N.C. treasurer: Wachovia-Wells deal not fair
Birmingham Business Journal
N.C. Treasurer Richard Moore has 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 state workers.
San Francisco-based Wells (NYSE:WFC) is buying Wachovia in a deal now valued at $13 billion. The deal is worth much more than an offer by Citigroup Inc. (NYSE:C) to acquire Wachovia’s banking operations for $2.16 billion. Wells trumped the Citi deal on Oct. 3.
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.
He says even Wachovia’s worst bets — notably, a sour mortgage portfolio it acquired in California by purchasing Golden West Financial Corp. — didn’t give the company as bad an exposure to the market as the company’s detractors have said.
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.
“Is it appropriate to have a shotgun marriage where the shareholders don’t get a fair vote?” Moore asked.
Comparing the Wachovia collapse to the possible bailout of Detroit automakers being backed by President-elect Barack Obama, Moore noted Wachovia employs more workers in the United States than General Motors Corp. (NYSE: GM).
“But yet we’re going to watch this shotgun marriage take place that’s gonna wipe out a lot of their jobs,” Moore told Squawk Box.
Moore also told CNBC the state pension fund does not own many shares of General Motors or Ford Motor Co. (NYSE:F). It does, however, carry “a lot” of the companies’ corporate bonds.
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.
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