Wells Fargo Won!

WELLS FARGO’S MERGER WITH WACHOVIA TO PROCEED AS WHOLE COMPANY TRANSACTION
WITH ALL OF WACHOVIA’S BANKING OPERATIONS
Merger on schedule for completion by end of 4th quarter 2008

SAN FRANCISCO, October 9, 2008 -- Wells Fargo & Company (NYSE: WFC) said today that it and Citigroup, Inc. (NYSE: C) have terminated discussions concerning a possible sale of certain banking assets of Wachovia Corporation (NYSE: C) and reaffirmed that it is proceeding with its merger with Wachovia Corporation (NYSE:WB) as a whole company transaction with all of Wachovia’s banking and other operations, requiring no financial assistance from the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

Wells Fargo has submitted its application to the Federal Reserve Board seeking expedited approval of the merger and the share exchange agreement previously entered into between Wachovia and Wells Fargo. Under the share exchange agreement, Wachovia is issuing Wells Fargo preferred stock that votes as a single class with Wachovia’s common stock representing 39.9 percent of Wachovia’s voting power. The acquisition of the non-banking related operations of Wachovia and the share exchange agreement have received early termination from the Federal Trade Commission (FTC), under the Hart-Scott-Rodino Act.

As previously announced, under the definitive agreement between the two companies, Wells Fargo will acquire all outstanding shares of common stock of Wachovia in a stock-for-stock transaction. In the transaction, Wells Fargo will acquire all of Wachovia Corporation and all its businesses and obligations, including its preferred equity and indebtedness, and all its banking deposits.

Wells Fargo Chairman Dick Kovacevich said the merger is “simply an incredible fit that will result in an immensely strong, stable financial services company that will carry on Wachovia’s proud tradition of being one of the very best financial institutions in the world. We’re combining the industry’s number one ranking customer service culture of Wachovia with the industry’s number one sales and cross-selling culture of Wells Fargo. The best in service and the best in sales, an unbeatable combination. We also bring to this merger our 157 years of experience in financial services and the unparalleled convenience we can offer Wachovia customers through one of the most extensive financial services distributions systems in North America. We have the highest regard for the quality and commitment and caring of Wachovia team members. We believe their demonstrated commitment to outstanding customer service and their highest standards of community leadership are identical to our own values.”

Kovacevich reiterated that the two companies have a firm, binding merger agreement, are confident the merger will be completed, that it will keep Wachovia intact and create significant value for Wachovia and Wells Fargo shareholders. Wells Fargo will record Wachovia’s credit-impaired assets at fair value. “Credit teams at Wells Fargo have had an opportunity to work with their counterparts at Wachovia,” said Kovacevich. “Much of Wachovia’s portfolio involves businesses where Wells Fargo has a significant market presence, operating history and expertise. We have had experience with such businesses through a variety of credit cycles. Given our broad based operating expertise, and specific understanding of these individual businesses we believe we have adequately evaluated the risks inherent in the portfolios as of the time of this merger agreement.”

In addition, Kovacevich said Wells Fargo is pleased that Citigroup announced that it is no longer seeking that the Wells Fargo-Wachovia Merger be enjoined. “We believe that that is the correct and right decision for our Country and our citizens and the health of our already stressed financial system, as well as our and Wachovia’s respective shareholders and stakeholders,” said Kovacevich.

"We are delighted to stride ahead with Wells Fargo in creating a coast-to-coast financial institution -- one of the strongest financial firms in the world," said Wachovia Corporation President and CEO Robert K. Steel.

