THE BASIS POINT

Wells Fargo To Buy National City?

The San Francisco Business Times reported that Wells Fargo is evaluating acquisition opportunities. In addition to posturing for Fed support by saying “I would not be averse to a Fed-assisted transaction,” Wells CEO John Stumpf said that National City is a target.

Stumpf’s comment about Fed intervention is at worst jealousy about JP Morgan Chase CEO Jamie Dimon’s perfect timing on his Fed-assisted acquisition bid for Bear Stearns. It’s unlikely to happen since the Fed’s job with Bear Stearns was to stave off an all out credit market meltdown. But in the ‘modernize monetary policy as we go’ environment, you can’t fault Stumpf for trying to get something done. His comments about Fed intervention aside, the National City deal seems like a good fit. Along with Wells Fargo, they were a favorite for 2nd mortgage financing up until August 2007, and there is still a large appetite for 2nd mortgages as a better alternative to private mortgage insurance.