Monday, Nov. 03, 2008
Wells Wins!
When Citigroup, one of the world's largest financial institutions, went to buy the banking operations Wachovia in late September, the deal was presented as a way to rescue Wachovia. It was. But federal regulators were also extending a pre-emptive lifeline to Citi by agreeing to absorb billions of dollars in potential losses tied to souring loans. Days later, Wells Fargo rode in with a counteroffer that didn't require a government guarantee. Eventually, Wells won the prize in a deal that was better for Wachovia and for taxpayers — at least in the short term. Citi didn't stop teetering and eventually received a bailout all its own — a $27 billion capital injection and guarantee on $306 billion in assets.