Wells Fargo & Co. aimed to take advantage of a change in tax law that occurred two days earlier when revising a 2008 offer for Wachovia Corp. and trumping a bid by Citigroup Inc., the Financial Crisis Inquiry Commission said.
Federal Deposit Insurance Corp. Chairman Sheila Bair told the panel that Richard Kovacevich, Well Fargo’s chairman, informed her that IRS Notice 2008-83 -- which gave tax breaks to acquirers of struggling banks -- “had been a factor leading to Wells’s revised bid,” according to the report. A previous offer by Wells Fargo had been rejected as regulators rushed to stave off bankruptcy at Wachovia.
Wells Fargo’s offer of $15.1 billion in stock derailed Wachovia’s agreement to sell its banking operations to Citigroup, which was reached a day before the IRS notice, according to the report. That led to two years of litigation among the banks. San Francisco-based Wells Fargo posted more than $20 billion in profit since the deal, while Citigroup required a $45 billion U.S. bailout.
Comment: Nothing new but an interesting recap. We are now 2 years into the merger. I now am on a team all in North Carolina and report to a former Wachovia manager.