Fed Tells Citigroup And Wells To STFU, Please

According to Bloomberg, Citigroup and Wells Fargo have agreed to temporarily stop suing the pants off one another over Wachovia. The reconciliation was made in light of impending economic doom looming over all of us.

Normally, banks suing one another for failed mergers would be pretty business as usual, but since the S&P has now hit 5 years lows and is down 32% in the last year, I think maybe investors have had enough drama for a while. The artificial cease-fire will last until noon on Wednesday, while the Fed officiates a peaceful resolve (in other words, Fed will threaten release rumors about FDIC seizure of Citi and or Wells if they don't play nice).

Putting these discussions behind closed doors is probably good for Citigroup, who is suing for $60 billion dollars on a failed $2 billion dollar deal. Apparently, normal folks are getting a little pissy about this kind of Wall St. greed.

As this mess continues, Citigroup, Wells Fargo and Wachovia are looking more like big losers. The Wachovia franchise is undoubtedly losing a lot more deposits as the drama continues (that regional king Bank of America is most likely scooping up), and the price of a juicy acquisition goes up for the eventual winner (as they will most likely end up in some sort of bidding war).

JP Morgan's steal of WaMu is looking better and better.