Hayes backing Wachovia deal with Wells Fargo
U.S. Rep. Robin Hayes, R-N.C., sent a letter Friday to the chairwoman of the Federal Deposit Insurance Corp. urging her agency not to stand in the way of Wells Fargo’s proposed merger with Wachovia.
“Like everyone in North Carolina,” Hayes said in a statement from his office, “my goal for Wachovia is to achieve the best outcome for employees, shareholders, customers and the community.
“If the FDIC is going to push against that outcome, then we are ready to push them back ó and it’s going to be a hard push.”
Hayes’ letter went to Sheila Bair, chairwoman of the FDIC in Washington. He told Bair he would like to know why the FDIC has taken the position it has of opposing the Wells Fargo deal and favoring the Citigroup purchase announced Monday morning.
A week ago, Wachovia saw its stock price drop by 27 percent, and it was experiencing a run on deposits.
Regulators feared other banks wouldn’t provide Wachovia with short-term funding it needed when it opened for business Monday.
Over the weekend, the FDIC consulted with other regulators and required Wachovia to reach a sale agreement with Citigroup, after Wells Fargo passed on a deal last Sunday.
In a surprising development Friday, Wells Fargo and Wachovia announced a $15 billion merger that obliterated the pending Citigroup Inc..-Wachovia marriage.
Citigroup was going to buy most of Wachovia’s banking operations for $2.1 billion in stock, with assistance from the FDIC. It also would not make a direct payment to Wachovia shareholders, although they would have owned what was left of the company.
The Wells Fargo deal is equal to $7 a share for Wachovia investors, and it would not include FDIC assistance.
Citigroup has indicated it will fight the Wells Fargo-Wachovia deal, saying it was a breach of an exclusivity agreement between Citi and Wachovia.
“I certainly understand why the other party (Citi) is opposed ó as evidenced by terms of this latest merger, they got a great deal and they want to keep it,” Hayes said in his letter to the FDIC.
“But for the life of me, I cannot understand why the FDIC would stand in the way of Wachovia entering into an agreement that seems better for their employees, shareholders, customers and the community around them. And since FDIC is not part of this merger, it would seem that it’s better for the taxpayer as well.”
Hayes added that the deal announced Monday was anything but a negotiated deal with two willing parties.
“It was a forced arrangement with FDIC in the middle,” he said.