New York (HedgeCo.Net) – The tug of war over Wachovia continued yesterday, as Citigroup and Wells Fargo tried to reach an agreement over the future of the Charlotte-based bank. 

According to transcripts from a teleconference held between U.S. District Judge Lewis Kaplan and the companies, a solution might be in the cards that entails Wachovia being split between Citigroup and Wells Fargo. 

"There are negotiations between Wells Fargo and Citi about a possible grand solution that would preserve the shareholder value for Wachovia as represented by the Wells Fargo deal, but that would involve not a single choice between Citigroup and Wells Fargo," said David Boies, who represents Wachovia.

For now, both Citigroup and Wells Fargo extended a cease-fire that was originally ordered on Monday by Federal Reserve Officials for fears of market retributions. 

Citigroup was believed to have a lock on Wachovia, after their $2.1 billion bid bought them the branch system of the troubled bank.  Though not the best deal for Wachovia, having their assets seized by the FDIC was not a viable alternative.  After they accepted the proposal, Wells Fargo came to the table and offered an astounding $15.1 billion for the entirety of Wachovia, sending Citigroup into a rage and forcing the issue of an exclusivity agreement.

Jane Sherburne, who also represents Wachovia, hopes that they can “facilitate in whatever way we can a negotiated settlement of this matter without escalating the issues in a litigation setting.”

In addition to the acquisation concerns, Citigroup is also going after Wells Fargo, seeking $60 billion in damages for interferring with the deal.  

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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New York (HedgeCo.Net) – Senate leaders will vote today on the $700 billion bailout package, after some key changes were implemented including tax breaks and higher limits for insured bank deposits.   

The new limit proposals are something that both candidates and President Bush agree upon, leading some to believe that the bailout package, in its current incarnation, will finally be passed through Congress.

Though the details of the plan are not readily available, lawmakers are hoping that the changes will appeal to those republicans who were knocked the first proposal, while keeping the democrats who are otherwise against generous tax incentives for businesses. 

“It has been determined, in our judgment, this is the best thing to move forward,” said Democratic Senator Harry Reid of Nevada.

While the bill has certain new elements to it, including extensions of unemployment along with tax credits for low income home-owners, the basic principle of the government purchasing $700 billion worth of bad debt and eventually re-selling them remains the same.  The bill also has some room for new additions, though Christopher Dodd, Chairman of the Senate Banking Committee warns, “Opening this up all over again to other things may doom it.”

Markets tanked following the rejection of the initial proposal on Monday, with the Dow Jones industrial average plummeting 778 points.   Though the markets regained some vigor on Tuesday, many lawmakers felt a strong urgency to get a plan passed. 

The FDIC currently insures up to $100,000 per account.  The new proposal might see an increase in that amount to $250,000.

House Speaker Nancy Pelosi is confident about the new plan, telling President Bush that “Working together, we are confident we will pass a responsible bill in the very near future.”

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com

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