...regulators had rejected a Wachovia proposal to essentially "rescue" itself
and that Wells Fargo initially balked at a deal with Wachovia prior to Citi's acquisition pact
because Wells officials "didn't understand" Wachovia's commercial loan portfolio.
On Sunday, Sept. 14, as Lehman Bros.' last suitors backed away
and Merrill Lynch scrambled to find a buyer,
Wachovia's top executives mulled over a comparatively trivial matter:
the scheduled appearance of its chief executive, Robert Steel,
on CNBC's Mad Money the following day.
Steel understood the gravity of what was happening on Wall Street.
Before taking Wachovia's top job in July,
he had been Henry Paulson's deputy secretary at the Treasury Department,
responsible for credit-market triage after the collapse of Bear Stearns.
Earlier, he'd worked with Paulson as head of global equities at Goldman Sachs.
But as dangerous as the crisis was to the remaining investment banks,
the situation looked less dire from Wachovia's headquarters in Charlotte.
Though the bank was staring at billions of dollars of losses on troubled mortgage loans,
its $448 billion of stable deposits buffered it from the panic in the credit markets
that had felled Lehman and left the surviving investment banks gasping for liquidity.
that very few knew of, like Steel, Paulson, Giethner etc...?
Shortly after 6 p.m. on Monday the 15th,
Steel strode onto Mad Money's cartoonishly cluttered set and shook host Jim Cramer's hand.
Introduced as someone "who knows how bad things are, but also knows how they can get better,"
Steel spoke quickly and with conviction about the crisis and Wachovia's own resilience.
...Steel had joined Wachovia
...and he had immediately bought one million shares of Wachovia's stock
as a show of faith in the bank and himself.
If Wachovia had undisclosed Fed lines of credit, since March 27, 2008,
how was Steel's purchase not a trade on insider information
if he joined the firm on July 9, 2008, while borrowing about $12.5 billion?
...With regulators involved every step of the way...
Meaning the regulators knew of the undisclosed credit lines,
which if not disclosed in securities filings
would be a SARBOX violation?
Even Wachovia general counsel Jane Sherburne,
who had requested the memo as part of the bank's contingency planning,
thought such a scenario was far-fetched.
Why havn't the SEC's Michael Mashburn, and FINRA's Daniel Stefek
both of whom recieved NC Securities Division File No. 12 SEC 84 in late June,
contacted George Hartzman Yet?
A former special counsel to the Clinton Administration with the dark humor requisite
for managing Whitewater scandal control,
Sherburne had earned a reputation for troubleshooting at her previous job
as head of the legal team for Citibank's global consumer division.
...Steel was hired on July 9, 2008
– the same day Wachovia revealed that it had lost $8 billion in a single quarter.
When did Wachovia start borrowing from the Fed?
March 27, 2008?
...With the help of two key deputies,
Sherburne and brokerage division head David Carroll,
Steel spent his first three months on the job offloading risk,
slashing the bank's troubled investment banking and mortgage divisions,
and exploring capital-raising options.
Did David Carroll know?
...Citigroup, ...was the first to call about a potential merger.
If Wachovia wanted to do a deal, CEO Vikram Pandit said,
Citi wanted its retail deposit base.
...Second came Morgan Stanley CEO John Mack,
whose investment bank was widely believed to be the next to fail.
...negotiations were still underway when Steel got a call from Kevin Warsh,
a governor at the New York Fed
who often did legwork for Treasury Secretary Paulson.
Did Warsh and Paulson know?
...Steel called CEO Lloyd Blankfein
...By Saturday Sept. 20, Wachovia had dispatched a small team,
including Carroll, Sherburne, and Wachovia adviser Peter Weinberg, to Goldman's offices.
Did Weinberg know?
......the Treasury secretary had called Wachovia board member Joe Neubauer
to tell him that a merger would be "a marriage made in heaven" in terms of addressing systemic risk,
says a person Neubauer told about the call.
Did Neubauer or the other person know?
The imminent passage of the Troubled Asset Relief Program,
Paulson reportedly said, would provide legal cover for government assistance.
Meaning political cover?
But not cover for the lines of credit,
which remained undisclosed?
