Saturday, October 04, 2008

Feds Panic Move not Necessary, Wachovia finds Romance with Wells

While we were being told the sky was falling and a forced marriage was being arranged for Wachovia, with CitiBank, Wells Fargo wooed and won Wachovia. It seems Wachovia was worth something after all. Wachovia lives on and does not fail, Wells expands to the east.

The Wall Street Journal - "Wells Fargo's deal on Friday marked a stunning turn of fortunes for Wachovia, the nation's fourth-largest bank in market value as recently as last year. Wells Fargo had been among the leading suitors for Wachovia during a tense period of negotiations last weekend that ended, in the wee hours Monday morning, with a government deal to sell most of Wachovia to Citigroup."

Is this who we want running things? The Federal Government? The Feds, who gave us the $700 Billion "Bailout" on the heels of faux bank failures like Wachovia, which turned out NOT to be a failure and turned out NOT to need FDIC participation for it to survive? More and more the economic "crisis" looks like a replay of the Perils of Pauline, with us as Pauline, tied to the railroad tracks. The villian is our own government.

"The Citigroup deal, which included a provision for the government to possibly absorb hundreds of billions of dollars in future Wachovia losses, was warmly received by Citigroup shareholders but nearly wiped out Wachovia's. Now, in forcing Wachovia back into play, Wells Fargo sets the stage for one of the most dramatic takeover battles in recent memory, pitting against each other the No. 3 and No. 4 U.S. banks in terms of stock-market value."

You want "Corporate Welfare?" There it is, with the US Government as Robber Barons, stealing the equity of Wachovia shareholders and lining the pockets of CitiCorp shareholders. This is the kind of bumbling idiocy we will get over and over again with career bureaucrats executing political agendas with OUR MONEY. The WSJ put the subheading on the story of "Deal Avoids Need for Taxpayer Cash." The Journal goes to echo another point your Modern Pharisee made yesterday.

"The Wells Fargo offer provides a glimmer of support for the fundamental value of troubled U.S. banks: It signals that there is still a market, albeit limited, for private takeovers of these institutions, one that does not place taxpayer dollars at risk. It is also significant because the new buyer, unlike Citigroup, asks for no government assistance."

Citi is in the position of arguing for destroying the equity of Wachovia shareholders, and tapping the pocket of every taxpayer in the United States. They should bow out gracefully, and show they have morals. It's something sorely needed in this time of lies. There is also the issue of all the jobs it saves. Citi also proposes to put a lot of people out of work, who now have their futures back.

"Meanwhile on Friday, at Wachovia's headquarters in Charlotte, N.C., where 20,000 employees had anticipated draconian cuts, there was elation in the hallways. 'Even in bull markets, I've never seen people this happy,' said one Wachovia employee."

One wonders, was WAMU really in that much trouble? It seems there is bravery at both Wells and Wachovia. Such courage may not have been present in the golden parchute equipped offices of other institutions. Maybe if WAMU's CEO didn't become an over night multi millionaire on failure, things would have been different.

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