Feds OK Wells Fargo-Wachovia Deal

So where is Citi getting the money to stay afloat? It was Wachovia’s deposit money Citi was after. Would Paulson Citi enough money to weather the damage from Citi’s toxic securities?

Ping!

What was the name of the bank that Wachovia bought last year for 24 some odd billion? What was the name of the owners that ran off with 2.4 billion?

I swear I'm not for regulation on capital but why doesn't anybody sound the alarm?

bttt

(Tied into SNL pulling the skit from youtube strangely enough.) From http://michellemalkin.com/2008/10/06/the-missing-snl-bailout-skit-and-the-soros-connection/

Ed Lasky recently reported on how the Sandlers — allies of left-wing billionaire George Soros — helped bring down Wachovia Bank:

Herbert and Marion Sandler, a New York lawyer and Wall Street analyst respectively, bought a small California thrift in 1963 and built it into GDW — one of the largest thrifts in the nation. The company’s business was built on adjustable rate mortgages (ARMs. These were mortgages offered at low “teaser” rates that ratcheted upward as interest rates increased. They were often sold aggressively to unsophisticated home buyers who did not comprehend the vast financial risks they were taking, or who assumed that housing prices would rise high enough to provide a profit to them when they sold their houses. They were targets for lenders peddling mortgages that should have been stamped with a skull and crossbones, for these were among the most seductive and dangerous types of mortgage.

This book of business is the core reason for Wachovia’s current difficulties

The Sandlers knew their business far better than any other person could. Not only were they the founders and major owners, they famously ran the company as a husband and wife team for all these years.

So why did they happen to cash out at precisely the right time? Did they see the handwriting on the wall, realizing the massive risks inherent in the mortgages they originated throughout one of the most overheated real estate markets in the nation’s history? They are not talking, but when smart people cash in some of their chips, it’s rarely a good time to bet against them. Nevertheless, Wachovia bet 24 billion dollars and lost big time.

The collapse was primarily caused by the GDW purchase, which became an albatross around Wachovia’s neck soon after the purchase. “Wachovia found itself in ARM’s Way” was the headline of a recent Wall Street Journal article. A huge percentage of these Wachovia ARMs were made to deep subprime borrowers with very poor credit scores. Most of these were “inherited from its ill-timed acquisition of Golden West” at the end of the housing boom in 2006.

The Sandlers have started to invest their billions of dollars politically, in the manner of George Soros, sugar daddy of many far-left wing groups and an early and prominent supporter of Presidential candidate Barack Obama. Soros has developed an empire of so-called 527 groups, putatively independent political activists groups that have influence within the Democratic Party. These 527 groups include the Center for American Progress, MoveOn.Org, Human Rights Watch, Media Matters and a slew of other like-minded groups…

Soros, Lewis, and the Sandlers form a core group of billionaire activists and Democrat partisans who have formed a group called The Democracy Alliance. They realized that they could magnify their power by working in unison and tapping other wealthy donors to further their agenda (the superb Boston Globe article “Follow the money” is a good primer on how money and 527 groups have come together to have a huge impact on politics in America).

The Democracy Alliance is a major avenue to help them achieve their goals. The roster of its growing membership consists of a list of billionaires and mere multi-millionaires who collectively hope to give upwards of 500 million dollars each year to further promote a left-wing agenda. A partial roster of the Democracy Alliance membership can be found here.

Half a billion dollars a year can purchase a great deal of influence.

The Sandlers certainly know quite a bit about leverage from their savings and loan days.

Among the beneficiaries of their largesse: Air America, ACORN (a group that has very close and long lasting ties to Barack Obama and has a long history of engaging in voter fraud. Citizens for Responsibility and Ethics in Washington (basically a private detective group focused on the private faults and foibles of Republicans), Media Matters, a media watchdog group that engages in harsh partisan attacks against media figures and articles it considers supportive of Republicans). The list goes on and on.