The combined company will have $1.42 trillion in assets, $787 billion in deposits, 48 million customers, $258 billion assets under management in mutual funds, 10, 761 stores, 12,227 ATMs and 280,000 team members. The merger will create the nation’s premier coast-to-coast community banking presence with community banks in 39 states and the District of Columbia. Wachovia will add the following banking stores, ATMs and deposits to the combined company (Stores/ATMs as of 9/30/08; U.S. Deposits 6/30/08):

Banking stores ATMs Deposits (billions)

Alabama 141 178 $8.8
Arizona 21 44 2.7
California 193 255 37.1
Colorado 34 35 4.8
Connecticut 74 105 7.4
Delaware 20 37 3.4
Florida 712 963 71.1
Georgia 277 653 27.8
Illinois 8 9 .9
Kansas 8 8 1.2
Maryland 80 116 7.5
Mississippi 13 20 .5
North Carolina 325 649 96.2
Pennsylvania 294 457 30.9
Nevada 6 26 19.0
New Jersey 312 468 28.4
New York 84 183 15.1
South Carolina 143 275 11.7
Tennessee 17 20 .5
Texas 241 290 14.1
Virginia 290 443 25.9
Washington D.C. 32 66 6.9
Total 3325 5300 $422

The combined company will be #1 in deposit market share * in 17 of its 39 Community Banking states: Alaska, Arizona, California, Colorado, Florida, Georgia, Idaho Minnesota, Iowa, Montana, Nebraska, New Jersey, New Mexico, North Carolina, South Dakota, Texas, and Virginia. Ninety-three percent of its deposits will be in states in which it ranks #1, 2 or 3 and the combined company will rank #1 in ten of the nation’s 20 largest Metropolitan Statistical Areas (MSAs) in deposit market share. *
* excludes deposits greater than $500 million in a single banking store

Wells Fargo also is the nation’s:

• #1 small business lender,
• #1 agricultural lender,
• #1 commercial real estate broker,
• #2 largest mortgage originator,
• #2 largest mortgage servicer,
• #2 largest debit card issuer,
• #1 financial services provider to middle market businesses in the western U.S and a national presence in commercial banking (29 states),
• largest bank-owned U.S. insurance brokerage

Wells Fargo & Company is a diversified financial services company with $609 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest possible credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”

FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements about Wells Fargo and Wachovia and the proposed transaction between the companies. There are several factors – many beyond Wells Fargo’s control – that could cause actual results to differ significantly from expectations described in the forward-looking statements. Among these factors are the receipt of necessary regulatory approvals and the approval of Wachovia shareholders. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date.

For a discussion of factors that may cause actual results to differ from expectations, refer to each company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and Annual Report on Form 10-K for the year ended December 31, 2007, including information incorporated into each company’s 10-K from their respective 2007 annual reports, filed with the Securities and Exchange Commission (SEC) and available on the SEC’s website at www.sec.gov.

MORE INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
The proposed merger will be submitted to Wachovia Corporation shareholders for their consideration. Wells Fargo will file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that will include a proxy statement of Wachovia Corporation that also constitutes a prospectus of Wells Fargo. Wachovia Corporation will mail the proxy statement-prospectus to its shareholders. Wachovia shareholders and other investors are urged to read the final proxy statement-prospectus when it becomes available because it will describe the proposed merger and contain other important information. You may obtain copies of all documents filed with the SEC regarding the proposed merger, free of charge, at the SEC’s website (www.sec.gov). You may also obtain free copies of these documents by contacting Wells Fargo or Wachovia, as follows:

Wells Fargo & Company, Attention Corporate Secretary, MAC N9305-173, Sixth and Marquette, Minneapolis, Minnesota 55479, (612) 667-0087.

Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South College Street, Charlotte, North Carolina 28288, (704) 374-6782

Wells Fargo and Wachovia and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Wachovia Corporation shareholders in connection with the proposed merger. Information about Wells Fargo’s directors and executive officers and their ownership of Wells Fargo common stock is contained in the definitive proxy statement for Wells Fargo’s 2008 annual meeting of stockholders, as filed by Wells Fargo with the SEC on Schedule 14A on March 17, 2008. Information about Wachovia’s directors and executive officers and their ownership of Wachovia common stock is contained in the definitive proxy statement for Wachovia’s 2008 annual meeting of shareholders, as filed by Wachovia with the SEC on Schedule 14A on March 10, 2008. You may obtain a free copy of these documents by contacting Wells Fargo or Wachovia at the contact information provided above. The proxy statement-prospectus for the proposed merger will provide more information about participants in the solicitation of proxies from Wachovia Corporation shareholders.

