My Bank Part II
It keeps getting better. This morning, our other bank, Wachovia was bought by Citigroup in a “rescue deal.” Now I don’t know a lot about Citigroup, other than it’s an old bank (Citicorp) that’s seen a lot of hard times. I’m not sure what to think about it yet, but I’d like to think that Citigroup would be a much better lender for our auto loan than Wachovia.
I’m also terribly excited about the news from this morning about the bailout plan rejection in congress today. It’s a ridiculous idea, even after it was refashioned by the congress to introduce more oversight and public transparency. No matter how you look at it, $700bn is a lot of money, especially when those who caused this crisis are able to get off without reprimand.
The buyout of Wachovia by Citigroup is a testimony to the markets ability to solve these kinds of issues while remaining in the private sector exclusively. If the bailout had been enacted, for example (figures made up), the committee for the EESA might have offered Wachovia $70bn for their bad debts and allowed them to stay in business. If this had happened, then Citigroup, a respectable company who is doing much better in regards to stability, would not have been able to match the EESA committee’s offer, thus preventing them from making an honest profitable investment in a failing company in which they were prepared to pay $48bn. You see how this interferes with the free market? Healthy companies are being denied healthy investments when the new rich kid comes into town.
Of course there’s going to be huge failures, but we should also think of the huge winners who’ll come out after the water settles. Let the strong absorb the weak in a natural way rather than change the rules altogether like a spoiled kid who isn’t winning. And we all know who that spoiled kid is, don’t we?
Tags: citigroup, economy, eesa, wachovia
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October 1, 2008 at 5:41 am
yes.