...the plan was ready to submit to the government.
Did those in the government who recieved the plan know?
...a principal concern was the "optics" of a bailout:
The CEO of Goldman Sachs was negotiating a merger
with the former head of Goldman Sachs equities,
all with the explicit support of the former CEO of Goldman Sachs.
...The Fed had agreed to convert Goldman and Morgan to bank holding companies.
Without disclosing relatively open lines of credit from the Fed
to these firms?
...the bank had a key potential partner:
Warren Buffet.
A few months earlier, Wachovia had sold $9 billion in discounted auction-rate securities
to a subsidiary of Berkshire Hathaway, the world-famous value investor's holding company.
Buffett had expressed potential interest in purchasing a Wachovia stake then,
and his interest had become more concrete in the wake of Lehman's collapse.
Did Buffett trade on inside information
...Wachovia's ...stock dropped 27 percent on Friday,
and corporate customers began to pull uninsured deposits.
...Carroll gave a speech about the passing of a great institution.
With no mention of what?
...By monitoring electronic access to the bank's financial data,
Wachovia watched Citi staffers pore over its books on Saturday.
Did the Citi staffers know?
...chairman Richard Kovacevich assured Steel
he was preparing to make an all-stock offer.
...failing banks were the FDIC's bailiwick.
Bair was in charge...
Did Bair know?
Has anyone
like the SEC's Michael Mashburn, and FINRA's Daniel Stefek asked?
Her staff solicited Wells and Citi's bids.
Did Bair's staff know?
...What if Wachovia submitted a bid to rescue itself?
Nothing in the law ruled out allowing Wachovia to become its own caretaker.
With who's money?
...Wells wanted up to $20 billion in upfront assistance.
On top of the other $95 billion most didn't know about?
...Wells Fargo had had more time to mull over Wachovia's books,
and legislation passed by Congress earlier in the week
meant the deal would now have significant tax advantages.
Did Congress know when they voted for the tax advantages,
that both Wells and Wachovia has undisclosed lines with the Fed?
...With Steel still in the air, Sherburne discussed Wells' offer
with Sullivan & Cromwell's H. Rodgin Cohen,
the chairman of the firm and the de facto dean of the M&A world.
Did Cohen know?
...Steel ...was presented with a contract.
...Wachovia called a board meeting for 11 p.m.,
and then turned its attention to another constituency: the federal agencies.
Did Wachovia's board know?
How could they not have known?
...Before Wachovia's board meeting, Sherburne had herded Wachovia's negotiators,
at least a dozen senior managers and lawyers,
into a conference room and all but barred the door.
Did those at that meeting know?
...Regulators had no choice but to consider the institution a systemic risk,
and propped Citi up with $20 billion capital injection
while agreeing to cover some $400 billion in losses.
Were those regulators aware of the other loans?
..
.
Re: North Carolina Securities Division File No. 12 SEC 84
Dear Mr. Mashburn:
...Mr. Hartzman's compaint of the Envision plan's alleged inaccuracies
is better addressed by the SEC.
If left at 0%, the Return Discount Rate
will not be displayed on any Envision report pages.
If you choose a Return Discount Rate >0%,
this assumption will be displayed on the Investment Plan Assumptions report page.
INTERNAL USE ONLY: Key Client Solutions Group Envision®
Mr. Hartzman's compaint of Wells Fargo's alleged violations of the Sarbanes-Oxley Act
are also better addressed by the SEC.
Sincerely,
Tasha W. Sheehy
Enforcement Attorney
State of North Carolina Department of the Secretary of State
cc: George Hartzman (without Enclosure)
cc: Daniel J. Stefek, Director, FINRA District 7 - Atlanta
Mr. Hartzman's compaint of the Envision plan's alleged inaccuracies
is better addressed by FINRA
because the Envision plan appears to be an investment analysis tool
addressed by FINRA rule.
Tasha W. Sheehy
Enforcement Attorney
State of North Carolina Department of the Secretary of State
cc: George Hartzman (without Enclosure)
Why havn't they called?
Why would they not want to contact a whistleblower?
Isn't that the job?
No comments:
Post a Comment