The Citi Never Sleeps?

When I was growing up in the NY Metro area we were constantly bombarded with the jingle, "the Citi never sleeps, Citibank." Well guess who got a rude wake-up call yesterday!

This household has some very close personal ties to Wachovia, which may seem odd since Wachovia is such a new-comer to California. Needless to say, there was a whole lot of praying in this household last weekend. When we received the announcement (soon after one of the three times Zap had to get up for work at 5:30 a.m. this week) we were bummed because Citi doesn't have the best reputation for community relations leadership in CA, but we have ties there & felt satisfied that we'd be all right.

Then, all of a sudden on Thursday night, Zap just couldn't sleep. He tossed & turned for a long time & then got up to surf the web & try to quiet his mind. Nothing spectacular happened on Thursday, but for some reason that night he just couldn't rest. On Friday morning (the second time Zap had to get up for work at 5:30 this week -- so that's right, this a.m. he had to get up at 5:30 for work and yes, it's Saturday) he learned that Wells Fargo made a competing bid (against a closed deal) & Wachovia was up for grabs. So while he was inexplicably restless, Wachovia was switching suitors. Coincidence? We think not.

Overall we're much happier with the prospect of the Wells merger. They're California-based and have a long, successfuly community relations track record. And believe you me, that goes a long way in this household. According to this morning's LA Times, Citi doesn't have a case if Wells & Wachovia didn't talk before Wells submitted its larger bid. The word on the street is Wells came up with its larger offer after it had the time to review Wachovia's entire portfolio, with which it was presented in the heat of the moment last weekend. So the chances are looking pretty good that Wells & Wachovia didn't communicate.



Zap thinks he'll look good in a cowboy hat. I tend to agree.

I Like Ben Stein's Thinking on This One...

September 28, 2008

Everybody’s Business

In Financial Food Chains, Little Guys Can’t Win

By BEN STEIN

IMAGINE, if you will, that a man who had much to do with creating the present credit crisis now says he is the man to fix this giant problem, and that his work is so important that he will need a trillion dollars or so of your money. Then add that this man thinks he is so indispensable that he wants Congress to forbid any judicial or administrative questioning of anything he does with your dollars.

You might think of a latter-day Lenin or Fidel Castro, but you would be far afield. Instead, you should be thinking of Treasury Secretary Henry M. Paulson Jr. and the rapidly disintegrating United States of America, right here and now.

But I am getting ahead of myself. First, I am furious at what the traders, speculators, hedge funds and the government have done to everyone who is saving and investing for retirement and future security. Millions of us did nothing wrong, according to the accepted wisdom of the age. We saved. We put a large part of our money into the stock market, as we were urged to do. Because the market wasn’t at ridiculously high levels, it seemed prudent to invest in broad indexes, foreign indexes and small- and large-cap indexes.

Now we have had the rug pulled out from under us. Our retirements have been put into severe jeopardy. The “earnings” part of those price-to-earnings ratios turns out to have been fiction for some financial companies, which normally account for a big part of total corporate earnings. In fact, earnings of giant finance players were often wildly negative, creating a situation rarely seen since the Great Depression, when the aggregate earnings of the Dow 30 were negative.

The current negativity occurred because of wild, casino-type operations of big finance players, creating liabilities way beyond anything we could have reasonably expected. This looks a lot like theft on a spectacular scale — of our wallets, our peace of mind, our futures.

