Something fishy is going on.

Wells Fargo just offered to buy out Wachovia for $14.8 billion straight up, with no money or guarantees from the government.  Previously, the FDIC had brokered a deal with Citi to buy Wachovia for $2.1 billion and some guarantees from the FDIC to buy-up some of the company’s debt.

Under Wells Fargo’s deal, Wachovia shareholders would receive 0.1991 shares of Wells Fargo for every share of Wachovia stock they own, valuing Wachovia at about $7 per share. This is a nearly 80 percent premium over the stock’s Thursday closing price of $3.91. Shares closed at $10 on Sept. 26, the last trading session before the deal with Citigroup was announced. . . .

In its planned takeover of Wachovia, Citigroup said it would assume $53 billion worth of debt and agreed to absorb up to $42 billion of losses from Wachovia’s $312 billion loan portfolio. The FDIC agreed to cover any remaining losses in exchange for $12 billion in Citigroup preferred stock and warrants.

So why exactly did we need this bailout again?  Private interests are moving in to buy up these failing companies, but the government still hit up taxpayers for $700 billion and the right to buy shares in these companies with taxpayer money?

I smell a scam.

Remember the rush Washington was in to approve the bailout?  Was there really a need to rush?  Or were they just in a hurry to close these bailout deals to keep other private companies from coming in cutting deals of their own?

What Wells Fargo is doing is exactly the sort of thing that happens in free markets all the time.  One company goes down, other companies pick the bones clean, and life goes on.  Business models shift so that the same thing doesn’t happen again.

It seems to me that far from being about “change” (which is all Washington types seem capable of talking about these days), the bailout was about protecting the status quo from the natural functions of the market.