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October 03, 2008
Wells Fargo tops Paulson by $13 Billion
Mac Fuller
If the economy is so wracked with crisis that we've just gotta have the pork-ridden $810,000,000,000 economic bailout, why is Wells Fargo about to top the government-sponsored Citi Group "rescue" of Wachovia by $13 Billion -- with no government assistance?
The forced government "rescue" of Wachovia Bank (thank you, once again, Secretary Paulson and FAS 157 mark-to-marketing accounting) where Citi Group agreed, at the Treasury Department's behest, to buy "endangered" bank assets for $2.1 Billion and leave the FDIC on the hook for potential loan losses, has apparently been replaced by a totally private sector offer from Wells Fargo to purchase the identical assets for $15.4 Billion --with NO government assistance.
Wachovia Corp. agreed to sell itself to Wells Fargo & Co. in a $15.4 billion takeover that will require no government assistance, scrapping a federally backed deal with Citigroup Inc.
The Wells Fargo offer is for $7 a share in stock, based on Thursday's closing price, 79% above where Wachovia shares finished. Wells Fargo also will assume Wachovia's preferred stock and debt. In conjunction with the deal, Wells Fargo will issue $20 billion in new securities, mainly common stock. Wachovia shares surged 64% premarket to $6.40 while Wells Fargo rose 1% to $35.50 and Citigroup fell 6% to $21.15.
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