Citigroup buying Wachovia banking operations

FDIC says Wachovia didn’t fail, and that all depositors will be protected.

NEW YORK - The government said Monday that Citigroup will acquire the banking operations of Wachovia in a deal facilitated by the Federal Deposit Insurance Corp.

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

The sale of Wachovia Corp. comes just days after the government’s seizure of Seattle-based Washington Mutual Inc. — the largest bank failure in U.S. history.

— Full MSNBC Story

Sleepy George W. speaks to Congress/Nation

A sleepy looking President came out at 7:35 am and spoke to the Nation this morning. As a one-person pep-rally, he urged congress to pass the bailout bill. He then turned on his heels and walked back to the Oval Office.

The neighbor's dog must have kept him up last night!





Wait... that was me..

Never mind.

Wachovia Update

Citigroup is near a deal for Wachovia, a move that would concentrate power within the nation’s banking industry in the hands of a few giant lenders, The New York Times’s Eric Dash and Andrew Ross Sorkin reported Monday morning.

Citigroup executives are meeting to complete the deal Monday morning, these people said, cautioning that the talks could unravel. Wells Fargo, which had also been in talks with Wachovia, could also revive its bid.

Although the Federal Reserve and Treasury Department were pushing for a sale, the government was resisting pressure to provide financial guarantees to the buyer, which both Citigroup and Wells Fargo had sought.

A sale to Citigroup would further concentrate Americans’ bank deposits in the hands of just three banks: Bank of America, JPMorgan Chase and Citigroup would control more than 30 percent of the industry’s deposits.

— NYTimes Story

My bank is in trouble!

Wachovia Corp. is in trouble. It purchased a bank that had questionable lending practices in 2006 and is now paying the price.

At least two major banks were reportedly in talks Sunday to buy Wachovia Corp., the latest U.S. bank to be the focus of investor anxiety over mounting losses tied to toxic assets.

The New York Times reported on its Web site that Citigroup Inc. and Wells Fargo & Co. are bidding in a possible emergency takeover of Charlotte, N.C.-based Wachovia.

The Wall Street Journal also listed Spain's Banco Santander SA as a possible bidder.

Wachovia spokeswoman Christy Phillips-Brown declined to comment on the reports, as did Citigroup spokeswoman Christina Pretto. Wells Fargo spokesmen could not be immediately reached for comment.

Wachovia's shares fell 27 percent in regular-session trading on Friday, and shed another 15 percent in after-hours dealings to end the week at $8.50, as investor worries heightened.

Wachovia's current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion 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

But like many other banks, Wachovia stands to benefit from the passage of the government's proposed $700 billion rescue plan — the details of which were emerging from Washington on Sunday.

This summer, Wachovia reported a $9.11 billion loss for the second quarter, announced plans to cut 11,350 jobs — mostly in its mortgage business — and slashed its dividend. Wachovia also boosted its provision for loan losses to $5.57 billion during the second quarter, up from $179 million in the year-ago period.

Earlier this month, Wachovia said it is on track to reduce securities and outstanding loans on its balance sheet by $20 billion this year, which will free up $1.5 billion in capital.

Additionally, Wachovia still expects to reduce expenses by $2 billion by the end of 2009.

However, the second-half expense benefit will be more than offset by $525 million to $650 million in severance and benefit costs related to previously announced job cuts, Wachovia said.

— AP Story via Yahoo! Business news

Bailout in chaos, feds seize WaMu

WASHINGTON (Reuters) - A rescue for the U.S. financial system unraveled on Thursday amid accusations Republican presidential candidate John McCain scuppered the deal, and Washington Mutual was closed by U.S. authorities and its assets sold in America's biggest ever bank failure.

As negotiations over an unprecedented $700 billion bailout to restore credit markets degenerated into chaos, the largest U.S. savings and loan bank was taken over by authorities and its deposits auctioned off. U.S. stock futures fell by more than 1 percent.

The third-largest U.S. bank JPMorgan Chase & Co said it bought the deposits of Washington Mutual Inc, which has seen its stock price virtually wiped out because of massive amounts of bad mortgages. The government said there would be no impact on WaMu's depositors and customers. JPMorgan said it would be business as usual on Friday morning.

Had a bailout deal been reached in Congress, it may have helped the savings and loan, founded in Seattle in 1889. Efforts to find a suitor to buy WaMu faltered in recent days over concerns about whether the government would reach a deal to buy its toxic mortgages.

— Full Story