US backs Citigroup takeover of Wachovia, gets stake
By Joshuah at 1 October, 2008, 1:23 pm
Rest assured, Wachovia did NOT fail…ok.
Source: AFP
Citigroup agreed to buy troubled Wachovia’s banking operations in a deal Monday that gives the US government a stake in another sector shakeup amid the worst financial crisis since the Great Depression.
The government-engineered rescue marked further consolidation of the struggling US banking sector saddled with heavy losses from the bursting of the real estate bubble and a related credit crunch.
It came as Wachovia, the fourth-largest US bank by assets, faced a near collapse of its share price and weakening confidence because of its exposure to the subprime mortgage crisis.
The Wachovia takeover was unveiled just hours before the US House of Representatives rejected a massive 700-billion-dollar bailout of financial firms, roiling markets.
The tentative Wall Street bailout agreement was struck Sunday after intense negotiations between President George W. Bush’s administration and Republican and Democratic Congressional leaders.
The Bush administration insisted the rescue of financial firms exposed to toxic mortgage investments was crucial to avert a wider economic collapse.
The Federal Deposit Insurance Corp. (FDIC), which insures and regulates banks, said in announcing the Citigroup takeover that Wachovia “did not fail.”
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