New York Sen. Charles Schumer asked Treasury Secretary Henry Paulson to justify a tax ruling that helped spur Wells Fargo & Co. to buy Wachovia Corp., saying Congress wasn't consulted on the change.
Schumer, a Democrat, said the Sept. 30 ruling may lead to unnecessary tax-motivated consolidation that wouldn't help stabilize the financial services industry. The ruling may cost taxpayers as much as $140 billion, according to an estimate by the law firm Jones Day.
Treasury spokesman Andrew DeSouza said, “we have received the letter and are reviewing it.”
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Wachovia unit probed over investor losses
Wachovia Corp.'s Evergreen Investments unit is being probed by federal and state regulators over investor losses on one of its short-term bond mutual funds.
The U.S. Securities and Exchange Commission and Massachusetts have launched separate investigations over “alleged issues” related to the drop in the value of Evergreen Ultra Short Opportunities Fund, the bank said Thursday in a regulatory filing.
Charlotte-based Wachovia shuttered the fund and guaranteed investors would suffer no additional losses after an 18 percent decline in early June. Three class-action lawsuits allege that Evergreen made misleading statements about the fund's risks and failed to accurately price its holdings, “at different points in time,” according to the filing with the SEC.