Wells Fargo Settles Dispute With Citigroup Over Wachovia Purchase
Wells Fargo has agreed to pay $100 million to settle a dispute with Citigroup over the acquisition of Wachovia. The lawsuit stems from one of the most tumultuous weeks in Charlotte's banking history. On the brink of collapse in October 2008, Wachovia rushed toward the altar for a merger with Citigroup. But Wells Fargo came along and swept Wachovia off its feet for a better price. The jilted Citigroup went straight to court. Now, after two years of litigation over breach of contract, the once-betrothed banks have agreed to settle for an amount Duke University finance and securities law professor James Cox calls, "chump money." Cox says the $100 million Wells Fargo will pay Citigroup is a quick way out in a case that was ambiguous to start with. "This would have been years and years to find any sort of resolution to," says Cox. "And the legal bills on these things are just staggering. Then of course there's the ongoing distraction." And right now, Cox says the big banks have other things to worry about - like the mounting investigations and legal threats related to the credit crisis and foreclosures.