Too Connected to Jail; The Short, Short Version

Former Wachovia CEO Robert Steel, with the help of former Goldman Sachs colleauge Peter Weinberg, misled Wachovia's board of directors to sell Wachovia to Wells Fargo for a $50 million commission of which Goldman Sachs recieved half of, without telling Wachovia shareholders of massive Federal Reserve credit lines, with the help of key Bush and Obama administration personel.

Wells Fargo CEO John Stumpf knew and went along with the merger, signing false SEC certifications in the process.

The following was filed with the Middle District of North Carolina United States District Court on December 3, 2014 in an Amended Complaint;

Robert Steel served as Under Secretary for Domestic Finance of the United States Treasury under Hank Paulson until October 10, 2006, before becoming CEO of Wachovia on July 9, 2008, after working at Goldman Sachs from 1976 to 2004 with former Treasury Secretary Hank Paulson, Perrella Weinberg Partners' Peter Weinberg, former Chairman of the Federal Reserve Bank of New York Stephen Friedman (January 2008 - May 7, 2009) and current CEO Lloyd Blankfien.
Steel was very close to Paulson at Goldman Sachs;

Bloomberg News reported that "[Robert] Steel, 62, who had previously worked with Peter Weinberg at Goldman Sachs Group Inc., considered joining Perella Weinberg when the firm opened its doors in 2006... Instead he went to work for the government, where he was a Treasury under secretary before he became CEO of Wachovia in July 2008".

As Robert Steel served as CEO of Wachovia as Stephen Friedman served as Chairman of the Federal Reserve Bank of New York, they both currently work together at the Aspen Institue;

Robert K. Steel


Stephen Friedman

"Timothy Geithner helped design and run the central bank’s lending programs", and was the president of the Federal Reserve Bank of New York from 2003 to 2009, after which he became Treasury Secretary.



During Steel's tenure at the U.S. Treasury, he revived the President's Working Group, the core group to respond to the global economic crisis of 2008.


Steel "revived the President's Working Group" under Paulson, which included Federal Reserve Chair Ben Bernanke and SEC Chair Christopher Cox.

Before arriving at Wachovia, Steel was in a "need to know position" concerning massive undisclosed material borrowing by many financial firms administered by the Federal Reserve Bank of New York, most of which occured under Stephen Friedman and Tim Geithner's tenure, that overwhelmingly most firms did not provide details of within required SEC filings, especially the size of credit lines available to Wachovia and Wells Fargo;


From 2006 through 2008, current SEC Chair Mary Jo White's husband John served as Director of the Division of Corporation Finance at the U.S. Securities and Exchange Commission, which oversees disclosure and reporting by public companies in the United States.  Mr. White was head of the SEC division which oversees disclosure and reporting by public companies.  "[Mr. White] played an integral role in the SEC’s response to market turmoil throughout 2008, ensuring that the Division acted swiftly to facilitate strategic transactions and access to capital for public companies."

Stephen Friedman, while administering undisclosed loans to most of Wall Street as Chair of the Federal Reserve Bank of New York purchased Goldman Sachs stock when it traded at historical lows in the fourth quarter of 2008 without being arrested and prosecuted for insider trading by Obama's Justice Department.

On March 27, 2008, Wachovia borrowed a not disclosed $3.5 billion from the Federal Reserve’s Term Auction Facility (TAF), unencumbered Assets, representing assets free and clear of any encumbrances such as creditor claims or liens, showed that Wachovia had available unreported Federal Reserve credit line worth $53.652 Billion, as discovered by Plaintiff in 2014 posted on the Federal Reserve's website as of August 2, 2013 as confirmed by Federal Reserve Public Affairs officer Cecelia Bradshaw on November 20, 2014.

On 6/30/2008, Wachovia's outstanding Federal Reserve provided Term Auction Facility borrowings totaled $10 billion, representing a material 29.82% of the company's market capitalization.

Wachovia Corporation's June 30, 2008 form 10-Q certified by Robert Steel did not disclose the type, terms, interest charges, dates, collateral, values or amounts of financial assistance provided by the Fed.


