Citigroup To Take Over Wachovia

FDIC-Brokered Deal Expands Citigroup's Reach; Will Absorb $42B Of Wachovia's Losses

(AP)  In the latest byproduct of the widening global financial crisis, Citigroup Inc. will acquire the banking operations of Charlotte, N.C.-based Wachovia Corp. in a deal facilitated by the Federal Deposit Insurance Corp.

Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.

The deal greatly expands Citigroup's retail outlets and leaves it among the U.S. banking industry's Big Three along with Bank of America Corp. and J.P. Morgan Chase & Co.

The deal comes after a fevered weekend courtship in which Citigroup and Wells Fargo & Co. both were reportedly studying the books of Wachovia, which was suffering from mounting mortgage losses linked to its ill-timed 2006 acquisition of mortgage lender Golden West Financial Corp.

The FDIC asserted that Wachovia didn't fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.

Federal Reserve Chairman Ben Bernanke, in a statement Monday, said he supports the "timely actions" taken by the FDIC "which demonstrate our government's unwavering commitment to financial and economic stability."

Treasury Secretary Henry Paulson also welcomed the sale of Wachovia to Citigroup, saying it would "mitigate potential market disruptions." Paulson said he agreed with the FDIC and the Fed that a "failure of Wachovia would have posed a systemic risk" to the nation's financial system.

"As I have said before, in this period of market stress, we are committed to taking all actions necessary to protect our financial system and our economy," Paulson said.

The sale of the Wachovia assets comes just days after the government's seizure of Seattle-based Washington Mutual Inc. — the largest bank failure in U.S. history. As details of its takeover unfolded, Wachovia shares plunged 91 percent in Monday premarket trading to 91 cents. The stock had closed Friday at $10, down 74 percent for the year.

Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. It paid roughly $25 billion for Golden West at the height of the nation's housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West's specialty, which let borrowers skip some payments.

[mcv57]

Under the authority of the U.S. Constitution, I demand the immediate arrest of:

1. The President of U.S.
2. The White House Administration
3. The Chair of SEC and executives
4. The entire U.S. Supreme Court
5. The disolve of the F.B.I.
6. The Secretary of Treasury and executives.
7. The Federal Reserve Chairman.
8. U.S. Senatorial and Congressional leaders who
host this financial Bail-Out Scheme.
9. All investment bank CEOs who are directly responsible for this insolvency. AND

10. U.S. ATTORNEY and its administration

with charges of TREASON and SUBVERSION OF THE SOVERIEGNTY OF THE UNITED STATES.

If none of my U.S. Congressional leaders will declare this vote of NO CONFIDENCE. I plead the U.S. military leaders to take siege of this totally corrupt government and declare marshal law; until a U.S. Constitution government may be restore.

[im4honesty]

IS ANYONE LISTENING?


The giant brains in Washington are attempting to find a way to buy up $700 billion in delinquent debt. The latest estimate that I have heard is an expected overall loss of 50% when this thing washes out years down the road.

For decades, ''hard equity'' lenders have been making a healthy profit loaning money a a 65% LTV (loan-to-value).

Why haven''t at least one of these geniuses thought of going to the source to cut our losses instead of handing this massive amount of money over to the same morons that caused the problem?

If homeowners were offered a no-interest loan of up to $100K and then the mortgage holders were offered a one time chance to renegotiate to a payoff equal to 65% LTV plus up to $100K at a ''market'' interest rate, those lenders would minimize their losses and the taxpayers would enjoy a return considerable greater that 50% of the investment.

At $100K per family in trouble, $700 billion would help seven million families and save their homes.

In reality, the average amount needed per family would probably be more like $50K... 14 million families would have their lives turned around. Plus, no golden parachutes for the theives that caused this mess in the first place.

Someone please tell me how I''m wrong.

[adfolder]

If the bank account is insufficent/ By one error or flaw/ He''s quick on the deposit/ But she''s fast on the draw! Another broke Wachovia customer

[bobnjersey]

[The deal greatly expands Citigroup''s retail outlets and leaves it among the U.S. banking industry''s Big Three along with Bank of America Corp. and J.P. Morgan Chase & Co. ]

excellent. let''s consolidate the banks even more ... so that when one fails ... they too will require a big pile of cash that won''t be called a ''bailout''.

let''s continue deregulating everything so that each business sector can consolidate into one entity per sector (one bank, one ins co, one telcom co, etc) ... which will lower prices due to reduced competition (bizzaro economics) ... provide greater options to consumers (bizzaro economics) ... produce greater tax revenue (bizzaro economics) ... and enhance stability in the market (end of sarcasm and the description of the current bizzaro economic policies forwarded by one of our two parties for the last 30 years).

[oscarez]

Credit, credit credit and more credit. Has anyone stopped to think that borrowed money, AKA as credit, has gotten us into this mess. How can we believe that borrowing more money can get us out. Right, borrowing more money that you can never pay back will fix the problem. I see no way to avoid a world depression.

[msobamaishot]

"The FDIC asserted that Wachovia didn''t fail"

Yea...it didn''t fail b/c Citigroup bought them. Under this assertion I''m assuming neither did Bear Sterns or Merrill, right? Seems to me like the Fed is trying to do a lil damage control to keep people from panicking. I guess asserting that a bank didn''t fail maintains the public''s trust in national banks.

[missingamerica]

Banks consolidating down to seven or so mega-banks...

What is next?

Times getting so very tough that, in desperation, the American people will permit the destruction of seventy-five years of tough work crafting labor and enviromental laws?

Stay tuned, ''cuz if you look up the mortality rates for the 1890s you have your life invested in the answer, whether you know it or not.

[afmca]

What I find very disturbing is taxpayers had to bail out banks because they were to big to fail. With the current bank, mortgage, and financial mergers Bank of America, Chase, and now Citigroup and now even larger and more monopolistic than ever. It seems like we have consolidated the financial system even further so that when poor business practices and greed eventually overcome these institutions the American taxpayer will once again be made to pay. We need less consolidation; not more!

[generey]

Oh no here we go. Again. (Thats my bank, BUT, I dont have over $100K in it, actually -$129.00 at the moment!) LOL.

[nursehope]

GREED,GREED,GREED plain and simple. This funny thing is that most of those companies managers on vote the family values GOP ticket!

[pugster]

It is too late now. The golden parachutes are already given to the wall street fatcats and the taxpayers are here to pick up the crumbs.

[tbuckl]

Thomas Jefferson was so right when he said the following, I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by all future generations, under the name of funding, is but swindling the state of being yet to come on a large scale. Now the American banking system and its Barbaric CEOs have taken the American people to the clearers. Thomas Jefferson correctly used the word SWINDLING when writing his thoughts about banks and aristocratic tyrants that would infect our soceity. He knew these aristocratic tyrants would infest our soceity just like they did so many centuries ago. I wish he had been wrong, because I am starting to think something else he said may also be true. "The tree of liberty must from time to time be refreshed with the blood of patriots and tyrants. It is its natural manure."

[longlostnob]

More FBI investigations are in order. The bank CEO''s that allowed all the bad loans need to go to jail at least, pay back any bonuses during the years the stupid loans were made, pay big fines and make little rocks from big rocks. What a mess!!!