Wakovia - r.i.p.

[30ashopper]

Citi picks it up for a loss, and the real-estate market bags another 'prize'.

NEW YORK - In the latest byproduct of the widening global financial crisis, Citigroup Inc. will acquire the banking operations of Wachovia Corp. 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.
The deal greatly expands Citigroup's retail outlets and leaves it among the U.S. banking industry's Big Three along with Bank of America Corp. and J.P. Morgan Chase & Co.

The deal comes after a fevered weekend courtship in which Citigroup and Wells Fargo & Co. both were reportedly studying the books of Wachovia, which was suffering from mounting mortgage losses linked to its ill-timed 2006 acquisition of mortgage lender Golden West Financial Corp.

The FDIC asserted that Wachovia didn't fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.
Federal Reserve Chairman Ben Bernanke, in a statement Monday, said he supports the "timely actions" taken by the FDIC "which demonstrate our government's unwavering commitment to financial and economic stability."
Treasury Secretary Henry Paulson also welcomed the sale of Wachovia to Citigroup, saying it would "mitigate potential market disruptions." Paulson said he agreed with the FDIC and the Fed that a "failure of Wachovia would have posed a systemic risk" to the nation's 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," Paulson said.

The sale of the Wachovia assets comes just days after the government's seizure of Seattle-based Washington Mutual Inc. ? the largest bank failure in U.S. history. As details of its takeover unfolded, Wachovia shares plunged 91 percent in Monday premarket trading to 91 cents. The stock had closed Friday at $10, down 74 percent for the year.

Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. It paid roughly $25 billion for Golden West 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.

 

[NoHall]

Can someone tell me what this means to the casual Wachovia customer who only has a checking account with Wachovia? I've always liked this bank--they've been easy to deal with.

 

[scooterbug44]

Shouldn't make any difference to you whatsoever - maybe the letterhead and management will change.

 

[NoHall]

Yay...

At a time like this, I'm grateful to have no investments, savings or retirement! (I just wish I had enough gas in my car to go see my doctor. )

 

[elgordoboy]

Can someone tell me what this means to the casual Wachovia customer who only has a checking account with Wachovia? I've always liked this bank--they've been easy to deal with.

After the dust settles I am changing. Nothing to do with thsi mess though. Last week they charged me $15 to receive an incoming wire that I paid $60 for on the other end. I believe they also charge $5 to cash a check over $150 to non account holders as does Regions and others, I ran into this while cashing a check for the return of $200 cash I loaned a friend. There will be no loaning cash to Regions customers by me anymore.

 

[30ashopper]

After the dust settles I am changing. Nothing to do with thsi mess though. Last week they charged me $15 to receive an incoming wire that I paid $60 for on the other end. I believe they also charge $5 to cash a check over $150 to non account holders as does Regions and others, I ran into this while cashing a check for the return of $200 cash I loaned a friend. There will be no loaning cash to Regions customers by me anymore.

All the banks are jacking up fees. BofA charged me 25% on a $20.00 withdrawl from a non BofA ATM last week. Be careful what services you're using, they're likely loaded down with lots of hidden fees right now.

 

[30ashopper]

Can someone tell me what this means to the casual Wachovia customer who only has a checking account with Wachovia? I've always liked this bank--they've been easy to deal with.

You are now a customer of Citbank! Next week, who knows, could be JP Morgan!

 

[NoHall]

After the dust settles I am changing. Nothing to do with thsi mess though. Last week they charged me $15 to receive an incoming wire that I paid $60 for on the other end. I believe they also charge $5 to cash a check over $150 to non account holders as does Regions and others, I ran into this while cashing a check for the return of $200 cash I loaned a friend. There will be no loaning cash to Regions customers by me anymore.

That's ridiculous, and it's one of the reasons I stopped using Regions. In fact, the customer service at Regions got so bad here a few years ago that the vast majority of management and middle management left all at once and opened a new bank. My mother worked for 15 years at the local, hometown bank that was eventually bought by Regions, and knew a lot of the people who left. They said that the Regions Bank would not let them approve loans based on their own knowledge and judgment of the applicants.

The primary reason I stayed with Wachovia for so long is because I always do business at one branch here in town. For the 8 years I owned my business, they were always friendly and helpful. If I had an issue, I could always call them. There were a couple of times when I made mistakes and they were able to head them off so I didn't have to pay fees. (They had a front-row seat of how broke I am!)

Even so, I realize that part of it had to do with familiarity. I only went to other branches when I had to, and didn't get the same, "How ya doin'?!" friendliness. Since this is about people rather than corporations, I'm hoping that this won't hurt my branch...

Suddenly I'm thinking of It's A Wonderful Life and the Bailey's lifelong fight against Henry Potter...

 

[scooterbug44]

All the banks are jacking up fees. BofA charged me 25% on a $20.00 withdrawl from a non BofA ATM last week. Be careful what services you're using, they're likely loaded down with lots of hidden fees right now.

Not all of them!

One again I trumpet the merits of patronizing local businesses! I still have my accounts and $ in my childhood hometown bank - which doesn't charge any ATM fees and didn't make any sub-prime loans.

 

[NoHall]

You are now a customer of Citbank! Next week, who knows, could be JP Morgan!

Should I close my checking account and open one up with Bank of Mattress?