signed a binding merger agreement. Upon becoming aware of this, Citigroup informed Wachovia and Wells Fargo that Citigroup considered the merger agreement to be a violation of the exclusive dealing agreement between Citigroup and Wachovia.
Citigroup demanded that Wachovia and Wells Fargo terminate their proposed transaction. Citigroup on the same date sent a separate letter to the Federal Reserve protesting any Wells Fargo application to the Federal Reserve to acquire Wachovia on a number of grounds. The statement indicated that the Wells Fargo proposal had not yet been reviewed and that regulators would be working to achieve an outcome that protected all Wachovia creditors and promoted market stability. Litigation and Standstill On October 4, Citigroup filed suit against Wachovia and Wells Fargo, seeking a temporary restraining order, preliminary and permanent injunctive relief, specific performance of the exclusivity agreement, and punitive damages.
On October 5, Wachovia filed its own motion for a temporary restraining order preventing Citigroup from taking any steps to interfere with the implementation of the Wachovia-Wells Fargo merger agreement. Due to concerns that the competing legal claims of Citigroup and Wells Fargo could themselves become a destabilizing influence on those institutions, Wachovia, and the banking system generally, representatives of the Federal Reserve attempted to facilitate negotiations among Wachovia, Citigroup, and Wells Fargo to resolve their disagreements.
To allow these discussions time to proceed, Federal Reserve officials became involved in facilitating negotiations for a cease-fire or standstill to the litigation among the three firms. A standstill agreement was finalized on October 6, under which Wachovia, Citigroup, and Wells Fargo agreed to suspend for two days all formal litigation activity, including discovery, and to otherwise cooperate to preserve the status quo with regard to any litigation. This agreement was extended until October During this period, the three firms attempted to renegotiate a transaction that would be mutually agreeable.
The negotiations focused on a joint acquisition of Wachovia by the two bidders, with each bidder acquiring a different geographic portion of Wachovia. The parties were unable to reach an agreement on a joint acquisition of Wachovia, but did agree on October 9 not to seek injunctive relief to stop a Wachovia acquisition transaction from occurring.
Citigroup determined to proceed with its claims, but to limit those claims to seeking monetary damages. Wells Fargo announced its intention to complete its merger with Wachovia and indicated that it had submitted an application to the Federal Reserve seeking expedited approval of the transaction.
Wells Fargo Application On October 12, the Board announced its approval of the application and notice under sections 3 and 4 of the BHC Act by Wells Fargo to acquire Wachovia and its banking and nonbanking subsidiaries. In light of the emergency affecting the financial markets, and as permitted by the BHC Act and Federal Reserve regulations, the Board waived public notice of the proposal and shortened the notice period to the primary regulators of the banks and thrifts involved.
These agencies, and the Department of Justice, indicated that they had no objection to approval of the proposal. On October 21, the Board released a statement explaining in more detail the reasons for its approval. This statement included a discussion of the various relevant factors for applications and notices under sections 3 and 4 of the BHC Act, including competitive effects, financial and managerial performance, the convenience and needs of the communities to be served, and performance under the Community Reinvestment Act.
The statement also addressed a number of comments received on the proposal, including comments from Citigroup objecting to the proposal.
On January 1, , Wells Fargo announced that the merger had been completed effective December 31, Federal Reserve Assistance The Federal Reserve did not provide any emergency financial assistance in connection with the Wells Fargo-Wachovia merger, nor was any financial assistance sought from the Federal Reserve as part of the Citigroup bid or either of the Wells Fargo bids.
This Commission has asked nonetheless for information explaining the Federal Reserve's authority to provide assistance under section 13 3 of the Federal Reserve Act. Prior to the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law earlier this year, section 13 3 of the Federal Reserve Act authorized the Federal Reserve to extend credit to any individual, partnership, or corporation in unusual and exigent circumstances and upon a vote of five members of the Board of Governors of the Federal Reserve.
This provision authorized only the extension of credit and required that the credit be secured to the satisfaction of the lending Reserve Bank. It also required that the lending Reserve Bank obtain evidence that the borrower could not obtain adequate credit accommodations from other banking organizations. The Dodd-Frank Act has since substantially modified section 13 3 to remove authority to extend credit to single identified non-banking companies or to make a loan to remove assets from the balance sheet of a particular institution.
Now, credit under section 13 3 may only be offered through broad-based credit facilities that are offered to multiple borrowers. While emergency credit was not sought or given in connection with the Wachovia transaction, Wachovia's depository institutions accessed the Federal Reserve's discount window at various times throughout The discount window comprises several credit facilities open to insured depository institutions on a regular basis and is not limited to emergency credit like section 13 3.
The Wachovia depository institutions accessed these facilities on the same terms and conditions applicable to other depository institutions, including the completion of required documentation and the pledging of collateral to the Federal Reserve.
Many other depository institutions accessed the discount window during this period as well. I wonder what they will tell us today when we get to work today? Now this? Pretty funny stuff here. But this seems this is what is best for the economy and the companies. Those in my generation will remember Wells Fargo best as those bank wagons in all those Saturday afternoon westerns at the local movie theatre.
You remember. Called strobe effect in film photography. Maybe there is light at the end of the tunnel after all. Good show Wells Fargo! I am immediately reminded of Pennzoil v.
I am SO happy with the decision. Wells Fargo, by far appears to have had a good run these past years and by acquiring Wachovia, only proves that it continues to be well managed. There is no to little need for government intervention- a blank check that taxpayers will continue to pay for decades on end.
Good riddance to Wachovia, the firm that illegaly seized and held my retirement funds when my employer was bought out. Wachovia was the transfer agent. A much better deal for stockholders, employees, and taxpayers! Good news! I am glad that my tax money is not helping to save Wachovia, the worst bank and financial service company I have ever done business with.
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