In breaking news, CNBC’s Charlie Gasparino reveals the FDIC is pushing Wells Fargo and Citigroup to reach a compromise Wednesday night in their fight to acquire Wachovia .
The federal authorities want the two banks to avoid a court case. If the deal happens as it stands now Citigroup will get $100 billion of Wachovia’s deposits, which is about 25%. Wells Fargo then gets the rest of the firm.
As we’ve been telling you The Fed has been engaging both Citigroup and Wells Fargo in the hope of reaching a quick resolution and avoiding a lengthy court battle.
"I think the worst thing would be a protracted legal battle," said Mike Stanfield, chief executive of VSR Financial Services in an interview Tuesday. "There is enough uncertainty in the markets right now. We certainly don't need more."
Like many banks, Wachovia has been slammed over the past year by defaulting mortgages, particularly in its portfolio of option adjustable-rate mortgages, which allowed many customers to pay less than the monthly interest owed on the loan.
Wachovia was in considerable trouble when it agreed to the Citigroup deal early last week. Wachovia disclosed in court documents that it agreed to the acquisition "with the understanding that a seizure of its banking assets later that day by the Federal Deposit Insurance Corp. would occur" unless it accepted Citigroup's proposal.
> Feds Push Citigroup, Wells Fargo on Wachovia Deal
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