....so lookee here, if you buy this troubled bank we'll cover 98% of the potential losses, and give you a 10 year loan at the discount rate to cover your losses? It's basically risk free! Plus we'll throw in a building in NYC for free, and oh yeh - 14K employees. Interested? It'll cost you $300M... wait, maybe $1B after the shareholders whimper.
Of course any viable bank that did not run its business in the ground would jump at that offer - so much so that they are even offering publicly to "help". :) Again, of the major banks Wells Fargo (WFC) is one that has done a very good job of navigating this mess... and looks like the perfect suitor to pick up a tax payer sponsored bailout of say Washington Mutual (WM). I mean risk free transactions are very capitalistic - creative destruction and all. Wells Fargo has its hand out - when the next disaster strikes, I'm sure the booty will be delivered by the Fed. Once you set that precedent....
- The chief executive of Wells Fargo & Co. said Tuesday that the current environment presents opportunities and that the venerable San Francisco bank would consider doing a deal in conjunction with the Federal Reserve. "I would not be averse to a Fed-assisted transaction," Chief Executive John Stumpf said in an interview with the San Francisco Business Times newspaper
- The bailout of crumbling investment bank Bear Stearns by the Federal Reserve and the Treasury Department 11 days ago has investors wondering how far the government will go in playing matchmaker to stabilize the troubled markets.
- Wells Fargo, with its good standing after a year of widespread write-downs and a rapidly slowing economy, would likely be at the top of the list as a suitor for many banks. It's the only one of the nation's five largest banks to have maintained a AAA credit rating from Moody's Investors Service and Standard & Poor's. (should we be happy for Wells Fargo or what does this say about the other 4 top "financial institutions" in America? That light regulation thing really worked out great...)
- Still, the San Francisco newspaper reported Stumpf said he would be willing to risk that rare designation in exchange for the chance to snap up a target at a bargain price.
Such a kind offer. Too bad the other banks are in such shoddy stage or else we'd have a bunch of banks lining up to be on the Federal Reserve Christmas gift list. Quite a sad state of affairs so few are in position to take advantage of this offer due to their own troubles...