On July 22, 2008, Mr. Steel personally purchased 1,000,000 shares of Wachovia’s stock as the company’s undisclosed Federal Reserve Term Auction Facility (TAF) borrowing reached $12.5 billion, representing a material 34.85% of the company's market capitalization.


On September 23, 2008, Goldman Sachs announced Warren Buffett, who owned 9.2% of Wells Fargo in 2007, purchased $5 billion of Goldman Sachs perpetual preferred stock warrants to purchase $5 billion of Goldman Sachs common stock.

"We view it as a strong validation of our client franchise and future prospects," said Lloyd C. Blankfein, Chairman and CEO of The Goldman Sachs Group, Inc.”

On 9/25/2008, when Wachovia borrowed an undisclosed $5 billion from the Fed's Term Auction Facility, Unencumbered Assets, representing the Fed credit line available to Wachovia was $56.848 Billion.  The $12.5 billion outstanding borrowings by Wachovia on 9/25/2008 represented a material 42.26% of the companies market capitalization of $29.576 billion.

Wachovia's $56.848 Billion in Unencumbered Assets with the Fed represented almost twice the company's market capitalization.

Wachovia CEO Robert Steel falsely certified Wachovia's Quarterly Report as of September 30, 2008, as the $12.5 billion borrowed by Wachovia on 9/30/2008 represented a material 165.43% of the companies market capitalization;

"I, Robert K. Steel, certify that:  I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 of Wachovia Corporation;  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report."


The Federal Reserve unanimously approved Wachovia's merger with Wells Fargo on October 12, 2008, as Wachovia's Fed Discount Window borrowings were a material 449.72% of the company's market capitalization.

On October 31, 2008, the Federal Reserve was aware Wachovia and Wells Fargo CEO's Robert Steel and John Stumpf lied in a merger related SEC filing.

"Wachovia's financial advisors (Goldman Sachs and Perella Weinberg) informed Wachovia that the type of analysis customarily performed was not meaningful for Wachovia because of the extraordinary circumstances faced by Wachovia and its severe liquidity crisis..."


Wachovia's stock price on date of first TAF loan: 3/27/2008 - Last Trade: 27.07

Wachovia price on date of completed merger with Wells: 12/31/2008 - Last Trade: 5.54

As of January 31, 2008, there were 1,981,983,990 Wachovia shares outstanding.

27.07 - 5.54 = 21.53 x 1,981,983,990 = $42,672,115,304.70 Wachovia market capitalization lost between the first undisclosed TAF loan and Wells Fargo merger.

Items 24 - 52;

Following the merger, Steel was invited to join the board of Wells Fargo and served on the firm's credit and finance committees.  In 2010, upon being appointed Deputy Mayor for Economic Development of New York City, Steel resigned his seat on the Wells Fargo board.

On June 22, 2010, Steel was appointed by New York City Mayor Michael Bloomberg to serve as Deputy Mayor for Economic Development.

On August 22, 2011, Bloomberg's Bradley Keoun and Phil Kuntz wrote "Wall Street Aristocracy Got $1.2 Trillion in Secret Loans" which only mentions collateral and securities pledged for Morgan Stanley; "...Morgan Stanley borrowed $61.3 billion from one Fed program in September 2008, pledging a total of $66.5 billion of collateral". 

Bloomberg News failed/declined to report massive available credit lines for tens of other firms including Wachovia and Wells Fargo, after Robert Steel went to work for Michael Bloomberg.


After paying Peter Weinberg's Perella Weinberg Partners $25 million and Weinberg and Steels' former employer Goldman Sachs $25 million to advise Wachovia on the merger with Wells Fargo, Steel became CEO of Perella Weinberg Partners in 2014.

Robert Steel earned some of the money he allocated to Perella Weinberg Partners as Wachovia's CEO, after he sold Wachovia to Wells Fargo for substantially less than it was worth, with the help of his former collegues from Goldman Sachs at the New York Fed and the Treasury Department, along with current SEC chair Mary Jo White's husband without being prosecuted by the Obama Administration's Justice Department and without Bloomberg News or any other mainstream news outlet reporting the story.

George Hartzman

No comments: