Today, Wells Fargo announced a nearly $16B bid for Wachovia, prompting the latter's stock to pop nearly 60%. Days earlier, the Federal Reserve and FDIC had engineered the sale of Wachovia to Citigroup for $2B and had agreed to provide over $300B in loan guarantees. Wells Fargo's bid is 8x larger and does not involve implicit or explicit government guarantees!
If this level of interest exists in Wachovia, why did the U.S. Government short-circuit the free market and put over $300B of taxpayer money at risk? Are we to assume now that similar government deals involving Bear Stearns, Washington Mutual, and Merrill Lynch were similarly flawed? What does it say, in general, about government interventions into the free market?
Clearly, the sweetheart deal that the Feds gave Citigroup needs to be cancelled and the terms of government-sponsored deals involving Bear Stearns, Washington Mutual, and Merrill Lynch need to be reviewed to see if any institutions were unfairly enriched and if any taxpayer money was improperly put at risk.
Christian Antalics
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