Friday, November 21, 2008

Remember Sheila Bair wanted to sell Wachovia to Citigroup

I loved the sequence.  Sheila Bair forces the issue at Washington Mutual - a bank that she did not need to force the issue at but which might have been insolvent.

Then she absolutely forced the issue at Wachovia.  She insisted that Wachovia sell to Citigroup even though Wells Fargo wanted more time and a market solution was available for Wachovia with no hint of a government guarantee.  

If Sheila had sucessfully sold Wachovia to Citigroup she might have two banks to deal with or Citigroup might just sell the loans she had guaranteed.  

But now is Sheila Bair's moment.  If her past behaviour is anything she will confiscate Citigroup because it looks sick.  She has the ego, she has the momentum, she has the form.

Sheila can of course run this, sort it out, become Treasury Secretary and otherwise rule the world.

Sheila Bair - just admit the precedent you set is inappropriate and resign!

John Hempton

1 comment:

james said...

I find it absolutely astounding that the FDIC and Bair wanted to sell Wachovia to Citi, and now Citi finds itself on the brink of bankruptcy. Like, did she seriously not know the true state of Citi's assets? Or was she merely trying to prop two ailing bohemoths against each other hoping that they would keep each other afloat somehow?

Its scary that in this economic situation, those who are charged with having the foresight and knowledge to successfully get us through it seem to be as clueless as the rest of us.

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