As Citigroup looks at buying Washington Mutual, 1+1=0

Posted Sep 19th 2008 8:45AM by Douglas McIntyre
Filed under: Deals, Citigroup Inc. (C), Washington Mutual (WM), Housing

Citigroup (NYSE: C) is considering buying Washington Mutual (NYSE: WM), the nation's largest savings and loan. It sounds like Sandy Weill is back in charge and trying to create the kind of financial conglomerate he built in the 1990s and earlier this decade.

According to The Wall Street Journal, "Citigroup and several other banks are reviewing the Seattle thrift holding company's books, which are packed with shaky mortgages."

Just a few months ago, Citi CEO Vikram Pandit was talking about cutting the big bank's expenses by 20% and selling off "non-core" assets. Now he is thinking about buying the most troubled large financial company in America.

Pandit would be better off staying with his first plan. There is a reason WaMu's stock got down to under $2. If mortgage defaults move up and housing prices move down, the mortgage company's financial situation could get much worse.

Pandit is proving to be a "flavor-of-the-month" CEO. Investors never know what he plans to do tomorrow, let alone what he wants to do with Citi over the next year.

Douglas A. McIntyre is an editor at 247wallst.com

Tags: C, citigroup, inthenews, pandit, wamu, washington mutual, WashingtonMutual, weill, WM

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Reader Comments (Page 1 of 1)

9-19-2008 @ 10:21AM

EMIL J KOVACH JR said...

It's Nice To Know, Citi CEO Vikram Pandit's, real Game plan, Isn't On everybody's Blog Site.

Morgan Stanley--Should Learn Something From this.

EMIL J KOVACH JR

9-20-2008 @ 9:21AM

John Smith said...

Why would Citi even consider merging with WaMu? They are barely over their own troubles and now want to jump in blindly to take over this bank? Both banks operate in exactly the same foot print. This merger would mean that the giant would have to close out hundreds of branches, putting thousands of people out of jobs. These thousands would end up on unemployment and ultimately lose their homes in this impossible job market. In addition, WaMu customers have Citi branches in their own towns, already. If they wanted to bank with the giant, they would already do so. The WaMu customers would not bank with Citi if it takes over WaMu. They will move their money over to banks like Wachovia that offer apples to apples products and services. If the government blesses any Merger with WaMu, it should be with a bank (even if it must be a foreign bank) that would come in leaving the existing branch structure in place. There are enough displaced people from the financial industry walking the unemployment line already.