Wachovia Bank has had serious net worth and financial issues for months. Just last week Wachovia agreed to be merged with Citicorp for $1 a share and an FDIC guarantee against certain losses.

Just yesterday Wells Fargo offered $7 a share with no FDIC involvement. It has Citicorp pissed to the walls which is reflected in the linked article.

Wells and Wachovia have signed a definitive agreement that has already been approved by their boards. Wells with mark down Wachovia’s loan book of $498 Billion by $74 Billion and its Pick-A-Payment $122 Billion portfolio by $32 Billion. [Pick-A-Payment loans allow the borrow to choose from 4 different payment choices each month: minimum payment (less than interest only meaning the loan could increase up to 110% of loan to value), interest only, principal and interest or as much as the borrower wanted to pay up to 20%. These were modeled after the original creator of the concept World Bank in California. ]

This private party transaction done with no government involvement is a good sign. Other mergers may need government help but this one at least leads the way to private transactions. Wells Fargo has said it expects to save $5 Billion in operating costs with the combined operations. It’s a win-win with no taxpayer involvement.

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