Friday afternoon FDIC Chairman Sheila Bair said that the agency "stands
behind its previously announced agreement with Citigroup."
That
deal announced on Monday would allow Citi to buy Wachovia's banking
assets at the rock-bottom price of $2.1 billion, with the FDIC
absorbing losses from write-downs that exceed $42 billion. Additionally, the deal would make Citigroup again the largest bank in the U.S., ceding that mantle back from Bank of America Inc. However,
Wells Fargo swooped in Friday with a $15.1 billion offer that required no
federal assistance, and also would have the effect of pushing Citigroup further down in the rankings.
Caught in an awkward position, the FDIC
qualified its support for the Citigroup deal saying that "the FDIC will
be reviewing all proposals and working with the primary regulators of
all three institutions to pursue a resolution that serves the public
interest."
Citigroup has already demanded that Wells Fargo and
Wachovia immediately terminate their merger agreement, saying that the
agreement signed on Monday prohibited negotiating with another party.
But with a far higher offer on the table from another bidder with no
government assistance, Citi's agreement is likely to become a political
football. - George White
See FDIC statement
See Citigroup statement
See Dealscape post on Wells Fargo
See Dealscape post on Citigroup deal
The Federal Deposit Insurance Corp. threw its support behind Citigroup Inc. in the unfolding drama over Wachovia Corp., which shocked markets by walking away from its deal with Citi and agreeing to a $15 billion offer from Wells Fargo & Co.
