Durham native and former Wachovia CEO Robert Steel told a panel probing the Charlotte bank's near-collapes in 2008 that he was ordered by the FDIC to sell the company to avoid a banking system meltdown, Bloomberg News reports.
FDIC head Sheila Bair informed Steel on Sept. 28, 2008, that “Wachovia’s situation posed a systemic risk” and that he should begin talks with Citigroup, Steel wrote in testimony prepared for today’s hearing before the Financial Crisis Inquiry Commission.
Citigroup then made an offer supported by the FDIC, only to be trumped within days when Wells Fargo bid more for Wachovia without U.S. aid.
The hearings in Washington are examining events during the financial crisis and the government’s decision to salvage firms such as Wachovia and American International Group, while leaving others such as Lehman Brothers Holdings to collapse. Former Lehman CEO Richard Fuld is scheduled to testify today, while Federal Reserve Chairman Ben S. Bernanke and Bair are slated to speak tomorrow, Bloomberg reports.
“The government had deemed Wachovia too big to fail; Lehman fell into a different bucket and we have lots of questions why,” said Tucker Warren, a spokesman for the commission.
Steel, the former U.S. Treasury Department and Goldman Sachs Group Inc. executive, was brought in to lead Wachovia in 2008 as the lender struggled to recover from the aftermath of its $24 billion purchase of Golden West Financial.
Steel grew up within walking distance of Duke's East Campus, and later attended his parents' alma mater. He has kept close tied to Duke and was chairman of the university's board of trustees during the lacrosse scandal in 2006.
Steel is now the deputy mayor for economic development for New York City mayor Michael Bloomberg.
Read the full Bloomberg report on today's hearing here.