Credit Suisse expects to pay $536 million

SAN FRANCISCO (AP) -- Credit Suisse Group said Tuesday that it expects to pay $536 million to settle a five-year Justice Department investigation into business it did with countries subject to U.S. economic sanctions between 2002 and 2007.

The bank said it is in advanced settlement talks with the Justice Department, Federal Reserve, Manhattan district attorney's office and the Treasury Department's Office of Foreign Assets Control. Credit Suisse expects to book a fourth-quarter charge of 445 million euros ($649.2 million) related to the deal.

The Manhattan District Attorney's office confirmed Tuesday it was negotiating with the bank, but spokeswoman Alicia Maxey Greene said there was no final agreement. The DA's office has scheduled a news conference on the subject Wednesday.

The bank said it had previously disclosed the investigation and undertook an internal review of some U.S. dollar payments that involved countries, people or entities who could be subject to U.S. economic sanctions. That review has been completed.

Credit Suisse also said it exited the business in question in December 2005 and conducted an independent investigation into payment activity in Zurich. The company added that in 2006 it stopped doing business with all parties sanctioned by the Office of Foreign Assets Control, and as part of this move shuttered an office in Tehran.

Countries under economic sanction by the U.S. include North Korea, Cuba and Iran.

Wells Fargo stock offering to raise $12.25B

NEW YORK (AP) -- Wells Fargo & Co. said Tuesday that a stock offering planned for later this week should raise $12.25 billion that will be used to help repay its government bailout loan.

The offering price of $25 a share was announced a day after Wells Fargo said it would repay the $25 billion it received as part of the Troubled Asset Relief Program.

The stock sale is expected to close on Friday, Wells Fargo said. It will raise $10.65 billion from selling 426 million shares of common stock, and another $1.6 billion from selling another 63.9 million shares to underwriters, bringing the total offering to 489.9 million shares.

The bank's shares outstanding will increase by about 10.4 percent from 4.69 billion shares of common stock outstanding as of Oct. 30. Wells Fargo's shares rose 17 cents to close at $25.66 on Tuesday.

"We are very pleased with the positive reception for this equity offering, and we appreciate the confidence investors have demonstrated in Wells Fargo's strength and future prospects," Chief Financial Officer Howard Atkins said in a prepared statement.

Wells Fargo was the last of the initial eight big banks that received TARP money to announce it would repay the government. The San Francisco-based bank's announcement on Monday came just hours after Citigroup Inc. said it would repay $20 billion in TARP money and the government would sell its nearly 34-percent stake in the bank.

By repaying TARP, Wells Fargo escapes restrictions like caps on executive compensation and dividends. It will also save the bank $1.25 billion annually in interest payments it had to pay the government for the money.

Aside from the stock sale, Wells Fargo also is issuing $1.35 billion in stock to employees instead of giving them cash bonuses. The TARP compensation restrictions affected the size of cash salary and bonuses banks could award their executives.

The size of the stock offering means Wells Fargo will no longer need to raise $1.5 billion through asset sales by the end of 2010, the bank said.

Separately Tuesday, Wells Fargo said it will pay $4.5 billion in cash for Prudential Financial Inc.'s stake in the companies' retail brokerage joint venture, which includes Wells Fargo Advisors LLC. Wells Fargo will buy the noncontrolling stake by Dec. 31.

"Wells Fargo considered the cost of Prudential's put in the assumptions for the Wachovia merger and we are pleased to take this next step pursuant to the agreement between Wachovia and Prudential," Wells Fargo Chief Financial Officer Howard Atkins said. Wells Fargo purchased Wachovia Corp. at the height of the financial market crisis last year.

Prudential Chairman and CEO John Strangfeld said in a statement that the deal will substantially enhance the company's capital position and financial flexibility going forward.

The purchase price is based on the value of Wells Fargo Advisors (then known as Wachovia Securities) at Jan. 1, 2008, prior to the contribution of the retail securities businesses of A.G. Edwards & Sons. Wells Fargo was advised by Greenhill & Co. LLC and Prudential was advised by Barclays Capital Inc. in determining the valuation.

No real consensus on bank overhaul

WASHINGTON (AP) -- After meeting with bank executives, President Barack Obama noted "a big gap" between the CEOs and their lobbyists on his campaign to rewrite the rules governing the financial industry. The CEOs "support reform," Obama said, but their lobbyists have been sending a different message.

Appearing separately after the meeting, the bankers seemed to agree. "We're going to do a better job ... to work with the lobbyists" to address that disconnect, US Bancorp CEO Richard Davis said.

But the "gap" Obama said he discovered is an illusion. The bankers not only are well aware of their lobbyists' efforts, they direct them. They have supported parts of Obama's financial agenda since long before the financial crisis, when they proposed the same measures.

In striking the appearance of agreement, both sides glossed over a dispute on one key proposal: the creation of a new agency to protect consumers from bank abuses. The proposed agency would have rule-writing authority and onsite examiners.

That proposal is the core of Obama's proposed changes, and U.S. banks and their representatives oppose it unanimously. Monday's meeting didn't change that.

"The bankers (in the meeting) said they support consumer protection, but there's no reason as far as I can tell to believe they support" the new consumer protection agency, said Ed Yingling, president of the American Bankers Association.

That bankers support many other items on Obama's agenda should come as no surprise. Many of the president's key provisions track closely with a 2007 report overseen by the CEO of JPMorgan Chase & Co. and the chairman of Wells Fargo & Co., and released by the Financial Services Roundtable, which represents the 100 largest financial firms.

Roundtable lobbyist Scott Talbott said his group supported much of Obama's plan before it was announced. But he said his group and other industry groups have been consistent in opposing the proposed consumer agency.

By suggesting the opposition comes from lobbyists rather than bankers, Obama could be giving his White House guests room to soften their position. It's also a populist tactic that takes aim at a group he has often vilified -- those who play Washington's lucrative influence game.

He also may be attempting to neutralize the U.S. Chamber of Commerce, which has spent millions of dollars on a high-profile campaign to defeat the proposed consumer agency. The Chamber already won key concessions in the version of the bill that passed the House this month.

Obama's own poll numbers have been sagging, and he has little to lose from tapping the vast reservoir of public anger at banks. On Sunday night, the day before meeting with them, he was on TV calling bankers "fat cats" who "don't get it."

Monday's meeting let Obama sharpen his get-tough message, then claim to have discovered common ground.

He criticized the banks' lavish executive pay practices -- even though they have made progress in tying compensation to long-term performance. He pressed them to lend more money to consumers and businesses -- then acknowledged banks are hamstrung by the rough economy and regulators are cracking down on risky lending.

Asked about the supposed gap between bank CEOs and their lobbyists, White House spokeswoman Jennifer Psaki said, "We expect the CEOs to say the same thing in public and in private to members of Congress that they said to the president in person yesterday."

And that gap Obama discovered between the bankers' support for the rules rewrite and their lobbyists' rhetoric? Davis, the bank CEO who promised to close the gap between CEOs and lobbyists, is the incoming chairman of the Financial Services Roundtable. The Roundtable has been among the proposed consumer agency's most strident opponents, saying it "would actually harm consumers."

Davis spent the hours after Monday's White House meeting at the Roundtable's offices. The lines of communication between bank executives and their lobbyists remain open.

Aside from the rhetoric, there's no evidence they ever were closed.