Wells Fargo is buying Wachovia.
What did you expect? In this Darwinian world, the strong survive, the weak seek bailouts.
In this case, the weak look so appetizing to a bigger fish looking to gobble up something tasty. Just makes sense. Citibank, which had made an earlier offer to buy Wachovia, was just a poser anyway, with almost as much riskiness in its portfolio as the banks that failed. Wells is a far better merger for everyone. It’s one of the bigs and assures stability, which after all is what’s attainable in the short term. A turn around, something more positive is down the road. All we want to do now is stop the bleeding.
http://www.nytimes.com/2008/10/04/business/04bank.html?hp=&pagewanted=print
But the deal is instructive for the House which is expected to vote on the bailout today. Any package has to have something more real to ease the pain for consumer/taxpayers, something that gives hope to those who are upside down on stupid mortgages sold to them by greedy lenders.
Save the bailout bucks for the real people who are hurting. I don’t care if CEO X is fearful of not being able to pay his Netjets bill. There are real people in crisis who don’t get enough help from any current bailout on the table. Raising FDIC protection is just window dressing. Penalize, don’t bailout the greedy. Help the consumers who were victims in all this.
As the Wells deal shows, capitalism will take care of itself with merger and acquisitions. That leaves society to take care of the new poor, the one time middle class that each day sinks further in this abysmal economy. That’s where the real societal values of trust and leadership come into play.
It will take more than a quickie $800 billion or so package to save us all. Let’s take the time to do it right. Remember it was those damn no-doc loans that got us in this mess in the first place.