FDIC backing Citigroup takeover of Wachovia

September 29, 10:17 AMBusiness ExaminerDarrell Proctor

Previous Next

Comment Print Email RSS Subscribe

Subscribe

Get alerts when there is a new article from the Business Examiner. Read Examiner.com's terms of use.

Email Address   Include other special offers from Examiner.com Terms of Use

 

Another of America's largest banks has a new owner. Citigroup Inc. today agreed to buy Wachovia Corp.'s banking operations for $2.2 billion in stock and will assume another $53 billion in Wachovia debt.

Federal banking regulators signed off on the deal by agreeing to share a portion of future losses - through the Federal Deposit Insurance Corporation - that Wachovia's failing mortgage portfolio could generate.

Said Citigroup in a statement: "The FDIC has agreed to provide loss protection in connection with approximately $312 billion of mortgage-related and other Wachovia assets."

Shares of Charlotte, N.C.-based Wachovia fell more than 90 percent in premarket trading, and the New York Stock Exchange moved to prevent shares from trading at this morning's open.

Wachovia customers - like Washington Mutual's last week - were assured their assets were not at risk.

"There will be no interruption in services, and bank customers should expect business as usual," FDIC Chairwoman Sheila Bair said.

Federal Reserve Chairman Ben Bernanke said he welcomes the Wachovia bailout deal, adding that the FDIC action shows the government is committed to U.S. financial stability.