Second, according to what I hear from my betters in the world of finance, the most serious problems are not with the bundles of subprime mortgages themselves — a large but not lethal quantum as far as I can tell — but with derivatives contracts tied to subprime and other dicey debt. These contracts are superficially an attempt to “insure” against risks of default, hence the name “credit-default swaps.” In fact, they are an immense wager — which anyone with lots of money or borrowing ability can enter — about how mortgage-backed bonds, leveraged loan bonds, student loan bonds, credit card bonds and the like will perform.

These wagers entail amounts many times larger than the total of subprime loans. In fact, there are roughly $62 trillion in credit-default swap derivatives out there, compared with about $1 trillion of subprime mortgages. These derivatives are “weapons of financial mass destruction,” in the prophetic words of Warren E. Buffett. (Apparently believing that the worst is over, at least for one big investment bank, Mr. Buffett is now investing in Goldman Sachs.)

The swaps market has been unregulated. It has been just a lot of people making bets with one another. Some of them made incredibly fortunate payoff wagers against the mortgage bonds, using credit-default swaps as their wagering vehicle. I am not sure who the big winners are, but they are out there, and the gains were big enough to cripple the part of Wall Street on the losing side of the bets.

Almost no one (except Mr. Buffett) saw this coming, at least not on this scale. But let’s get back to the man of the hour. Why didn’t Mr. Paulson, the Treasury secretary, see it? He was once the head of Goldman Sachs, an immense player in the swaps world. Didn’t people at Treasury have a clue? If they didn’t, what was going on in their heads? If they did, why didn’t they do something about it a year ago, when saving the world would have been a lot cheaper?

If Mr. Paulson and Ben S. Bernanke, the chairman of the Federal Reserve, didn’t see this train coming, what else have they missed? What other freight train is barreling down the track at us?

All of this would be bad enough. But by far the most terrifying item I read in my morning paper last week was this: Mr. Paulson demanded that Congress forbid judicial review of his decisions on use of the money in the mortgage bailout. This would amount to an abrogation of the Constitution. Not only would his decisions be sacrosanct and above the law, but so would the actions of his pals in the banking world in connection with this bailout.

The people whose conduct got us into this catastrophe have not only taken our money, hopes and peace of mind, but they apparently also want a trillion or so more dollars to put into their Wall Street Buddy System Fund. This may be the most dangerous attack on the law in my lifetime. What anarchists even dared consider this plan? Thank heaven that minds more devoted to the Constitution on Capitol Hill are questioning this shocking request.

By the way, if we are actually thinking about tossing the Constitution out the window, why not simply annul these credit-default swap contracts? With that done, the incomprehensibly large liability of the banks would cease, and we wouldn’t need this staggering bailout. Shouldn’t we consider making the speculators pay some of the price?

WE have survived housing-price corrections before. Why is this one causing so much anguish? It must be the side bets, the credit-default swap bets, multiplying the effect of the housing downturn many times over. Maybe we should just get rid of these exotic bets and start again without them. “Insurance” on market moves is always a bad idea, because it does not tamp down market disruptions but instead greatly magnifies them — as in the disastrous effect of “portfolio insurance” in the 1987 crash.

Then there was Mr. Paulson’s insistence that there be no compensation caps for executives of companies being bailed out by the factory workers, the farmers, the schoolteachers and the medical doctors. He told a skeptical Congress on Tuesday that if these caps were put into place, bank executives simply wouldn’t participate in the bailout or sell us suckers their debts. Fine with me. If the banks are in good enough shape so that petulant executives can simply opt out rather than live on a few million a year, maybe we don’t need the bailout at all. Maybe we would be better off if those executives simply bailed out and were replaced by people with more sense and more patriotism.

One final little thought bubbles into my mind: Maybe the bailout should not be of the banks at all, but of homeowners themselves. Maybe if we make the government the buyer of last resort of homes, we will stabilize the markets, stabilize the debt associated with the markets and take the gain out of the credit-default swaps for the speculators. Yes, price would be a huge issue, but so it is for Mr. Paulson’s plan for buying debt from banks.

