News From The Morgue: Wachovia Embalmed Into Citigroup
Lyndon LaRouche
September 29, 2008 (LPAC)--At the demand of Federal regulators and with the assistance of the FDIC, the banking operations of the clearly insolvent Wachovia Corp. are being sold to Citigroup. Today's actions comes on the heels of the failure of Washington Mutual late last week, and in both cases a deal was reached which did not require the FDIC to take the bank over and run it, something it has neither the manpower nor the money to do. Wachovia surpasses WaMu as the largest bank failure in U.S. history, even though the FDIC insists it did not fail by their legalistic terminology. However the FDIC records it, Wachovia died, and the undertaker processed the corpse.
We are in the early stages of a wave of global bank failures the likes of which no one alive has ever seen. We have the two biggest bank failures in U.S. history within days of each other, and a rash of failures in Europe. The Belgian, Dutch and Luxembourg governments injected $16 billion into Belgian-Dutch financial conglomerate Fortis, taking a 49 percent share of the bank in return. The British government has seized Bradford & Bingley, the third British bank to fail this year, when no buyers could be found, and the Iceland government seized Glitnir, one of that nation's larger banks.
Fortis was one of three banks, with the Royal Bank of Scotland and Banco Santander, which took over the giant Dutch bank ABN AMRO in a battle with Barclays, and all three "winners" are in trouble. As part of its agreement with regulators, Fortis will have to divest itself of all of its ABN AMRO assets. This is a case where the "winner" turned out to be a very big loser, something to keep in mind as the consolidation moves rapidly, and the disintegration moves even faster. Winning is moot, if you don't survive.