It looks like higher bids still win, suggesting that markets continue to mean something.

What's certain is that Wells Fargo's (WFC) planned acquisition of Wachovia (WB) will be in compliance with the Attorney's Full Employment Act: Citigroup (C) plans to seek $60 billion in damages for breach of contract, though it won't challenge completion of the deal in court.

On Sunday, the Federal Reserve approved Wells Fargo's $11.7 billion acquisition of Wachovia. Wells Fargo says it plans to complete the acquisition by the end of the fourth quarter. Wells Fargo's deal was valued at $15.1 billion for Wachovia's banking and other units (Citigroup offered $2.2 billion for just the banking operations), but the California bank's stock has declined since the deal was announced. The deal still requires Wachovia's shareholders' approval.

The Federal Reserve's action comes after federal antitrust regulators moved quickly to back Wells Fargo's plan to buy Wachovia. The Charlotte, North Carolina-based bank was hit by a $5 billion run on deposits in late September following the failure of Washington Mutual. JPMorgan Chase (JPM) acquired Washington Mutual, making winners of its stockholders and the FDIC.

With the acquisition, Wells Fargo will have about 6,675 branch offices, rivaling Bank of America (BAC) in terms of deposits. In a research report issued October 10, Standard & Poor's said Wachovia's investment banking business is likely to be "significantly downsized
after the acquisition." Wachovia's corporate and investment banking division employs about 6,000 people and generated about 16% of the company's revenue last year.

Bloomberg says Wachovia is the 14th-ranked underwriter of US bond deals this year and is 12th in global equity offerings.

The deal also gets Wells Fargo the third-largest US securities brokerage and Wachovia's Evergreen mutual fund unit that has about $250 billion in assets. This will augment Wells Fargo's existing businesses.

Here's betting that Wells Fargo is primarily interested in Wachovia's retail operations and the rest is almost incidental. If so, there are more deals ahead.

What's encouraging is that Uncle Sam didn't unilaterally determine the outcome of this deal and let the higher bid speak to Wachovia shareholders. That suggests that the Federal government won't determine winners and losers in future deals. This should reinvigorate the market.

Or at least we can hope it will.

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