Wachovia Bank Failure Thwarted On Citigroup Buyout News
Author: Rob K. Blake | Date: September 29, 2008 | Filed In: Mortgage News
Wachovia Corp (NYSE: WB), at one time the fourth largest banking operation in the US, is currently fending off failure by holding talks over the weekend with potential buyers. Wells Fargo & Co. (NYSE: WFC) seemed to be the front runner over the weekend, but I just got a press release from the Treasury Department’s Hank Paulson congratulating Citigroup.
Wachovia Sold To Citigroup
Paulson just released a statement on the sale of Wachovia Bank…it reads,
“I commend the action taken by Chairman Bair and the FDIC today to facilitate the sale of Wachovia Bank to Citigroup in an orderly fashion to mitigate potential market disruptions. I agree with the FDIC and the Federal Reserve that a failure of Wachovia would have posed a systemic risk. As a result of this transaction, all Wachovia depositors will be protected and Wachovia’s senior and subordinated debt will be assumed by Citigroup. The FDIC’s actions help to mitigate potential systemic risk to our financial system. As I have said before, in this period of market stress, we are committed to taking all actions necessary to protect our financial system and our economy.”
Everyone predicted with the huge Option ARM exposure, Wachovia Bank would be the next to fall. Option ARM mortgages are often referred to as “Pick Your Payment” loans, and they were sold with limited or no income verification.
I called it the Dumbest Mortgage In America…you can read more about in in my review of Wachovia Mortgage.
Good Luck!
Author: Rob K. Blake
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