Citigroup to Buy Wachovia, Backed by FDIC

Deal leaves three 'behemoths' in financial crisis
By Matt Cantor,  Newser Staff
Posted Sep 29, 2008 9:00 AM CDT
Citigroup to Buy Wachovia, Backed by FDIC
In this July 10, 2008 file photo, Wachovia Corp's CEO Robert Steel speaks during a news conference at the bank in Charlotte, N.C.    (AP Photo/Chuck Burton, file)

Citigroup will purchase struggling Wachovia’s banking operations in a $2.2-billion government-backed deal, the Wall Street Journal reports. The FDIC has agreed to take on a portion of potential losses in the plan, which leaves three banks, including Bank of America and JP Morgan Chase, in control of nearly a third of deposits nationwide, the Washington Post notes.

The deal was made under the auspices of the Federal Reserve and the Treasury department. It bolsters the flagging Citigroup, which was a key player in the credit crunch and saw its shares drop to $20 from $50 last year amid $40 billion in writedowns. The FDIC attempted to minimize any market fallout from the decision. “On the whole, the commercial banking system in the US remains well capitalized,” said its chairwoman.
(More Citigroup stories.)

Get breaking news in your inbox.
What you need to know, as soon as we know it.
Sign up
Get the news faster.
Tap to install our app.
X
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.

X