Monday, September 29, 2008


Based on a Bloomberg article, it seems most likely that Citibank will buy Wachovia. Shareholders will not get much or any money, both WFC and C appear to need the help of the FDIC to make the purchase.

Wachovia owns $122 Billion of option-arm mortgages. Washington Mutual, Country Wide and IndyMac were all bankrupted by losses on these popular California mortgage loans. Any student of real estate knows that California real estate has a history of extreme volatile, like Myrtle Beach. Wachovia purchased Golden West at just the wrong time.

The people of Winston-Salem, NC, where Wachovia grew up as a conservative bank, will be hurt badly. Of course, they have already been hurt by the fall from last years price of $58.

The brightest ray of hope is that the bail out package will be used to save the bank. A thin thread indeed but something to hang onto.


Anonymous said...

OK, now what?