Wachovia has failed...it's FDIC Monday!
Posted on 09/29/2008 5:39:46 AM PDT by FlameThrower
FDIC: Citi to Buy Wachovia’s Banking Operations The FDIC made the following announcement this morning on Citi’s purchase of Wachovia’s banking operations.
Citigroup Inc. to Acquire Banking Operations of Wachovia
FDIC, Federal Reserve and Treasury Agree to Provide Open Bank Assistance to Protect Depositors
Citigroup Inc. will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina, in a transaction facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President. All depositors are fully protected and there is expected to be no cost to the Deposit Insurance Fund. Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC.
“For Wachovia customers, today’s action will ensure seamless continuity of service from their bank and full protection for all of their deposits.” said FDIC Chairman Sheila C. Bair. “There will be no interruption in services and bank customers should expect business as usual.”
Citigroup Inc. will acquire the bulk of Wachovia’s assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia Corporation will continue to own AG Edwards and Evergreen. 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.
In consultation with the President, the Secretary of the Treasury on the recommendation of the Federal Reserve and FDIC determined that open bank assistance was necessary to avoid serious adverse effects on economic conditions and financial stability.
“On the whole, the commercial banking system in the United States remains well capitalized. This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” Bair said. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.”
Wachovia customers with questions should call their normal banking representative, service center, 1-800-922-4684 or visit www.wachovia.com. The FDIC’s consumer hotline is 1-877-ASK-FDIC (1-877-275-3342) or visit www.fdic.gov.
Sounds like a ‘steal’ when the FDIC (taxpayer) pays off $270 billion of the banks bad loans. Citi gets the goldmine, the taxpayer gets the shaft.
I guess it’s the stockholders who are bailing out all these “takeovers”. We are effectively wiping out all stockholder equity and GIVING the assets to other banks.
They should.
Whatever happened to “you pays your money, you takes your chances”?
Now it’s “you pays you money, and the taxpayers takes your chances.”
Aren’t the Clinton’s connected to Citigroup?
I find it odd that this happened so close to the election and the wording of the bill was done so fast.
Yep. Stock prices shriveled to $19.99 today, After shriveling to 33% to $20.15 on friday.
Of course stockholders get the shaft.
Actually there will be 4.. Chase, Citi, Wells Fargo, and BOA unless BOA is in trouble..
The next one I look at is Wachovia Bank (WB), because Bob Steel the CEO and the former under secretary of the Treasury for Domestic Finance has a better handle on how this process will work than any other executive out there perhaps because he was in the government. He was Paulson number 2. I think Steel is ready to split Wachovia into good bank and bad bank. Give the bad bank to the government as soon as the plan passes and he is able to because he owns whole loans sold right to the government. In return for a stake by the government in new and old, good and bad Wachovia... which is really now in a very dicey situation thanks to all the bad mortgages in bought when it acquired Golden West in 2006. Wachovia is a winner.
oops...
Right - Wachovia was #5. One through four remain. For now.
I love all the politicians and talking heads saying, “nobody saw this coming”.
Right.
I saw it, you saw it, we all saw it! How can you spend years lending to people with no assests and no credentials on the backs of those who do, and expect that it ain’t going to come around and bite us on the arse.
So once again, the citizen is a stupid bunpkin racist, and oh, by the way, pay up, AGAIN!
We'll have a lot more than three. But we've had an excess of banks for years due to weird laws and anti-big business politicians. In the 1970s we had 14 thousand banks. Now, we're down to a mere 7 or 8 thousand.
Except there was no good bank.
Evil rich billionaires, now (natch) supporting BO.
The distinction I believe is that, as an “open bank” takeover, the $100,000 FDIC insurance limits do not apply, because the bank did not “fail”.
So all deposits are still honored after the aquisition.
In contrast, I think WAMU was a failed bank takeover, so anybody who had more than $100,000 deposited MIGHT have lost the excess. But I’m not sure.
Actually, $20.15 to $19.99 doesn’t look like much of a shrivel. The previous losses hurt people who had the stock, but it seems it’s better than failing and having your stock be worth 7 cents.
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Wachovia has failed...it's FDIC Monday!
We followed our advisor when he came over from Merrill Lynch, because we found him to be an honest man and responsive. If not for him, we'd have dumped Wachovia, because the banking side of their operations was a perennially screwed up mess. I had to chase numerous clerical mistakes, missing documents, errors on tax documents, etc. If Citi runs a tight ship, I'll probably be happy for the change.
Wrong.. There are other regional banks that avoided this mess. New Banks will sprout up in these others places.
I just went down and took 85% of my account balances out of Wachovia.
wachovia’s stock has been plummeting.
it went from 13.50 to 10.00 in one day, I have no idea what it is right now.
as for the FDIC, they are in trouble too.
they had a balance of about 45 billion last month, it’s almost gone— and they are considering asking for a $150 billion bailout from the fed.
Right now there are three major banks only.
Citigroup acquired Wachovia...
The bill today is probably gonna go down in flames-
and even if not, it does not fix the problem so there will be even more collapses.
Folks, I’d recommend you all to pay ATTENTION to how this is being mismanaged. This congress is nothing but monkeys with a chainsaw.
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