Wachovia Begins Early Deal Talks With Citi [Dealbook]
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Posted by guest , Sep 26, 2008 4:20PM
Too long, didn't read.
Posted by guest , Sep 26, 2008 4:23PM
reposted from previous thread (more appropriate here...)
WB is down 30% today.
IT MUST BE THOSE GREEDY, SCUM-SUCKING SHORT SELLERS!!!
(Oh wait... short selling is illegal)
Has it occurred to anyone else that the entire justification for outlawing shorting was "evidence" of colluding shorts (sometimes "naked") driving down bank share prices? We're now seeing this "evidence" again. The conclusion drawn from the old premise (sharp drop in market value --> (therefore) short seller collusion) has been proven invalid.
Time to rethink the short selling ban?
Time to rethink the notion that we can legislate our way out of this mess?
Posted by guest , Sep 26, 2008 4:25PM
Too shittygroup, didn't read
Posted by guest , Sep 26, 2008 4:26PM
Tagging this as "Clusterfucks" = solid
Posted by RAW DOG , Sep 26, 2008 4:27PM
Breaking News: Bailout bill has passed.
Posted by guest , Sep 26, 2008 4:27PM
WTF? Coupla days ago they wanted to buy MS...
Insane times!
Posted by guest , Sep 26, 2008 4:27PM
noooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo
sigh.
Posted by Phobos , Sep 26, 2008 4:28PM
Not a fucking chance this happens without:
1) Capital infusion from outside source (Citi trying to do an equity offering like JP would only show their weakness and inability -- ANYONE who takes that long position appreciates being sodomized with a baseball bat)
2) Huge GOV intervention
3) A Genie
Posted by guest , Sep 26, 2008 4:30PM
raw dog: srsly? sauce on that?
Posted by guest , Sep 26, 2008 4:31PM
Queen Citi
-S&J
Posted by guest , Sep 26, 2008 4:34PM
This merger would be more awkward than FC.
-S&J
Posted by guest , Sep 26, 2008 4:36PM
Hope this happens:
Shitty Bank + Walkallovaya = Shitallovaya
Posted by guest , Sep 26, 2008 4:36PM
Charlotte Hates This...
Posted by guest , Sep 26, 2008 4:37PM
In a year there will be one entity after all these banks merge. That bank will be called the U.S. Treasury.
--HEDGEmony
Posted by guest , Sep 26, 2008 4:37PM
why pay now? Why not do what Barclays or JPM did and wait for them to fail so they can buy only the good stuff and leave the bad stuff for them to deal with? I thought that was the precedent we had set?
Posted by RAW DOG , Sep 26, 2008 4:38PM
@2 - Time for you to get a clue.
Posted by guest , Sep 26, 2008 4:40PM
In a year there will be one entity after all these banks merge. That bank will be called the U.S. Treasury.
--HEDGEmony
Posted by guest , Sep 26, 2008 4:41PM
If this deal happens, the conspiracy theory is proven.
WB CEO Steel: ex-GS, ex-deputy of Paulson at Treasury. Barney Frank quoted on Bloomberg as believing Paulson "told him to take" the WB CEO job.
C board member/"Senior Counselor" Rubin: ex-GS, inner circle.
WM CEO Fishman: not a member of the club - community/regional banker.
NCC CEO Raskind: not a member of the club - community/regional banker.
JPM CEO Dimon: ex-C, HBS, full member of the club.
If C pays real money to WB stock + debtholders while WM debt + equity gets wiped out (not to mention FNM, FRE, LEH), something's very extremely stinky with both timing and outcomes.
I really hope this deal doesn't come to pass, just so I can hold on to some thin reed of belief in our system...or at least make sense of it...
Posted by diablo , Sep 26, 2008 4:41PM
Raw Dog is shitty. There's no bill ready for approval. Pelosi is saying NO to reduction in capital gains taxes for this bailout.
Posted by guest , Sep 26, 2008 4:42PM
Where the hell are the hedge funds? How come they aren't buying into these banks and investment banks?
Posted by guest , Sep 26, 2008 4:43PM
@15...why let the retail op get impaired while trying to nickel and dime on price? If you like it,you won't want that local shop called BAC to go gobble up your deposit base.
