September 29, 2008

FLASH: Ho-hum, another day, another bank failure. Today's bank death pool winner? Wachovia, as Citigroup picks the meat off the bones


This just came in from the FDIC. Citigroup picks up the first $42 billion in losses, the FDIC (i.e. US Taxpayer) gets the (unknown) rest. Even though the FDIC is spinning that this isn't a failure or bailout.

Citigroup Inc. to Acquire Banking Operations of Wachovia
FDIC, Federal Reserve and Treasury Agree to Provide Open Bank Assistance to Protect Depositors

FOR IMMEDIATE RELEASE
September 29, 2008
Media Contact:
Andrew Gray (202) 898-7192
angray@fdic.gov

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.

"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."

6 comments:

Anonymous said...

Citigroup will buy Wachovia's banking operations; FDIC says Wachovia didn't fail

NEW YORK (AP) -- Citigroup Inc. will acquire the banking operations of Wachovia Corp., one of the nation's largest banks, in a deal facilitated by the Federal Deposit Insurance Corp.

Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.

Anonymous said...

According to msnbc this morning the bank did not fail and this was a great deal.

Anonymous said...

This is the new concept in the Business World ,Good Bank /Bad Bank .
Banks merge the good parts of the
Banks ,and the taxpayers take the bad parts ,and all is well .

Usually when I do a deal ,I like to get better than the bad parts . All in the name of keeping it going ,doesn't matter what the moral hazard is or who the winners and losers are .

What is amazing is the lesson that the public is getting now on the loan game and the leverage game house of cards .

Anonymous said...

The business system and contract law had all the rules in place for what was to happen if a investment didn't yield profits or even failed .

Doesn't it pissed you off that the government can change the rules after the fact and declare who the winners and losers will be ? In fact ,one man Hank Paulson can declare who the winners and losers will be .

Very interesting times we live in
today .The lawmakers create a quickly constructed Bill evoking emergency power to interfere with
long standing business law and contracts and they determine who the winners and losers will be .
All for the public good of course .

Make no mistake ,the Bail Outs are the greatest Obstruction of Justice acts in Judicial history .

Let me put it this way , the BAIL
OUTS will prevent more than just a
upset in commerce . Look at it this way ,if the bad loans didn't bring down Wall Street ,the lawsuits would of . Either way Wall Street is getting saved to some extend so business can carry on .

Anonymous said...

Failures will come in waves, we're just seeing the beginning stages of this ... "bail-out" or no "bail-out", this ship is sinking.

Anonymous said...

The Wall Street Bailout Plan is like the 'golden calf' of biblical lore.

It's time to wake up and smell the con game.

We're on the road to ruin and Paulson's Plan is raising the speed limit to 200 mph.