Wachovia, like many US banks, has begun to feel the burden of the dwindling US economy. Over the past few months Wachovia underwent some changes in an attempt to survive the rough patch in the US economy. Wachovia's first move occured almost three months ago when it closed its wholesale division. After still experiencing trouble the firm closed its consumer mortgage division as well. Sadly niether of these actions appeared to be enough to rescue Wachovia from it's downward spiral. Stock prices continued to fall even after both actions. Thankfully, Citi, in cooperation with the United States, came to rescue. Their action wasn't really a surprise. In fact many economists and Wall Street businessmen had speculated that a deal was being formulated between the two companies. On Monday, Citi announced that it had finalized a deal with Wachovia to buy the company and take control of its assets. As a result, the two banks are now one entity and have become one of the three largest coporate banks in the United States.
Hopefully, Wachovia will be one of the last banks that need rescuing. If Congress manages to pass the spending bill in the near future many of the banks that are currently struggling may be able to recuperate. This would mean a more stable financial market which would be good for everyone right now.
On a side note, Citi does not intend to throw away the Wachovia name and all Wachovia contract will still be honored by Citi. So, next time you look at the back of your OneCard take note that you're not looking at the same Wachovia anymore, but you are still looking at Wachovia. Oh, what a paradox!
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