Did Wells Fargo take on too much with Wachovia?

Did Wells Fargo buy more than it bargained for with its acquisition of Wachovia Corp.?

Reuters financial blogger Felix Salmon speculates that the merger is a key reason why Wells Fargo is the only major bank that hasn’t left TARP yet.

Wells Fargo got sucked into a bidding war for Wachovia with Citigroup, and now the bank is suffering from the “winner’s curse,” Salmon writes.

He calls it a “panicked and unwise acquisition” and says the combined banks’ size will make it a target of intense regulatory scrutiny for the foreseeable future.

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Comments (1)

  1. Submitted by Dr. John Roberts on 09/03/2009 - 06:45 pm.

    Wells Fargo is the only major bank that “hasn’t left TARP yet”? Really? So Citi and B of A are free and clear now? “Sucked into a bidding war”? The actual history is that Citi thought they had a deal and was blind-sided by the Wells Fargo offer. And by the way, according to the Wall Street Journal, Wells bought Wachovia at a fire-sale price. Do these clowns, Salmon and Haugen recall that Chairman of the Board Richard Kovacevich was very vocal about not wanting a TARP injection but was basically forced to take the 25 billion by Paulsen? It certainly is not Wells Fargo management’s fault that Geitnher’s army of Stress Test regulators could not understand the WFC business model and saddled Wells Fargo with a requirement to raise 13 billion in additional capital. Oh, and by the way, CEO John Stumpf announced this week that WFC will be repaying TARP “shortly” without diluting shareholders. Why does this kind of crap get published?

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