posted on Oct, 5 2008 @ 12:34 AM
With all the other economic drama going down this week here's one I haven't seen mentioned much on ATS. We all know that after WaMu failed last
Thursday and was assumed by JPMChase, Wachovia (WB) was also on the ropes and through with .gov intervention was to be assumed by Cititgroup (C) with
the .gov backstopping a certain level of losses.
Friday, while we were all pestering our Representatives to do the right thing and vote down the taxpayer bailout of the criminal enterprise known as
the financial system, (you were e-mailing, faxing, and calling your Rep right?) and interesting development occured in regards to Wachovia. Wells
Fargo (WFC) made an offer for Wachovia that was more beneficial to the WB shareholder and the taxpayer.
However, C in the "too big to fail but might anyway" category. Claims to have had an ironclad deal with WB.
From AP via yahoo
Lawyers seem to have been busy over the weekend thus far.
Citi (NYSE:C - News) tonight was granted emergency injunctive relief extending the Exclusivity Agreement between Citi and Wachovia Corp. (NYSE:WB
- News) until further order of the court.
Some interesting things are going on here. First the WB takeunder by C was backed by at least one part of the .gov with some backstops offered. The
WFC offer was better for the WB shareholder than the C offer with no .gov backstop.
Some interesting speculation is coming out of this. Did the CEO of WB breach a contract with C to pump up his share price to unload as much stock as
possible? Doesn't WB have a legal and fiduciary responsibillity to seek the outcome in the best interest of its shareholders? Is WFC trying whatever
it can to get into that "too big to fail club", it does have alot of HELOC and other problem stuff on its books? Does the fact that WB was able to
find a buyer (without a government backstop) say that the system isn't as frozen and in as much danger of collapse as many seem to think, and the
bailout isn't necessary, therefore the deal must go through as originally planned? WFCs due dilligence seems to imply that the amount that the
government is on the hook for with the C-WB deal is orders of magnitude larger than publicly stated. Will the FDIC sieze WB Monday give it to C and
put the matter to rest?
Anyway, thanks for listening, I'd love to hear some thoughts about this. If I can't stop our elected representatives from pissing away my childrens
future, I can at least have fun watching two pigs get dirty in the mud.
[edit on 5-10-2008 by jefwane]