Citi-Wachovia: Another day, another $270 billion

The key detail from this morning's announcement that Citigroup is buying the bulk of Wachovia, with the FDIC's help:

The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.

So basically, the FDIC is taking on a $270 billion pool of loans--albeit it with significant protections, and some potential upside. While the members of the House of Representatives argue today over whether Hank Paulson should be given $250 billion to buy stuff with (with the possibility of later upping it to $350 billion, then $700 billion), taxpayers have just acquired $270 billion in, well, stuff.

Meanwhile, the citizens of the low countries learned this morning that they have just put up $16.4 billion to save bank/insurer Fortis, while German taxpayers have just advanced $42 billion to keep Hypo Real Estate alive. Somebody remind me: Why did we need this Paulson bill again?

Update: Roger Ehrenberg has some choice words on Citi-Wachovia:

Are we really comfortable that Citigroup's management, which has made perhaps one good decision in the last five years (raising $50 billion - and fast), has the wherewithall to manage this even larger Goliath? What evidence have we seen that this might be the case? Now, if you told me that Wells Fargo was the buyer, I might feel differently. But this seems like the case of consolidating a bunch of crappy assets under a decidedly mediocre management team in order to claim a win for the current Administration and the U.S. taxpayer. Bull*@%^. All we're doing is potentially upping the cost of a subsequent bailout instead of taking care of Wachovia cleanly and in a straight-forward manner - now.