"Wachovia Corp’s investment portfolio “began to go up in smoke” in the fall of 2008 with the collapse of the “housing boom.” Depositors got nervous and began “pulling their money out of the bank.” (Giftopia - Matt Taibbi)
Something had to be done. The bank was deemed to be “systemically important” by a frantic Fed and FDIC.
Wells Fargo was urged to assist, but was naturally reluctant to get involved. But then some old-fashioned “backroom” prompting by the Fed/Treasury sweetened the deal, and Wells Fargo stepped up to save the day.
Treasury Secretary Hank Paulson “promised” a deal that would work out to “an almost $25 billion tax break for Wells Fargo” going forward. And then Wells Fargo received their TARP apportionment of $25 billion in cash. Wells Fargo immediately decided it could “help the government out” and purchase Wachovia – for the fire-sale price of $12.7 billion.
Thank you America’s working family taxpayers.
Wachovia Corp., which almost collapsed in September 2008 because of a deposit run, floated itself with Federal Reserve funds the following month after becoming the object of a takeover battle between Citigroup Inc. and Wells Fargo & Co. Fed assistance for Charlotte, North Carolina-based Wachovia included a $29 billion loan on Oct. 6, 2008, from the discount window, the biggest of any U.S. bank during the crisis from the central bank’s 97-year-old lender-of-last-resort program. Wachovia also borrowed from the Term Auction Facility, bringing total Fed liquidity to $50 billion.
Peak amount of debt on 10/9/2008: $50B"