It was a non-conforming bid. They wouldn't follow the guidelines set by the FDIC, so they never actually submitted a bid for the bank, atleast not a conforming bid.
I have a copy of correspondence sent by Citi to Mitchell Glassman, the Director of the FDIC's Division of Resolution. If you look at the 3rd paragraph of the letter, it reads as follows.
"However, we are writing to inform you that we will not be submitting a conforming bid for Washington Mutual under the structure the FDIC has offered; rather, as more fully described below, we are submitting an indicative bid on an alternative approach for your review and evaluation."
Also found in that letter Citi states that they indeed were familiar with Washington Mutual and here is a quote.
"In that same light, if the FDIC were to receive a non-conforming bid that it might otherwise be inclined to accept, we believe that the best and most appropriate option (and the option we believe would be legally required) would be to offer that structure to other bidders, such as us, that have the financial capacity, operational strenth and knowledge of the Washington Mutual franchise and allow competing bids on an immediate basis."
My copy of the letter came along with about 300 pages of documents sent to me by the FDIC in response to a formal FOIA request I submitted, but I believe a copy of the letter is available on the FDIC website. Not sure though.
