3 October 2008: TARP signed as Wells Fargo swoops on Wachovia
On the same Friday, President Bush signed the $700 billion bank rescue law known as TARP, and Wells Fargo announced a deal to buy all of Wachovia, trumping a government-brokered Citigroup bid from days earlier. Markets still fell, because a rescue plan is not the same as a rescue. Wells, the conservative lender that had avoided the worst mortgage excesses, ended up buying a giant competitor at a crisis price.
The lesson: Banks that stay boring in good times get to go shopping in bad ones.
What it meant for investors
$1,000 in Wells Fargo at the start of 2008 → $2,833 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2008, the year it happened. That is 2.8 times the money, but $1,793 less than a plain index fund made over the same years.
What Wells Fargo teaches: The metric management celebrates loudest can be the one employees are gaming; a culture problem eventually shows up in regulation, fines and a stalled share price.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2008 | $30.00 | $2,833 | $4,626 |
| 2010 | $27.00 | $3,148 | $6,071 |
| 2012 | $28.00 | $3,036 | $5,312 |
green = beat the S&P 500 · red = lost money
What if you bought Wells Fargo? Every starting year and the full story →
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
Play Sixty-40