Wachovia: Getting Messy

The fight over Wachovia is getting messy. Court judgments are getting overruled; obscure provisions in the bailout legislation are taking on a crucial importance; the Fed is acting like King Solomon, splitting the baby between the West Coast and the East Coast. And then there's this, from Wachovia's CEO:

Illustrating the competing interests at play, a sworn affidavit filed this weekend in federal court by Mr. Steel paints a picture in which the eighth-largest U.S. bank in stock-market value is caught between two takeover bids while facing pressure from the FDIC to sell itself. The affidavit suggests that Wachovia has come within inches of failing at least twice during the past week.

The fact is that the global credit crunch is significantly nastier now than it was last week -- which means that the only reason Wachovia is still operating as a going concern is that everybody is certain it'll end up getting sold to Citi, to Wells, or to some combination of the two. And in this market, certainty is not good for you.

On Friday, when it looked as though Citi had lost Wachovia, Citigroup's stock plunged. Today, it looks as though Citi might get at least some of Wachovia -- and Citigroup's stock is down another 5% at the open. Truly, there is no good news today.