Citigroup to Buy Wachovia, Backed by FDIC

Citigroup will purchase struggling Wachovia’s banking operations in a $2.2-billion government-backed deal, the Wall Street Journal reports. The FDIC has agreed to take on a portion of potential losses in the plan, which leaves three banks, including Bank of America and JP Morgan Chase, in control of nearly a third of deposits nationwide, the Washington Post notes.

The deal was made under the auspices of the Federal Reserve and the Treasury department. It bolsters the flagging Citigroup, which was a key player in the credit crunch and saw its shares drop to $20 from $50 last year amid $40 billion in writedowns. The FDIC attempted to minimize any market fallout from the decision. “On the whole, the commercial banking system in the US remains well capitalized,” said its chairwoman.