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The Lowdown on Citi / Wachovia

Are you really that clueless Sid? The Citi CEO said they won't need the FDIC insurance because if he said anything else the market would punish Citi stock.

Citi is assuming all of WB's debt. Should the deal be approved then the market cap of the remaining firm might be 50% of Morgan (around $26 billion). That works out to a little over $12 per share. Morgan has debt and WB would not. Morgan has a more extensive network and would have a less tarnished name.

The alternative to voting for this is seizure by the FDIC. The bank then is gone and WB is still stuck with all the debt not in the bank's name. The talk of a class action lawsuit is a pipe dream. That is no alternative to a sale to Citi. Where are you going to collect the money from if the firm is bankrupt?

Robbing Peter to Pay Paul: More on Wachovia / Citi

Sid, you might know software but you don't know investing. Your comment about the feds taking over Golden West or Wachovia paying the $12 billion to the FDIC proves that.

As far as the comment above, that this is a done deal, it certainly is not. Stupidity could still reign. Citi bonds are still trading normally and have not been discounted. Wachovia's debt though is trading in tthe 50s and 60s. If this was a done deal it would be in the high 90s like Citi's. The bond traders are obviously worried that stupidity might win out.

The Lowdown on Citi / Wachovia

The difference between Bear Stearns and Wachovia is that the FDIC could not seize Bear Stearns. Bear shareholders had leverage. Wachovia shareholders have none. Should they be so foolish to vote against the deal then the FDIC will seize he bank and sell it to Citi for even less. Get a clue people.