Monday, October 06, 2008

Citi Sues Wachovia--Where'd They Get the Dollar Amount?

So the Feds tried to force Wachovia into Citigroup, and Wachovia has since been seeking a deal with Wells Fargo. Citi doesn't like that, and today filed suit against the two other banks. Part of the suit identifies $20 bil. in compensatory damages.

Compensation for what? Did Citi spend $20 bil. planning this acquisition? Of course not. The only thing that can account for this $20 bil. figure is the fair-market value of Wachovia that Citi wasn't going to have to pay for since the government was forcing it all through. Again, haste makes waste. Again, the Feds wanted to be seen "doing something" instead of possibly doing the right thing. Now Citigroup is telling us just how great a deal they were being given at the expense of Wachovia's shareholders.

First AIG wants out of their assistance, and now Wachovia. It seems Ronald Reagan was telling the truth when he said, "The eleven most-feared words in the English language are, 'I'm from the government and I'm here to help.'" (Ronnie counted contractions as two words. Don't bust his balls; the man is dead.)

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