"North Carolina State Treasurer Richard Moore slammed Wells Fargo & Co.’s proposed purchase of Wachovia Corp., calling the deal “highway robbery.”
In a Wednesday morning appearance on CNBC’s Squawk Box, Moore said it didn’t make sense for the federal government to have engineered a buyout of Wachovia. Other banks, Moore points out, have been propped up by the federal government and are eligible for funds from the $700 billion federal bailout package.
“Why does the government get to decide who wins and who loses?” asked Moore, whose job puts him at the helm of North Carolina’s $72 billion pension plan for North Carolina’s state workers.
...The Wells purchase values Wachovia at roughly 15 percent of what the Charlotte bank was worth a year ago. Moore says Wells is getting a “great deal.”
But it’s not a fair deal, he says, in light of the number of banks the government is propping up with its “troubled asset relief program.” Under TARP, banks are getting cash infusions by selling preferred stock directly to the government.
All of the nation’s big banks, Moore told CNBC, are participating in the program, and he thinks Wachovia should have been kept alive until it received the same opportunity.
...“We’re going to be cashed out of our Wachovia stock at around $6 or $7 when I can’t find anyone who tells me that given time, under the TARP, it’s a $25 stock,” Moore says.
...As of Oct. 31, CNBC says, the state pension fund owned 3.22 million shares of Wachovia (NYSE: WB).
Moore also expressed consternation at a controversial provision of the Wells-Wachovia deal that essentially guaranteed the sale would go through over any shareholder objection. In October, Wachovia issued preferred stock to Wells that gave Wells 40 percent of the ballots to be cast in the shareholder vote on the deal.
...Moore, a Democrat, made an unsuccessful run at the party’s gubernatorial nomination this year. He is serving out his term as state treasurer and will be replaced by Democrat Janet Cowell."
Wachovia's asset management unit, Evergreen Investments, manages some money for the N.C. pension fund. Moore said it's too early to say if that relationship would change should the Wells deal go through.
Moore's successor, Democratic state Sen. Janet Cowell, was unavailable for comment Wednesday.
He and other critics think that the government's $700 billion bank bailout could have helped Wachovia survive if it had come earlier. The original plan passed Congress on the day the Wells deal was announced. In mid-October, Federal Deposit Insurance Corp. chairwoman Sheila Bair said that the government's capital injection program for banks “definitely would have made a difference” for Wachovia if it had come earlier.
"North Carolina's Attorney General And State Treasurer Duke It Out"
"One of the unusual things about the litigation over the Wachovia-Wells Fargo merger ...was the flood of letters and emails written to the Court. Judge Diaz received over 200 pieces of correspondence about the case.
The most high profile of those communications was the one from State Treasurer Richard Moore... Ever since Moore wrote his letter, I've been wondering why he didn't move to intervene in the case. That would have let him speak directly on behalf of the North Carolina Retirement System (the NCRS), which has lost nearly $20 million on its investment in Wachovia.
...In filings in the Southern District, the North Carolina Attorney General and the State Treasurer had gone to war over the authority of the State Treasurer to initiate the litigation and to retain outside counsel to represent the NCRS.
This is a thorny and interesting issue of the power of the State Treasurer versus that of the Attorney General. Maybe it will be resolved one day in a court closer to home."