Wells-Wachovia Blow Back

The hot blast of blow back from Wells Fargo's acquisition of Wachovia is flattening the banking landscape, screaming as it is at super sonic speed across the financial landscape. The graft disguised as a merger benefits all the insiders while keeping the outsiders out and footing the bill. First it creates an overnight mutual fund monopoly for Wells Fargo.

Wells Fargo & Co.’s $15.1 billion purchase of Wachovia Corp., Charlotte, N.C., would create a potential money management heavyweight with about $600 billion in client assets under management.

A transaction overview released today by Wells Fargo, titled “A Superior Deal for Shareholders,” emphasized the mutual fund side of the deal. According to the San Francisco-based financial services giant, it had $151.3 billion in mutual fund assets as of June 30, while Wachovia’s Evergreen Investments subsidiary had $107.1 billion.

But this nice ancillary little benefit was just an accidental consequence of the shear size of combined company emerging from the deal. But the real deal is about the taxes and the real story is as usual crime, connections and cover up. First Robert Steel the non-banker, recently appointed CEO of Wachovia was Secretary Paulson long time right hand man at Treasury and Goldman Sachs before that. Next came the collusion between the IRS, Treasury and the banks to change the tax law in a closed door back room session.

This new rule apparently allows Wells Fargo to accelerate the use of Wachovia's huge write-downs as an offset to their own income, saving Wells Fargo a substantial amount in taxes over the next several years.

Substantial to say the least, significant because at a time of exploding national debt caused largely by bail outs of the banks money that Wells Fargo would have paid in taxes, is being used to buy Wachovia. Another significant of the deal is the timing, on Sept. 26, after reviewing Wachovia's books, Wells Fargo balked and walked, leaving the mess to Citigroup, then on Sept. 29, the IRS made a rule change that gave Wells Fargo, Wachovia out of taxes it wouldn't be paying, then on Oct. 3 with all eyes on Congress passing the bailout bill Wachoiva slipped into Wells Fargos dirty pockets in what was sold as a merger.


Meanwhile, as the ponzi wheel turns the FED spin never ends. 'No cost to taxpayers' is suddenly in vogue and the battle cry du jour.

In announcing its acquisition, Wells Fargo on Oct. 3 issued a press release, which stressed that -- unlike the Citigroup offer -- its acquisition "requires no financial assistance from the Federal Deposit Insurance Corporation or any other government agency.

In a conference call with Wells Fargo investors the same day, Wachovia Chief Executive Robert Steel said the takeover "poses no cost to the United States taxpayers."

Two days later, Wells Fargo issued another press release saying that its merger, "in stark contrast to Citigroup's proposal ... does not demand financial support from our government."

Oh so that's why the IRS changed the tax law with Steel, Paulson and the FED looking on, and the fact that Wells Fargo did an about face on the deal, just after the tax law change is all coincidence.
Not on my planet. The only thing to motivated Wells Fargo to acquire Wachovia was the tax law change. That's a cute little way to recapitalize the banking system and the real reason Wells swooped down like a blot from the blue to claim the rotting carrion that had been Wachovia from the jaws of Citigroup.