They are not merely out to elect Democrats, but to also permanently realign U.S. politics and shift our society and culture in a far-left wing direction…

Wachovia bought World Savings a little over a year ago. I know, because I used to bank with World Savings. I switched to my local credit union last spring—partly because I felt Wachovia was in deep do do even way back then.

Know the finanicial status of your bank, folks.

Next time Paulsen needs someone to bail out a bank don’t go knockin on Citi’s door.

Wachovia is now offering about the highest CD rate I can find.

At least those are insured.

On Friday, Sept. 26, depositers withdrew $5 billion of Wachovia's nearly $450 billion in deposits, according to court documents filed by Citigroup to the U.S. District Court in the Southern District of New York.

So now we learn that the criminal seizure of Wachovia by FDIC was originally at the behest of Citi! has anyone vetted the 'court documents filed by Citigroup' to verify their authenticity, facts, and 'agenda'? Citi is FDIC's Magnum PI? FDIC complicit in a 'bear raid' perhaps?...any Naked Shorts at the FDIC? Too many questions, not enough answers (other than the fact that most bankers, lawyers, accountants and economists, along with their MSM apologists are Democrats!)

Email recieved from Commissioner Bill James ,District 6 on the Mecklenburg County Commission (Charlotte, NC).

Wachovia Tanks
What were their exec's doing?
Should Wachovia’s exec's have used shareholder assets to engage in narrow philanthropy?
Should shareholders sue management?

Wachovia has been Charlotte's special needs banking child since the old days of First Union. Uptown folks like to talk about both big banks as if they were equals. Hardly.

In Charlotte there were a lot of banks but the one that knew how to engage in banking aggressively and effectively was Bank of America (formerly NationsBank, NCNB and North Carolina National Bank). While Bank of America was cutting a deal to get the US Government bail them out of all of their loan losses on the Interfirst Texas acquisition (and also letting them claim a tax deduction on losses they didn't really pay for to boot), First Union/Wachovia was losing money in one deal after the other. The money store, Sub-prime lending, negative interest mortgages. What a list.

Wachovia has had a checkered recent financial history making bad financial deals left and right but always managing to stay afloa t usually by firing the CEO and telling Wall Street and the public that ‘things had changed’. Until now.

I am sure there will be much discussion about why it happened and who was at fault. In Charlotte, attention has turned to try and convince “Citi” to stay in Charlotte. Observer reporters write breathlessly about the possibilities as though they were real. They won't, but for now they will say that Wachovia’s ‘retail’ business (it bank branches headquarters) will be in Charlotte. That will last about a year or less. Most high paying jobs will go elsewhere. That is a loss that could have been avoided.

So what have Wachovia’s exec's been doing all these years to prevent their demise? Did they focus like a laser beam on the fundamentals of their business (banking) or follow best banking practices (if they exist today)? Nope.

To begin with, they were deciding to build another edifice to themselves in the form of a fancy skyscraper in downtown Charlotte. A monument to the ‘me’ generation now running the bank.

In addition, Wachovia also spent a lot of time and shareholder money pledging to build ‘arts’ facilities in Charlotte. The deal, negotiated with the City and County provides that Wachovia will construct these non-profit arts facilities initially with shareholder mon ey, incur the debt on Wachovia’s books and then recoup the future mortgage payment from the City and County who agreed to give back 80 to 90% of the property taxes on the new skyscraper. It was structured this way to avoid having to ask taxpayers about the debt.

If you think about it, Wachovia was basically operating as a big non-profit at the expense of their shareholders. They did what the Charlotte politicians and the local power brokers wanted but not what their shareholders wanted (an ever increasing stock price). It was a cozy deal for everyone except for Wachovia’s employees and their shareholders.

Now that Wachovia is ka-put and the stock worthless perhaps those that ran it and the investors (institutional or otherwise) into the dirt should consider whether Wachovia spent to much time playing ‘good corporate citizen’ for the very few, rich and well connected and not enough time actually engaging in the business of banking and making money.

