New York – The government says Citigroup will acquire the banking operations of Wachovia in a deal facilitated by the Federal Deposit Insurance Corp.
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The sale of Wachovia 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.