This just in from the Atlanta Journal-Constitution, Atlanta’s second-largest bank, Wachovia Corp., will be sold to Citigroup in a deal facilitated by the Federal Deposit Insurance Corp.
The FDIC says Wachovia didn’t fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.
The sale of Wachovia Corp. comes just days after the government’s seizure of Seattle-based Washington Mutual Inc. — the largest bank failure in U.S. history.
Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. Its current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation’s housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West’s specialty, which let borrowers skip some payments.
Read the AJC.com article about Wachovia's sale here.
Read the New York Times article about the Wachovia sale here.
Read the CNNMoney.com article about the Wachovia sale here.
plez sez: first, i have to give props to my friend Torrance over at Raw Dawg Buffalo... he called out the possibility of a Wachovia sale at least a week ago in a comment on plezWorld!
NOW... WTF! two years ago, the mortgage bubble was beginning to bust... who at wachovia thought it was a good idea to purchase a mortgage company that offered loans where borrowers could skip payments?!? that would've seemed like a risky investment in 4 years ago!
i've been with wachovia since i started college back in the early 80's (when it was First Atlanta)... i remember the first ATM machines were named "Tillie"! as a matter of fact, my current checking account is the same account i opened when i enrolled in college. it is hard to believe that things have gotten this bad. i wonder why Wachovia couldn't hold out on this sale until the bailout cash came available?
i'll be honest, plezWorld is not comfortable with this rash of bank failures and the overall contraction of the number of banks. at this current trend, we'll only be left with 2 or 3 large national banks (Bank of America, JPMorgan Chase, and Citigroup)... i'm not an economist, but something tells me that this trend cannot be good for long term economic growth and business development in the united states when all of the financial resources are concentrated in the hands of the few (and when the Treasury Dept holds all of the cards on cash and credit).