Six months ago, I ask staff to provide the Commission with a list of the impact to the grand arts conglomeration and was told they would get around to it. I wondered if the money that Wachovia was dumping into the arts projects would be impacted by their questionable financial condition. I was told not to worry. I suggested that we add a provision to keep jobs in Charlotte and prevent overseas job transfers. The Democrats on the Commission said ‘no way’ (it would have tied Wachovia’s hands and they are a ‘good corporate citizen’).

I am not Alfred E. Newman. As a CPA I did worry but in Charlotte asking about any ‘arts’ project is verboten and pol's are simply not allowed to ask Wachovia to be responsible.

To me, a corporation is not being a ‘good corporate citizen’ when it cuts a deal that is both bad for the average taxpayer and results in the death of the institution that could cost Charlotte tens of thousands of jobs. To be sure, the arts deal did not ‘kill’ Wachovia alone but it certainly did distract its leaders during a time when their attention should have been exclusively focused on survival.

In Charlotte however we define Wachovia as a ‘good corporate citizen’ regardless of the cost of such deals to shareholders and the community at large. Wachovia was distracted by and engaged in projects pushed by the select few (skyscrapers, theaters, museums and other such amenities) to make Charlotte into what the few view as “world class”.

I wonder if losing Wachovia makes us more world class than we were yesterday?

The City and County have not received ANY information on the status20of these various indirect financed projects by Wachovia.

I don't know what Wachovia (or Citi) will do with these arts projects that are in ‘progress’ with Wachovia shareholder money but if I were a guy who had invested in Wachovia at $18 a share I might want to sue the exec's for not paying attention to business, engaging in philanthropy at their expense and using their money without their permission to engage in large scale projects that have NOTHING to do with the business of banking but everything to do with Charlotte's culture of elitism at shareholder expense.

Some questions about Wachovia’s ‘arts’ projects that remain unanswered as a result of their failure:

·Are these projects being financed with Wachovia cash?
·Are the advances owned by the individual banks to be sold or the ‘holding company’?
·How far along are each of the facilities?
·Is construction continuing or will it be halted while the Wachovia deal is worked out (they halted trading of the stock but won't halt construction of arts projects)?
·Will Citi acquire the obligation to finish construction?
·Will Wachovia be able to finish if Citi does not acquire that obligation?
·Are these projects effectively cancelled due to the Citi acquisition?
·How much of an obligation does government have to pay the future $50 million in property taxes?
·Does the government have a legal obligation to purchase the defunct arts loans that Wachovia advanced?

Banking is about lending money and insuring repayment. It is about taking deposits from people and promising to keep them safe. It is not about financing an uptown skyscraper that is not needed (but could have been built for less in other places), nor constructing museums, theaters and other items with shareholder money up front.

I don't own any Wachovia stock but if I did, I would certainly consider a suit against the executive management and board for their imprudence and poor lack of judgment in allocating scarce Wachovia resources.
_________________________________
Commissioner Bill James has represented District 6 on the Mecklenburg County Commission (Charlotte, NC) for 12 years. He is a CPA by trade having spent 15 years or so working for various ‘big 6’ accounting firms dealing with banks and financial institutions around the globe.

(Bidding war for B & A! Bidding war for B & A!)

So where is Citi getting the money to stay afloat?

You and all the rest of us happy taxpayers.

Excellent local knowledge questions...did he send a similar letter to Wells Fargo?...perhaps without the ‘suing’ focus this time! So far as I know all that ‘suing’ executives succeeds at is lining the pockets of local lawyers and their friends.(same thing goes for suing Union leaders).

Back to the spotty history of Wachovia, First Union (who never met a bank fee it didn’t like), et al...all the way back to the Philadelphia Savings Fund Society. Both good banks and bad banks were integrated into this mammoth ‘do-gooder’ elitist enclave. All that said and not one mention of ACORN...makes one think.

When First Union purchased CoreStates, they made a huge “community grant”... from the press release:

$100 million foundation

http://www.scribd.com/doc/1341075/US-Federal-Reserve-attachment

The good stuff starts on page 28.

We can clearly see how Wachovia’s “altruism” has destroyed the lives of hundreds of thousands of senior citizens.