Wachovia spurns Citibank for Wells Fargo

Citibank had an exclusive deal to buy parts of Wachovia, with government assistance. Wells Fargo jumped in today and sealed a deal to buy the whole thing for $16 Billion, which is a 79% premium. As a result of the deal, Wells Fargo may lose it's prized "triple-A" credit rating.

Reliable sources have told me that Wells Fargo had stayed away from the most toxic types of FIRST mortgages, so why they would want to buy $100-300 Billion in toxic mortgages is a mystery. Maybe they plan on selling them to the government under the $700 Billion bailout (+$150 Billion of pork, by the way).

As I've blogged exhaustively in the past, Wells Fargo has $85 billion on toxic SECOND mortgages, which are behind toxic first mortgages. These are worthless.

According to this article from Mr. Mortgage, some of Wells Fargo's "prime" mortgages were actually subprime and Alt-A.