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Wells Fargo offers $15.2 billion for Wachovia

Discussion in 'Economics and Financials' started by Muck, Oct 4, 2008.

  1. Muck

    Muck Throwback Uniform Crusader Retired Administrator

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    This deal appears to be much better for everyone involved.

    Would make for the biggest retail bank in the country. Naturally, Citi is crying foul and the FDIC is standing behind its Citi deal. Anything that costs the people money, right? :rolleyes:

    Wells Fargo ups the ante in $15B bid for Wachovia -- Newsday.com

    Question: is there any 'good' reason for this deal to be blocked in favor of the Citi deal? From my limited reading elsewhere, Wells appears to be a better company right now. Accurate?
     
  2. FiN.in.RI

    FiN.in.RI Paul pierced through..

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    Actually from what I've heard and read, the Citigroup deal holds the advantage for the taxpayers which is why the FDIC backs the deal. Obviously, the shareholders for Wachovia will benefit more in the Wells Fargo deal than in a C deal but who cares about them:unsure:

    C also had a written exclusivity agrrement w/Wachovia.. This is definitely just the beginning of this saga.
     
  3. CrunchTime

    CrunchTime Administrator Retired Administrator

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    As a shareholder of those Evergreen funds I am just happy that there is so much interest in Wachovia .

    However I tend to have liked the Citi groups offer better because it was only for the troubled banking division.

    My Wachovia financial advisor was happy to see Wachovia get rid of it because it was dragging down the whole operation.

    Now that blight will be assumed by Wells Fargo and that could drag them down too if they didnt make a good business plan .

    Anyway I said before its a positive sign that two major financial institutions are interested in Wachovia
     
  4. Regan21286

    Regan21286 MCAT's, EMT's, AMCAS, ugh

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    As a Wachovia stockholder, I fully endorse the Wells Fargo deal.
     
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  5. Muck

    Muck Throwback Uniform Crusader Retired Administrator

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    I was under the impression that the FDIC (us) would be on the hook for some of the negative additions incurred by Citi on the deal.

    What are the facts here?
     
  6. CrunchTime

    CrunchTime Administrator Retired Administrator

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    No doubt the FDIC would have been on the hook for the Citi deal and thats what makes it attractive to those who are exposed like me.

    However I am in the minority so the Wells Fargo deal looks good to everybody ...if they made a good business plan.
     
  7. adamprez2003

    adamprez2003 Senior Member

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    Two points that I am looking at

    1) the shareholders should decide which they prefer

    2) the government should pull its guarantee from the Citigroup deal and tell them to pay for it themselves
     
  8. jdang307

    jdang307 Season Ticket Holder Club Member

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    Whatever deal is better, Wachovia signed an exclusivity deal. Isn't that a tortious interference of contract by Wells and a breach of contract by Wachovia themselves? Whatever happens, expect some serious litigation.
     
  9. adamprez2003

    adamprez2003 Senior Member

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    thats the legal claim citi is using but in this case the government needs to pull out. the only reason the government stepped in in the first case was there wasnt a free market solution. now that the free market stepped in there is no reason for the government to be involved. if citi balks they should be denied any of the 700 billion available
     
  10. FiN.in.RI

    FiN.in.RI Paul pierced through..

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    I'm under the impression that Citi would be shelling out ~10 billion to the FDIC as an addtional insurance policy against Wachovia's junk. The only way the FDIC would get involved is if Citi writes off over ~50 billion in Wachovia's junk. Anything over 50 billion would be behind an FDIC backstop. It's also only the banking business that C was in line to acquire. WFC is in line to acquire all of Wachovia. The WFC deal would just throw all of that toxic paper underneath TARP/Paulson effectively putting more risk to the taxpayers.

    Apparently it's unlikely that Citi would really need FDIC involvement and since they will be providing 10 billion to the FDIC up front, the FDIC essentially views it as a low risk/high reward, more or less.

    That's my high level understanding of it anyway. It could be more granular than that.
     
  11. adamprez2003

    adamprez2003 Senior Member

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    that seems to be the spin I'm hearing too. If Wells Fargo indeed is looking to dump their paper on the taxpayer then Citi should get the deal since its a better deal for the taxpayer. if however thats not the case then wells fargo should get the deal IMO
     
  12. FiN.in.RI

    FiN.in.RI Paul pierced through..

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    The bailout gave the incentive for there to be a free market solution. It's an interesting case. I think whichever way is good for the tax payor, is obviously going to be good with me.
     
  13. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Wells Fargo Seen Winning 75%-80% Wachovia Deposits - Mergers and Aquisitions * US * News * Story - CNBC.com
     
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  14. texasPHINSfan

    texasPHINSfan New Member

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    the thing is the Citi deal was proposed/offered before the bailout bill was passed.... so you have Wells Fargo come in afterward and offer (essentially) more money. of course they're wanting to go with the Wells Fargo deal, which is better for the stockholders.

    frankly, its refreshing to see two banks fight over acquiring another in this environment. :up:
     
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  15. Regan21286

    Regan21286 MCAT's, EMT's, AMCAS, ugh

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    Hallelujah, the Wells Fargo deal is all but done now:party:.
     

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