Citigroup is finally getting its due, two years after Wells Fargo snatched adjustable-rate-mortgage disaster Wachovia from the megabank’s grasp. As part of a settlement over the propriety of the October 2008 Wells-Wachovia merger, Wells is paying Citigroup $100 million.
In September 2008, when the entire financial world seemed to be coming apart, an enfeebled Wachovia was set to merge with Citigroup in the kind of government-sanctioned shotgun wedding that was fashionable at the time. As part of that deal, the government agreed to backstop some losses on Wachovia’s highly troubled asset portfolio. Days later, in came Wells Fargo, which trumped Citi’s offer by doing the deal without government aid.
Predictably, Citigroup got all grumpy about this — of the big banks, it was largely left out of the fire-sale acquisition game — and so it sued Wells and Wachovia for a whopping $60 billion for breach of an exclusivity deal. (It’s also worth noting that Citi was probably the poorer match for Wachovia, in that it later accepted $45 billion in government bailout money and retains Uncle Sam as an investor to this day.)
“We are glad to put this matter behind us and we look forward to our two institutions working together constructively in the future,” both companies said in a statement. And so one of the great love triangles of the financial crisis draws to a conclusion that’s being spun as happy by the banks’ respective public relations departments.
mtaylor [at] observer.com | @mbrookstaylo0r