Comments on: Citi-Wells Negotiations Over Wachovia Reveal Bank In Worse Shape Than Thought

By: Anonymous

Anonymous — Thu, 09 Oct 2008 20:25:00 +0000

“On a side note, thanks again Yves for putting out a quality blog. I’m impressed you can do this and still stay employed.”

I, too, echo that sentiment Yves…thank you again, whenever I need answers, this is my first stop.

By: wells_worker

wells_worker — Thu, 09 Oct 2008 16:59:00 +0000

I work at Wells. Internally this has been spun as “we already got the deal and the entire company will be called Wells Fargo”. Perhaps a bit premature, but I’m getting the vibe that mgmt is very confident on this. I too can’t believe they didn’t know that wachovia was a steaming pile of crap. This acquisition fills some needs, probably greatest of all is the nationwide presence now (we’re lacking in the southeast and atlantic coast). Indeed the writeoffs might be very beneficial too. Anyway, I can assure your they’re not stupid, they have a plan for this, and obviously it’s not so awful that they are walking away, which I’ve seen happen on other acquisition deals. And while Warren Buffet counts Wells among his annointed ones, they’re feeling good.
On a side note, thanks again Yves for putting out a quality blog. I’m impressed you can do this and still stay employed.

By: Sanjay

Sanjay — Thu, 09 Oct 2008 16:14:00 +0000

there is a simple reason that explains why the interbank market has frozen up. Each bank is saying to itself “if they have done what I have done I am not getting my money bank”. I remember an old adage “how can I believe you if I know that I would lie if I was in your position”

There is only one solution- force an honest mark to market using conservative assumptions and nationalize the failing banks. The only question for policy makers is who is going to take hit and how far up the debt structure are they going to allow it to go e.g. protect depositors but not bond holders?

By: S

Thu, 09 Oct 2008 15:33:00 +0000

All the regionsal are down 15-20% today. Wells and C are probably looking at the prospect of raising 10-20 billion and thinking diluioton dilution dilution. Wells should be the most nervous with its puffed up valuation. Distortion of the no short rule for sure. Those advocating a suspension of the mark to market should be sidelined once and for all. Chanos took a former FDIC chief apart on CNBC this am. They guy sounded foolish, essentially arguing that these things are worth a lot mmore than firesale. What he couldn’t anwser is whether tbeing market at 70 or 80 is the likley recovery? perhaps the right mark is 50 not 20, but the implication is the same — insolvency and or massive dilutive capital.

By: Moopheus

Moopheus — Thu, 09 Oct 2008 15:12:00 +0000

I have an off-topic but Citi-related question/observation (always with the questions). Recently Citi has begun actively promoting to users of Citi debit cards to use them as credit cards, rather than debit cards. It’s not entirely clear what the benefit for the user is, but the benefit for Citi is obvious–credit card transactions garner a higher fee than debit transactions. This would seem on the face of it to smell of serious desperation. Do you think this is a fair reading?

By: Phil

Phil — Thu, 09 Oct 2008 14:59:00 +0000

Sorry to post on this particular article but wanted to thank your for the following comment:
"Dear readers,

I have noticed an increase in the snarkiness of comments lately. Based on traffic stats, we have a lot of new readers. If you are one of them, please be advised that unlike many other bloggers, I regard the quality of reader input as a vital asset of this site. Indeed, some have said that this site has the best comments of any of the financial blogs.

I welcome substantive, robust discussion. But there has been a lot of hostility in recent weeks, often as not in comments that are also substantively dubious. I don't know if this is because new readers may not understand how the community here works, or that readers are stressed out by the markets and may be unconsciously getting more aggressive. Regardless of the cause, the decline in civility undermines the quality of discussion, and the methods I have to deal with it are pretty blunt (such as moderating comments). I thus encourage you to clean up your act."

This seems to have started about the time of your vacation, when you invited guest bloggers to post on your site. The comments on this blog are excellent and very helpful in forming opinions on all sides of a subject. As a novice, I don't post very often but wholeheartedly agree, "Keep this site clean" if you don't have anything constructive to say don't post.

Thanks Yves and keep up the great work.

By: Matt Dubuque

Matt Dubuque — Thu, 09 Oct 2008 14:07:00 +0000

Matt Dubuque

One consistent theme connecting the numerous recent takeovers and collapses, from Bear Stearns to AIG to Fannie and Freddie to Wachovia and to Lehman among others, is that the LONGER we have to look at their books, the WORSE we learn the finances of these troubled entities actually are.

I can’t think of a single exception.

Matt Dubuque
nospammdubuque@yahoo.com

By: Anonymous

Anonymous — Thu, 09 Oct 2008 14:04:00 +0000

Yves, what sweetened offer from C are you referring to? Has a new offer been made public?

By: tompain

tompain — Thu, 09 Oct 2008 13:56:00 +0000

Should we perhaps be a bit skeptical of the claims by C and WFC to be surprised? If they are so surprised, why isn’t one of them walking away and letting the other deal go through? Might it not be in the best interest of buyers to denigrate the quality of the item up for sale?

If the FDIC wants to wrap this up, they should play hardball with WFC and/or Citi and tell one of them to get lost or else.

By: Tom Stone

Tom Stone — Thu, 09 Oct 2008 13:38:00 +0000

Good lord they were surprised? not a good sign.”we expected a steaming pile of crap,but not the heartworms”.Freaking Reggie middleton detailed this months ago from public sources.