Why not? We do it for farmers. Why not for the individual homeowner? Oh, right. Because Treasury secretaries don’t know any of those people.

Ben Stein is a lawyer, writer, actor and economist. E-mail: ebiz@nytimes.com.

Copyright 2008 The New York Times Company

LA Times Editorial -- Bush's Arrogance

Editorial

Bush the arrogant

President Bush's latest permutation of crisis management is the last straw. But who best to roll back the excesses?

September 28, 2008

As the Bush administration attempts to stabilize the nation's economy, we are witness to the final chapter of a period of perverse and dishonest leadership that has used its own crises to justify the expansion of its own power. This was a president who came to office on promises of modesty -- who championed a "humble nation," scorned nation building and promised a more limited role for government in the lives of its citizens. Then he presided over a six-year attempt to tear down and rebuild the nations of Afghanistan and Iraq, and now has embarked on the most profound expansion of the federal government's role in the private economy since the Depression.

In both cases, the pattern is the same. Ineptitude led to crisis; crisis then became the argument for the radical expansion of executive power. The administration insisted that it exercise its new authority with a minimum of scrutiny by Congress, the courts or the public.

In the so-called war on terror, that has meant the abdication of our most basic American principles. We have forfeited privacy and honor -- the administration has monitored phones and e-mails without warrants and has secreted prisoners in foreign lands, arguing that they deserved none of our protections even while in our custody. As a nation, we have stooped to torture (while debating the meaning of the word) and refused to recognize one of our most basic Anglo-American notions, the principle of habeas corpus (thankfully, the Supreme Court, seven of whose members are Republicans, drew the line at that abomination). We have held prisoners in detention without trial, without charge, without end. In so doing, we have antagonized the world and debased America's moral authority to lead.

The same administration responsible for these catastrophes has over the last month nationalized the largest source of funding for mortgages and the largest insurance company on the planet. And it proposed to intervene even more dramatically in the nation's economy by having the Treasury Department -- with no court, congressional or public oversight -- relieve financial institutions of the troubled mortgages and related securities that have locked up the lending system.

There is no doubt about the depth and range of the crisis that provokes these calls for government action. The gyrations of the stock market have been dismaying, and the threat to the country's financial institutions -- and everyone who borrows from or invests in them -- is real. Still, the audacity of this administration demanding expanded powers and curtailed accountability is a wonder to behold. The bitter irony is that this crisis warrants dramatic intervention, but President Bush's record makes him difficult to trust even when he's right.

These troubles are about more than a president who is unfaithful to his word. Bush has transformed the balance of power in our government. We are seeing the erection of an imperial presidency, immune from oversight when it fights terrorists and when it rescues banks.

Politically, these developments raise two questions: Which candidate to succeed Bush benefits most by the events of recent weeks? And which candidate, if either, would have the strength to roll back these expansions of presidential power if elected?

To the first question, the answer seems to be Barack Obama, though only modestly. Obama's poll numbers have inched up in recent days as voters have taken stock of a frighteningly complex economic meltdown and been left to wonder what to think of John McCain's abrupt, halting responses -- as McCain saw it, the "fundamentals" of the economy were sound one moment, at risk the next.

Questions about McCain's judgment in recent days have only been deepened by the performances of Alaska Gov. Sarah Palin. She has struggled in her rare public appearances, and her selection risks appearing all the more reckless and cynical when held against the seriousness of this financial crisis. Even McCain's campaign "suspension" seemed like gamesmanship. He said he was rushing to Washington, but took his time, and the talks derailed soon after he arrived. He proclaimed that the situation was so dire he would not return to the stump until an agreement was reached, then did precisely what he said he wouldn't. It was not an impressive week for the Straight Talk Express.

Still, Obama has hardly run away with this issue, and the economic news exposes his weaknesses as well. He is, after all, untested by executive crisis and a freshman senator of limited achievement in government. Voters may well blanch at his relative inexperience, given the gravity of these times. Indeed, it is telling that in a week when his opponent flailed, Obama made scant headway in the polls.

