Things are moving at lightning speed in the banking sector, Congressional rescue package or not.
Since I wrote this post on Monday of this week, Wells Fargo has stepped in to buy Wachovia at an actual market price. This is so recent that it didn't even make the print edition of today's Wall Street Journal.
Meanwhile, Citigroup is left standing at the altar, FDIC-brokered deal in tatters.
For the FDIC and, of course, the public, the Wells Fargo deal is much better. No government-shouldered losses. No qualifications. Just a straight combination at an offered price to Wachovia shareholders.
It's likely better for the US commercial banking sector in the longer term, too. It's doubtful Vikram Pandit & Co. over at Citigroup could have actually prospered with the Wachovia acquisition. It's closer to the mark to say that mere survival of the resulting mess would have been heroic, and probably almost too much to hope for.
Now, at least a healthier bank with adult management, meaning the CEO of Wells Fargo, will take over the wreck of Ken Thompson's- excuse me, Bob Steel's- Wachovia.As the nearby, Yahoo-sourced chart of price performance for the S&P500 Index and Chase, Wells Fargo, Citigroup, BofA and Wachovia for the past five years indicates, Wachovia will be in better hands with Wells.
Citigroup and Wachovia have been the two worst-performing of the bunch. Chase and Wells are nearly equal, just managing a positive return. Not exactly glowing, but it beats the huge losses of the other banks.
If you're going to continue life as a boring, huge, regulated financial utility, at least you can be average. And Wells Fargo appears to be.
What's hanging over the deal, of course, is Citigroup's noises about being jilted. And possibly suing.
Just what we need, eh? At this point in the history of the US financial sector, a limping, near-failing Citigroup would sue for the right to combine with the other worst wreck of a major commercial bank, Wachovia.
You cannot make this stuff up.
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