USC-Col 2006-Honors Finance/Econ Grad MD

How Much Will a Wells-Wachovia Deal Cost Taxpayers?

I think the Wells Fargo deal was a brilliant move. It was a stupid move by Wachovia because they an opportunity their own company. Now they're are definitely either Wachovia or citgroup. If I was Citiggroup I would just just sue for the amount of what a quarter of their deposit, and If I was Wells Fargo I would oblige. I just don't think its a bad of a deal. When Wachovia is sold off, the shareholders now will get some return on the deal. Specifically the senior shareholders. The FDIC can save face just in case another bank falters. Wachovia prove incompetency, only in the instance that they signed an agreement with Citigroup. However on the flip side, if their were no agreement, their would be no Wachovia. Because Wachovia would have been bankrupt, and nobody would have gotten a huge chunk of assets, and the FDIC would have had to insure the Wachovia depoisitors. wells Fargo is a really good company as well. Citigroup is. Its just removing its problems at one time while the crisis is occuring. If they wrote off 46 billion and only incur a 9 billion dollar loss or a 3 billion dollar costs in this quarter. As well, as the credit criss is easing up. Then that's just smart from the executives and others within the company. Wachovia just didn't do completely what needed to be done to maintain themself as a seperate entity, but did do what needed to be done to save face with shareholders. As far as job cuts, concern as well, they don't have to look for entirely new employees. They can just get rid of employees who don't do their jobs, and eliminate the human resource issues that were published in previous articles. The branches will defintely retain branch managers and tellers. From there its the executive decison. Their would just be necessary cuts from an ordinary buyouts of a company with a new regime who is intersted in operations of their own company. I think the creditor will defintely get everything in the detail. As far as Wells Fargo is concerned they market traditional mortgages, so the new branches will definitely sell very good mortgages. The option ARMs weren't a terrible idea. They were just misused for personal, selfish gains by consumers, mortgage brokers, and loan officers. They were what caused risk for the bank as well as the mortgage backed securities by the bank(s). I just can't believe that option ARM's and Pick a Pay mortgages can be the primary mortgage marketed by your bank for sale and then be surprised when you ended in the circumstances. The only difficulty is that they won't need the staff from a failed bank who was able to be takenover. The staff of Wells Fargo is good enough and can definitely have more office space.