On the matter of which candidate could be trusted to roll back the excessive powers that Bush has aggregated, Obama is vague and McCain is exasperating. McCain has properly condemned the U.S. detention facility at Guantanamo Bay and said he would close it, but when the court granted detainees there the rights of habeas corpus, McCain denounced the ruling as "one of the worst decisions in the history of this country." He condemned torture, but then, with the campaign underway, voted against legislation to limit the CIA's use of coercive interrogation. Those oscillations do not reassure.

Obama, meanwhile, is more consistent and encouraging but offers few specifics. He pledges to close Guantanamo, restore habeas corpus and end the invasions of privacy undertaken in the name of fighting terrorism. Those are welcome positions and provide some hope that he would roll back Bush's excesses. But while he pledges allegiance to the separation of powers, Obama has said little about how to honor that pledge. Rare is the politician who willingly cedes authority, and we have not heard enough from Obama to be convinced he's that rare person.

These are not abstractions. They are the legacy of this grim epoch, one that should be equally offensive to conservatives and liberals. George Bush promised humility and delivered arrogance. The next president must not.

*Not* Just Any Other Manic Monday

Citigroup Buys Banking Operations of Wachovia

By ERIC DASH and ANDREW ROSS SORKIN

Citigroup reached an agreement early Monday morning to acquire the banking operations of the Wachovia Corporation after making a daring bid that pulled the deeply troubled company from the brink of collapse.

Citigroup will pay $1 a share, or about $2.2 billion, according to people briefed on the deal.

Federal regulators worked around the clock this weekend to orchestrate the sale, finally reaching an agreement at 4 a.m. on Monday morning. In the end, the government agreed to provide Citigroup with a financial guarantee on Wachovia’s most risky assets. It is similar to the deal that the Federal Reserve established with JPMorgan Chase’s emergency takeover of Bear Stearns.

Citigroup will assume the first $42 billion on losses tied to Wachovia’s riskiest mortgages and will pay the Federal Insurance Deposit Corporation $12 billion in preferred stock and warrants. In exchange, the F.D.I.C. will absorb all losses above that amount.

Federal regulators said the move was necessary to stave off what could have been the second big bank failure in less than a week. On Thursday, the government seized Washington Mutual and sold the bulk of its operations to JPMorgan Chase.

“This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” said Sheila C. Bair, the chairwoman of the F.D.IC in a statement. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.”

Wachovia customers should not notice any changes. “There will be no interruption in services and bank customers should expect business as usual,” Ms. Bair added.

The deal further concentrates Americans’ bank deposits in the hands of three banks: Bank of America, JPMorgan Chase and Citigroup will control more than 30 percent of the industry’s deposits.

Together, they will have unrivaled power to set prices for their loans and services. The institutions would probably come under greater scrutiny from federal regulators, given their size and reach. And some small and midsize banks, already under pressure, might have little choice but to seek suitors in order to compete.

The deal highlights just how bad the banking industry’s problems have gotten as well as the progress that Citigroup after being one of the first to suffer huge losses. Citigroup’s chief executive, Vikram S. Pandit, has recently been making the case to employees and investors that Citigroup is a “pillar of strength” in turbulent times. If he is successful, this transaction could be an important milestone.

Under the deal, Citigroup will buy all of Wachovia’s assets and liabilities — a move that should protect Wachovia’s bondholders. It will also acquire Wachovia’s big retail operations as well as its corporate and private banking. It will also takeover Wachovia’s relatively small investment banking operations, which have catered to real estate and medium-size corporations. Citigroup is leaving behind the A.G. Edwards retail brokerage operations and Evergreen Investments, Wachovia’s money management arm. Senior management decision have not been worked out, according to people involved in the talks.