Posted by guest , Sep 26, 2008 4:43PM
Where the hell are the hedge funds? How come they aren't buying into these banks and investment banks?
Posted by guest , Sep 26, 2008 4:45PM
@ 2
Not getting your point - since when does fact interfere with legislation when the governement has predetermined their course of action.
Case in point Iraq - USA has been in Iraq longer than WW2 lasted and we still have not found those pesky WMD.
Government wanted to give the Banks time to recapitalize. Government knew many banks on the ropes. Government started scapegoating shortsellers around the time of BSC. MSM picked up this scapegoating. Shortsellers became "evil doers". Once short sellers cast as evil doers it was easy to ban them. Nobody bothered looking at the facts and or the part short selling played in other market activities (convertiable debs, risk arbitarage, option trading ect.)
The facts have not changed on this issue, the market and the financial stocks were not going down because of short sellers (WaMu went down all by themseleves - perhaps if we had shortsellers they would not have traded at $3 yesterday but closer to their real value ZERO).
Posted by guest , Sep 26, 2008 4:45PM
@20
Buying mattresses to stuff anything over $100k in
Posted by guest , Sep 26, 2008 4:45PM
JT Marlin should buy both C and WB.
Posted by guest , Sep 26, 2008 4:48PM
NY lives!!!
FU Charlotte!!!
Posted by guest , Sep 26, 2008 4:49PM
Does anyone else miss the days when instead of interesting charts and linking to breaking news, dealbreaker broke the news? I actually miss Carney. Fuck
E.P. and Bess may be funny as hell, but they don't have Carney's rolodex.
Posted by guest , Sep 26, 2008 4:51PM
23-
Glad you're with me. Not just the gov't, but plenty of clowns on DB last week "blaming" short sellers as well. I'm moving to bermuda.
Rawdog- What's your beef, playboy?
#2
Posted by guest , Sep 26, 2008 4:52PM
Dealbook posted story at 3:54PM. Stock jumped about $1.50 the 2 or 3 minutes before closing.
Posted by guest , Sep 26, 2008 4:53PM
#27. Is that why the "real breaking news" has dried up?
Posted by diablo , Sep 26, 2008 4:53PM
@26
Cost of doing business in Charlotte is less than in NYC. Don't be afraid the move is to Charlotte after they empty all the WB office space.
Posted by guest , Sep 26, 2008 4:54PM
@23 i think temporarily it is good because instead of causing havoc and adomino effect(ie. LEH-->AIG-->MER) the long only model allows more time for these failures to unwind - like WaMu
WaMu would have been finished last week if the ban wasnt put on but is that a good thing?
It is chaos out there so any exta time to digest is welcomed
Posted by guest , Sep 26, 2008 4:56PM
Do you guys really see a deal with Citi and Wachovia going through? If I were Citi I would ask Jamie Dimon to handle all negotiations.
Posted by guest , Sep 26, 2008 4:56PM
In a year there will be one entity after all these banks merge. That bank will be called the U.S. Treasury.
--HEDGEmony
Posted by Bess Levin , Sep 26, 2008 4:57PM
@27-- was this story broken on Clusterstock? That's what I thought. Why don't you go take a gander at what's been written over there today before commenting here again.
Posted by guest , Sep 26, 2008 4:59PM
Not if we don't allow our representatives to put our money on the line, #34
Posted by guest , Sep 26, 2008 5:04PM
#32-
What about the poor bastards who have bought Wash M stock in the last week or bought debt? What if some really stupid bastard deposited $$$ over the FDIC limit and saw his uninsured deposits evaporate (that's obviously hypothetical).
The quicker we can kill of the dying firms, the quicker the new ones can grow.
#2
Posted by guest , Sep 26, 2008 5:05PM
Hi bess,
#27 here, clusterstock sucks, I miss the dealbreaker that included Carney, I have tried reading some of his garbage over there this week and it isn't the same. But to say that dealbreaker hasn't had a different tone this week would be untrue. I know it'll be an adjustment, but whatever.
Posted by guest , Sep 26, 2008 5:08PM
For a good time call John Carney. Trannies only.
Posted by guest , Sep 26, 2008 5:12PM
the 2 losers have finally found each other & will now copulate to make 1 giant loser. good job vik!
Posted by guest , Sep 26, 2008 5:15PM
@ 32 disagree with you.
