The leadership at Wells Fargo must be royally peeved at this point:
Stable national players like Bank of America, JPMorgan Chase, and Wells Fargo are already digesting acquisitions. A second group of so-called super-regional banks are well positioned to take over their competitors, officials said, but have been reluctant to undertake or unable to complete deals.
By offering capital at a favorable rate, the government may encourage them to expand. In this category, industry analysts point to regional leaders, like KeyCorp of Cleveland; Fifth Third Bancorp of Cincinnati; BB&T of Winston-Salem, N.C.; and SunTrust Banks of Atlanta.
Now, to be polite about it, one of those last four is (imnvho) a strong contender for Worst-Run U.S. Bank That Didn’t Pay $400MM for Naming Rights (h/t Skip Sauer). Ignoring that, a quick glance at the list shows at least two—BB&T and most especially SunTrust—that would have made Wells Fargo a very happy camper in its Southern Strategy effort.
So now, having spent the money, beating Citi and saving the FDIC, Wells is going to have to watch as SunTrust eats its lunch before it has even sat down for appetizers.
This is a bad move by the Fed that will result in no new lending, a lot of window-dressing, and bigger bank failures during the second term of the “failed Obama administration.” (Video of Dave Barry appearance at the National Press Club, 12 November 1992, does not seem to be available on the Internet. C-Span?? C-SPAN???)
If anyone wants to understand “moral hazard,” just imagine being a WFC shareholder* who watched your bank do due diligence and is about to watch SunTrust snap up some weak-kneed competitor by filling out a two-page form and sending it to Hank Paulson.
Anyone who says that Paulson (1) knows what he is doing, (2) does not use the word “kleptocracy” in describing Paulson’s actions, and (3) thinks it is a Good Idea is lying or selling something.
*Full disclosure: I’m not, nor to my knowledge in anyone in my family, though I don’t read through all the Prospectus Updates of some of my wife’s Mutual Funds.