With Wachovia’s branch network, Citigroup will now have one of the biggest retail banking franchises in the country after years of false starts. That should give Citigroup a larger platform to sell home loans and credit cards, and would give it access to more than $400 billion in more stable customer deposits. The bank has been aggressively trying to reduce its dependence on outside investors for funds.

The risk is that Citigroup could be saddled with tens of billions of dollars in losses tied to Wachovia’s giant loan portfolio. Wachovia has been hurt badly by its 2006 purchase of Golden West Financial, a California lender specializing in so-called pay-option mortgages. And the bank also faced mounting losses on loans made to home builders and commercial real estate developers.

To pay for the deal, Citigroup expects to raise more than $10 billion by issuing new shares of its common stock. It will also slash its dividend to 16 cents a share, the second time in the last year.

Another risk is that Citigroup has had a poor track record of putting together mergers, although it now has a new management team. Citigroup shares were essentially flat in late morning trading on Monday.

Last week, Wachovia held discussions with Citigroup, Wells Fargo and Banco Santander of Spain, before the foreign bank’s interest cooled. But the talks intensified this weekend as lawmakers worked in Washington to hammer out the details of a $700 billion bailout plan. Wachovia executives, meanwhile, huddled in the Seagram Building offices of Sullivan & Cromwell on Park Avenue.

Robert K. Steel, a former top lieutenant of Henry M. Paulson Jr. at both Goldman Sachs and then the Treasury Department, who took over as Wachovia’s chief executive in July, arrived in New York to handle the negotiations in person, along with David M. Carroll, the bank’s chief deal maker. At 8:15 am. on Saturday, Citigroup and Wells Fargo took their first peek at Wachovia’s books.

Regulators pressed the parties to move quickly. Senior officials at the Federal Reserve in Washington, and its branches in New York, Richmond and San Francisco held weekend discussions with all the banks involved. Top officials at the Federal Deposit Insurance Corporation and the Treasury were also in the loop.

Timothy F. Geithner, the president of the Federal Reserve Bank of New York, personally reached out to executives involved in the process to assess the situation and spur it along. Citigroup and Wells Fargo pressed regulators to seize Wachovia and let them buy its assets and deposits, as JPMorgan did with WaMu, or provide some sort of financial guarantee, as regulators did with JPMorgan’s acquisition of Bear Stearns, according to people briefed on and involved with the process.

Both Citigroup and Wells Fargo were deeply concerned about absorbing Wachovia’s giant loan portfolio, which is littered with bad mortgages, these people said. Bankers had little time to assess the risk.

Citigroup executives considered Wachovia a make-or-break deal for their consumer banking ambitions. With Wachovia, Citigroup would gain one of the pre-eminent retail bank operations after struggling to build one for years. It would also give Citigroup access to more stable customer deposits, allowing it to rely less heavily on outside investors for funds. If it failed to clinch a deal, Citigroup’s domestic retail operations would be far behind Bank of America and JPMorgan Chase. Mr. Pandit, the Citigroup’s chief executive, was personally overseeing the talks

Now, the challenge for Mr. Pandit will be making the deal work. Citigroup said on Monday it expected the deal to add to earnings in the first year, excluding a $3.7 billion restructuring charge. It also expects to reap about $3 billion in annual cost savings, though it did not disclose possible layoffs. If Citigroup can pull it off, it would be a symbolic victory of sorts. For Citigroup, the deal is the largest acquisition since the merger of Citicorp and Travelers Group forged the company a decade ago.

Although Citigroup has racked up nearly $50 billion in losses since the crisis began last summer and has watched the value of its shares sharply decline, the bank was also among the first to raise large amounts of capital. Mr. Pandit may point to the Wachovia deal as a sign of progress and an indication that the worst for the bank is behind it.

The deal will also be seen as a stamp of approval from regulators. Only a few years ago, the Federal Reserve took the unusual step of banning Citigroup from making "significant acquisitions." Gaining their approval to do a big deal on such short notice will probably be viewed as a big vote of confidence in Mr. Pandit’s management team.