Makes it much more risky. The short sellers don't lie (very much).
But this lie that WaMu "put itself up for sale" and that there was a bidding process cost investors money and the market credibility.
The effect of this is investors trust banks less and makes banks trust banks less.
I am going to guess that all the "investors" that paid $5 a share for WM - last FRIDAY are going to wish that they had know that WM was insolvent that, there were no real bidders and that the FED and FDIC were desperatly looking for a buyer.
If one of the major issues in the market is confidence and credibility banning dissenting opinions (short sellers)does not make very much sense.
Posted by guest , Sep 26, 2008 5:19PM
32 here
my biggest point was that during the chaos it could help to stem the systematic risks and counterparty exposures that bring down banks in the blink of an eye
i understand the value of the shorts in the market and would never support anything more than a temporary hiatus
Posted by guest , Sep 26, 2008 5:23PM
Let's talk over/undr on National City - anyone?
Posted by guest , Sep 26, 2008 5:30PM
?El banco ciudad puto?
Posted by Anal_yst , Sep 26, 2008 5:42PM
@ 43
How the hell is national city still afloat, I'm already out on the under from a month ago
Posted by guest , Sep 26, 2008 5:42PM
Breaking: Wachovia In Takeover Talks (WB, C, WFC)
John Carney | Sep 26, 08 5:11 PM
Wachovia (WB) has entered into preliminary discussions with potential acquirers, the Wall Street Journal reports, citing "a person familiar with the situation." The suitors are said to include Banco Santander of Spain, Wells Fargo and Citigroup.
Posted by guest , Sep 26, 2008 6:00PM
Did you guys see fast money? Jon Najarian has a great solution to the problem, they told shoomer...and what did he say "oh, we'll consider it". Why? Cause he didn't understand one aspect of it.
Posted by guest , Sep 26, 2008 6:01PM
Did you guys see fast money? Jon Najarian has a great solution to the problem, they told shoomer...and what did he say "oh, we'll consider it". Why? Cause he didn't understand one aspect of it.
Posted by guest , Sep 26, 2008 6:05PM
@ 46
Remember 10 days ago - when major news media was quoting JC on breaking stories. Now he is quoting major news media 45 minutes after the story is on their web site.
Love JC/ but loved him more @ dealbreaker.
Total comments on all clusterfuck stories today are less than or equal to the comments on this one story.
Posted by guest , Sep 26, 2008 6:10PM
#13 is the only factual post of the week.
Posted by guest , Sep 26, 2008 6:23PM
which sounds better - citovia or citichovia?
Posted by Investorcluzo , Sep 26, 2008 6:40PM
@43 - just what I was thinking, but it's not as clear cut as you might think.
here’s the side by side analysis (based on 6/30/08):
VaMoose Watchovaya Natty City Well Shucks
Assets $309,731 $812,433 $153,673 $609,074
GW/Intangibles 7,284 38,935 7,064 13,191
Total Equity 26,086 75,127 17,981 47,964
Level I 124 5,321 1,360 51,286
Level II 25,657 213,685 12,617 59,637
Level III 9,891 28,272 3,567 33,799
Total Loans $239,627 $497,947 $113,420 $399,237
Residential R/E 216,511 230,520 26,988 150,090
ARM Portfolio 99,560 122,200 No Mention "Minimal"
Delinquencies $11,203 $11,991 $1,156 $1,780
% 0f Loans 4.7% 2.4% 1.0% 0.4%
Total Reserves $8,456 $10,956 $3,434 $7,517
Reserves/Loans 3.5% 2.2% 3.0% 1.9%
% Broker Deposits 10.6% 10.6% 34.2% 0.0%
Assets/Equity 11.9x 10.8x 8.5x 12.7x
Assets/Tang. Equity 16.5x 22.4x 14.1x 17.5x
Debt+Pfd/Capital 80.3% 79.3% 62.9% 80.2%
Debt/Common 3.9x 3.7x 1.7x 4.0x
stay with me here (I know it's long). first, look at those scary level III assets – wm (which failed) had 3.2% of it’s total assets in the level III bucket, that compares to 3.5%, 5.5% and 2.3% at wb, ncc, and wfc respectively. when you look at level II, it’s clear that wb is the outlier. Does that mean they are more conservative (I doubt it)?
