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Citigroup Inc. to Acquire Banking Operations of Wachovia
WSJ | 9/29/08 | FDIC

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.


TOPICS: Breaking News; Business/Economy
KEYWORDS: bailout; banks
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To: Sid Spinach
it went from 13.50 to 10.00 in one day, I have no idea what it is right now.

WB was under $1.00 before trading was halted this morning.

81 posted on 09/29/2008 10:03:17 AM PDT by rabscuttle385 (No to bailouts, no to amnesty, no to carbon credits, no to Big Government!)
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To: VRWCmember
You mean banks are to dumb to have a computerized clearing house, just like when writing a check today. Guess you know a lot more than me!! I know banks and bank management have acted just like a teenage boy with the family car, they got drunk and wrecked it. So you need to take the keys away.
82 posted on 09/29/2008 11:23:08 AM PDT by org.whodat ( "the Whipped Dog Party" should support the SAM Walton business model, and then drill???)
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To: org.whodat
You mean banks are to dumb to have a computerized clearing house, just like when writing a check today. Guess you know a lot more than me!!

No, I mean that the easing of regulations in the 80's was what enabled the networks to share account information so that banks can network their ATM's across a network rather than servicing only the accounts of their own bank on their own ATM. The same is true of branch banking that allows you to conduct bank transactions at the bank in your neighborhood or at the branch close to your employer.

The problem was not with a lack of regulation, but rather with regulators being told to enforce regulations under laws like the Community Reinvestment Act in such a way that banks were forced to lower lending standards in order to increase their lending in minority and depressed neighborhoods.

83 posted on 09/29/2008 12:31:16 PM PDT by VRWCmember
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To: VRWCmember
The problem was not with a lack of regulation, but rather with regulators being told to enforce regulations under laws like the Community Reinvestment Act in such a way that banks were forced to lower lending standards in order to increase their lending in minority and depressed neighborhoods.

ROFLOL, wrong! Look at the number of actual bad debt, for mortgages,the problem is that there are way too many homes and not enough buyers no matter how you rig the loans. The home loans on the books have lost 40 to 50% of their value. Stop drinking the coolaide.

84 posted on 09/29/2008 12:59:44 PM PDT by org.whodat ( "the Whipped Dog Party" should support the SAM Walton business model, and then drill???)
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To: org.whodat
ROFLOL, wrong! Look at the number of actual bad debt, for mortgages,the problem is that there are way too many homes and not enough buyers no matter how you rig the loans. The home loans on the books have lost 40 to 50% of their value. Stop drinking the coolaide.

And you are suggesting that the housing bubble was caused by Free Market activities of the banks, and too little government intervention rather than too much? You are the one drinking the Obama/Pelosi koolaid my FRiend.

The Real Culprits In This Meltdown
By INVESTOR'S BUSINESS DAILY | Posted Monday, September 15, 2008 4:20 PM PT

Big Government: Barack Obama and Democrats blame the historic financial turmoil on the market. But if it's dysfunctional, Democrats during the Clinton years are a prime reason for it.

Obama in a statement yesterday blamed the shocking new round of subprime-related bankruptcies on the free-market system, and specifically the "trickle-down" economics of the Bush administration, which he tried to gig opponent John McCain for wanting to extend.

But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but "predatory."

Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the '90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.

And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.

As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.

Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.

Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.

In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.

But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America.

At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households.

The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today's nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars.

And the worst is far from over. By the time it is, we'll all be paying for Clinton's social experiment, one that Obama hopes to trump with a whole new round of meddling in the housing and jobs markets. In fact, the social experiment Obama has planned could dwarf both the Great Society and New Deal in size and scope.

There's a political root cause to this mess that we ignore at our peril. If we blame the wrong culprits, we'll learn the wrong lessons. And taxpayers will be on the hook for even larger bailouts down the road.

But the government-can-do-no-wrong crowd just doesn't get it. They won't acknowledge the law of unintended consequences from well-meaning, if misguided, acts.

Obama and Democrats on the Hill think even more regulation and more interference in the market will solve the problem their policies helped cause. For now, unarmed by the historic record, conventional wisdom is buying into their blame-business-first rhetoric and bigger-government solutions.

While government arguably has a role in helping low-income folks buy a home, Clinton went overboard by strong-arming lenders with tougher and tougher regulations, which only led to lenders taking on hundreds of billions in subprime bilge.

Market failure? Hardly. Once again, this crisis has government's fingerprints all over it.

85 posted on 09/29/2008 2:42:58 PM PDT by VRWCmember
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To: Phantom Lord
I found an old credit union account that's been inactive for some time - they assure me it was fine and are sending deposit slips. ( I'm with Wachovia ) I pulled some money out Thursday and moved it in a local bank ...

Anyway, here's my question - who insures Credit Unions? It's not FDIC is it? Do you know? It seems a good way to go.

86 posted on 09/29/2008 2:56:52 PM PDT by GOPJ (Kerry (on FOXSunday) said Paulson talked to Obama EVERY DAY for weeks about the crisis. ODD.)
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To: rabscuttle385

WB is up some after hours....so would the shares cover the remaining businesses?


87 posted on 09/29/2008 3:20:36 PM PDT by BurbankKarl
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To: GOPJ

http://en.wikipedia.org/wiki/National_Credit_Union_Share_Insurance_Fund


88 posted on 09/29/2008 3:28:09 PM PDT by BurbankKarl
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To: GOPJ

NCUA


89 posted on 09/29/2008 3:43:08 PM PDT by Phantom Lord (Fall on to your knees for the Phantom Lord)
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To: BurbankKarl; Phantom Lord
The NCUSIF is funded entirely by deposits from insured credit unions. All Federal credit unions, as well as any state chartered credit union insured by the fund, are required to maintain a balance equalling 1% of all covered deposits in the fund. The NCUA is required to set a target equity balance of at least 1.2% and no more than 1.5% of the total of insured deposits.[3] The majority of the fund is invested in United States treasury securities...

Looks good to me - thanks for the information.

90 posted on 09/29/2008 7:13:19 PM PDT by GOPJ
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To: VRWCmember
Just think if we could have had a republican administration and a Republican attorney general the past 8 years they could have put some of those people you named in jail. Just Damn!!!!

It seems that the pubs didn't really give a damn until it came time to CYA.

91 posted on 09/30/2008 5:15:53 PM PDT by org.whodat ( "the Whipped Dog Party" should support the SAM Walton business model, and then drill???)
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