Hello? Get on with better Wells-Wachovia deal
Wake up and good morning. Amid the drumbeat of "who's in financial trouble now" how could we forget the fate of Wachovia, the North Carolina banking company that's got a No. 1 market share in Florida? Because the three players determining Wachovia's future -- Citigroup, Wells Fargo and, yes, the federal government -- are still thumb-wrestling over who gets what. Kind of like an early scene of carving up a Thanksgiving turkey. If you can recall through the fog of financial chaos, Citigroup agreed to buy Wachovia's banking assets (but not Wachovia Securities) with the generous backing of the FDIC. Days later, Wells Fargo stepped up with a dramatically better offer: Buy all of Wachovia -- without FDIC backup. Citi protested and sued for $60-billion -- an absurd sum suggesting Citi's thinking with its ego, not its brain. Now the banks' lawyers are fighting and there may be resolution when the truce ends Friday morning.
“There are negotiations between Wells Fargo and Citigroup about a possible grand solution that would preserve the shareholder value for Wachovia as represented by the Wells Fargo deal,” Wachovia lawyer David Boies said during a teleconference. Such a deal “would involve not a single choice between Citigroup and Wells Fargo,” Boies said, without providing details.
Say what? Boies, you may recall is the lawyer who represented Al Gore in the controversial 2000 election recount in Bush vs. Gore before the U.S. Supreme Court. Hopefully, Boies will have better luck this time.
One thing is for sure. The pundits and analysts do not like Citigroup's approach to the Wachovia deal. This MarketWatch column slams Citigroup's recent history of "whatever it touches turns mediocre" and warns Wachovia would be next for the reverse-Midas touch. A Wall Street Journal opinion piece this week suggests Citigroup is smarter to call off its legal battle over Wachovia to prepare for bigger warfare ahead, including the possibility of a global banking recession, or worse. I agree. Besides, the FDIC (which is ultimately backed by the U.S. taxpayer) has an obligation to step away from guaranteeing Wachovia's bad assets when Wells says it will acquire them with no federal strings attached. Hello, FDIC, anybody home?
Here's another tale of a medical test apparently hitting the market before it's ready. The Food and Drug Administration warned clinical test giant Laboratory Corp. of America Holdings that it was marketing an ovarian cancer test in violation of the law, vindicating skeptics worried the $220 test wasn't ready yet. Here's the Wall Street Journal story about OvaSure -- and the concerns of Tampa's Rebecca Sutphen, a spokeswoman for the National Ovarian Cancer Coalition and director of genetic counseling and testing services at H. Lee Moffitt Cancer Center and Research Institute.
"When you make a test available, then people are likely to make decisions based on the test," Sutphen said. "Obviously, everyone is on the same page in terms of wanting such a test. But women may be using this information prematurely to make decisions, and the decisions may not be in their best interests."
On the financial bailout front, here what's one of Tampa's small business owners -- Maryann Ferenc owns and operates the fine dining restaurant Mise en Place and a catering event business -- thinks of the fed's giant rescue package, as reported by Business Week magazine. (I paraphrase). Suck it up, Wall Street, downscale your excessive lifestyle and toughen up. Not bad advice since we Floridians all have to do this at times! Here's what Ferenc actually says:
"As an independent business person for the past 23 years, there have been times when I had to close my businesses because of financial necessity," she says. "No one helped me, and I don't think they should. I had to change my lifestyle when I made decisions that were less than fabulous. But I learned a lot and came out on the other side a better business person. It's a good lesson for Corporate America to go through. People need to pay for their mistakes. We need to hold people responsible for the decisions they make. I am a Democrat and a strong one, but I do not like to see us bailed out."
--Robert Trigaux, Times Business Columnist