now take a look at the protection currently in place. wm had reserves to loans of 3.5%, then jpm came in added $31 billion of reserves – bringing the total to 16.5%. if you extrapolate that to the others, you would get some alarming results: wb would need an additional $71 billion, while ncc would need $15 billion (wfc $58 billion) – potentially wiping out the tangible equity at each! however, residential real estate made up 90% of wamu’s loan book, the ratio at wb, ncc and wfc is 46%, 38%, and 40%, respectively. so a mark of those proportions would be extreme – but it gives you a sense of the magnitude.
wfc claims it has “minimal” exposure to subprime/ARMs. ncc reported $4.8 billion in subprime, 17% were 90 days+ past due – reserved only to 11% (in hopes that the portfolio would improve); wb indicated it had $122.2 billion of the nasty “pick-a-pay” mortgages with reserves for only 4% defaults.
while I have long thought wm, wb, and wfc would ultimately be bagels; I am taking wfc off "death watch". however, wb is going the way of the dodo unless it gets rescued by citi or some other unsuspecting giant – the price won’t be 0, but probably won’t be far from it. ncc is a wild card, it doesn’t have the same level of resi exposure, but it’s funding base is more costly. if they can avoid a crisis of confidence, they may just survive.
Posted by guest , Sep 26, 2008 6:44PM
@ anal_yst
I don't know how they are still alive. CDS blew out today (5000 bps). Yet citi upgraded them to top pick today (hahaha - like we beleive anaylsts anymore (no offense anal_yst)).
"Our capital analysis shows that National City is among the best capitalized banks in our universe". I guess if the benchmark is low enough??
They are done by next friday and i would be suprised to see WB survive the weekend (as an independent). The lawyers must be making big $$$$ right now.
Posted by guest , Sep 26, 2008 7:08PM
This is some real bullshit, people are trying to keep Wachovia afloat.
Pretty sure no one is interested in Wachovia.
Posted by guest , Sep 26, 2008 7:15PM
wachovia is soooo insolvent. my estimate is approx -20billion net tangible.
the math isn't that hard.
equity is done, as is most if not ALL debt. just line it up beside Wamu and compare.
Posted by guest , Sep 26, 2008 7:19PM
oops, 55 here, just read 52! much more lucid, I'd quibble at the margin to the downside but exact same process.
Posted by guest , Sep 26, 2008 7:32PM
Conspiracy theorist at 18: What was Jamie Dimon before 2004? He ran a regional bank in Chicago.
Granted, Goldman rules most, but not quite, all.
Posted by guest , Sep 26, 2008 8:38PM
Wackobye Bank is talking to Whatashitty Group only to be bought by JPMorgue for 1 cent/share.
I think JPMorgan deserves to be called JPMorgue as it trying to cremate or embalm dead banks.
Posted by guest , Sep 26, 2008 8:46PM
SCHLUT FOR MONEY
Posted by guest , Sep 26, 2008 9:53PM
@57 - Dimon was Sandy Weill's errand boy/boy wonder during a career that started at Primerica in the late 1980s and ended at Citigroup when the place became too big for him and Weill. Bank One was his vehicle to get back to the uberbank game (and ultimately show up the old boss).
Posted by guest , Sep 27, 2008 1:16AM
@60. @57 here. I appreciate your consideration in providing an answer, but the question was rhetorical. The point was that Dimon isn't a "full member of the club," whatever @18 meant by that. Dimon's been enormously successful, but he didn't go about becoming a Wall Street success in the way Paulson did by working his way up in one of the big I-banks (now, of course, defunct). Couldn't BankOne be called a regional bank?
Q. I'm not all that familiar with Dimon's background, but do you mean that Citigroup became too small for him and Weill?
I agree that one of Dimon's motivations seems to be a desire to be bigger and badder than Sandy Weill.
Posted by Cincinnatus C , Sep 28, 2008 12:36AM
that old economic notion about how over time consolidation will lead to mere 3 or 4 huge oligarchs out there seems to be coming true. Who will be the last bank standing?
of course this couldn't be true b/c of all the start-ups and shitty mom and pop companies out there that no one would touch w/a ten foot pole.
anyone remember this theory? or was it more of an urban legend?