Oct 3, 2008 11:23 pm US/Eastern
FDIC, Citi Challenge Wells Fargo For Wachovia
Customers Left Confused About What Will Happen Next
FORT LAUDERDALE (CBS4) ―
South Florida Wachovia customers are in the middle of a bank battle. Just when you thought the sale of Wachovia couldn't get any stranger, it does. Earlier this week, Citigroup announced it was purchasing Wachovia with help from the federal government. Then, early Friday morning, Wells Fargo announced it was purchasing Wachovia. Now, the FDIC and Citigroup are saying, to quote ESPN announcer Lee Corso, "Not so fast my friend."
Now Wachovia customers in South Florida, who temporarily thought a Wells Fargo deal would have helped them, are pretty much confused.
"It's wonderful. I do business with them (Wells Fargo) in Texas. I'm thrilled they're coming out here," Wachovia customer Melinda Davidson told
CBS4 Reporter Joan Murray. "They're wonderful, a strong bank. I'm excited."
Other customers were still upset. "They said it wasn't their fault. And I said, 'What about your CEO who had to resign in July if he had no culpability?' I said, 'What about my IRA that went down 30 percent because your bank went under?'' said Wachovia customer Bill Whelan.
The head of the FDIC said the agency is standing behind the agreement it made with Citigroup Inc. to buy Wachovia Corp. despite Wells Fargo & Co.'s new $15.1 billion deal trumping Citigroup's plan.
Federal Deposit Insurance Corp. Chairman Sheila Bair said Friday the agency "stands behind its previously announced agreement with Citigroup."
Citigroup, for its part, demanded that Wachovia call off its deal with Wells Fargo, saying its agreement was exclusive.
Under the $2.1 billion deal struck earlier, Citigroup agreed to absorb as much as $42 billion in losses from Wachovia's $312 billion loan portfolio. The FDIC agreed to cover losses above that level.
The surprise announcement early Friday by Charlotte, N.C.-based Wachovia that it had agreed to be acquired by Wells Fargo in the all-stock deal - without government assistance - upended what had appeared to be a carefully examined arrangement and caught regulators off guard.
The FDIC will review all proposals and work with the regulators of Wachovia, Citigroup and Wells Fargo "to pursue a resolution that serves the public interest," Bair said.
The Federal Reserve, which has regulatory oversight of the three big banks, said it hasn't had time to review the proposed sale of Wachovia to San Francisco-based Wells Fargo but will work to ensure that all creditors and depositors of Wachovia are protected.
The Fed said regulators would be working with Wachovia and Wells Fargo "to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability."
Some customers say they hope this mess will resolve itself soon. "It has been unsettling, not knowing if in six months they're going to go under and everything we have in there, we'll lose," lamented Nyandra Foreman.
Other Wachovia customers say they'll stay on the sidelines and wait until the dust settles. "Most people feel we are just holding on until the storm settles," Melody Dresseno said, "I think after the Presidential Election, things will settle for normal people."
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