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Citigroup will buy Wachovia's banking operations;FDIC says Wachovia didn't fail

Discussion in 'Economics and Financials' started by joeydolfan, Sep 29, 2008.

  1. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    NEW YORK (AP) -- In the latest byproduct of the widening global financial crisis, Citigroup Inc. will acquire the banking operations of Wachovia Corp. in a deal facilitated by the Federal Deposit Insurance Corp.

    Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.

    The deal greatly expands Citigroup's retail outlets and leaves it among the U.S. banking industry's Big Three along with Bank of America Corp. and J.P. Morgan Chase & Co.

    Citigroup to buy Wachovia banking operations: Financial News - Yahoo! Finance

    I really do not agree with the FDIC stepping in on these banks before they fail and I DAMN sure do not agree with the FDIC receiving 12 billion in preferred stock and warrants.

    Looks like Wachovia shareholders just got diluted into oblivion.
     
  2. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Video- CNBC.com

    Bondholders from Wachovia appear to be safe, shareholders in Wachovia are definitely wiped clean. Unreal. Look for shareholder lawsuits galore in the coming future.
     
  3. adamprez2003

    adamprez2003 Senior Member

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    good thing there arent any anti trust laws in this country anymore lol
     
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  4. CrunchTime

    CrunchTime Administrator Retired Administrator

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    I have my IRA account in a low risk half bond, half stock account in Wachovia.

    Anything to worry about ? There is a substantial penalty for withdrawal.

    Would appreciate some advise from an expert

    Actually I tried to go to an all bond portfolio a couple of months ago but my account executive talked me out of it ......no commission I guess..and the withdrawal penalty.
     
  5. adamprez2003

    adamprez2003 Senior Member

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    there's no penalty for a rollover with another institution, so long as the paperwork is done correctly
     
  6. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Adamprez is correct crunch, you would just need to open an I.R.A. account at a different brokerage or bank and have the account moved over in its entirety. Once the I.R.A. is open you will need to fill out an A.C.A.T. form which is an account transfer form. Once the A.C.A.T. is submitted it usually takes 5 - 7 business days to move the account from your original I.R.A. holder to the new institution.

    Also keep in mind, so far I have not seen the exact structure of the deal and the exact accounts in their entirety Citigroup has bought from Wachovia. There is still the possibility it would just be moved over to Citigroup and you could choose to stay there if you wanted too.
     
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  7. CrunchTime

    CrunchTime Administrator Retired Administrator

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    The penalty would be because the fund was recently acquired .One year is required before a withdrawal without penalty
     
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  8. adamprez2003

    adamprez2003 Senior Member

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    A withdrawal is when you take the money out of the account. A transfer, where you keep the account in tact will not cost you a penalty
     
  9. Regan21286

    Regan21286 MCAT's, EMT's, AMCAS, ugh

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    Great, more good news. I am certainly hoping for that last sentence to come true and especially hope they pop up for Wamu.
     
  10. texasPHINSfan

    texasPHINSfan New Member

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    to add to this, if you took a distribution instead of transfer, the IRS gives you 60 days to transfer tax-deferred funds from one account to another without paying a penalty.... seems like no one else mentioned this. you could sell & liquidate everything from the account and not pay a penalty as long as you get it into another tax-deferred account within 60 days.

    joey has it 100% on though - we don't know yet what is going on with that, but i would say with almost 99% certainty that your $$ is in no danger. the assets of all the investment accounts will most likely be either merged into Citi's existing brokerage, or bought out by another brokerage firm. the only difference you'll see is a different name on the paper you get your statements from. heck, you might even keep the same adviser. :up:

    oh, and i like how the FDIC was saying Wachovia didn't fail.... well of course it didn't, it was "rescued" before it had a chance to fail. if it had been left to its own devices, it would have failed.
     
  11. texasPHINSfan

    texasPHINSfan New Member

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    ah, that's a different fee then. yes, that varies from fund to fund... glad to see you did your homework though and were aware of these fees.

    those fees don't apply to ACATs though, as joey said. :up:
     
  12. CrunchTime

    CrunchTime Administrator Retired Administrator

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    Its the Evergreen Asset allocation fund .Its half stock,half bonds.It lost 8 pct after the big dropoff.

    Thats what the fund normally earns .Averaging 8 pct per year.
    At best I would break even if I stick with the fund.I would lose another one percent if I get out of the fund.

    BTW Wakovia was happy to get rid of its banking segment.The investments segment apparently is doing ok.
     
  13. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    The Evergreen fund is actually one of the pieces that Citigroup did not buy from Wachovia and now after the dust has settled Wachovia still stands as a publicly traded company, just without the depositor base and branches.

    Really up to you Crunch, if you were happy with the services provided by Wachovia and are happy with the average annual returns from the Evergreen fund than stay with it.

    If you choose to move the account, keep in mind you should be able to keep the evergreen fund in the I.R.A. and just transfer it over to a new advisor or financial institution of your choosing. As long as you are not liquidating the fund and just transferring it to a different account there should be no penalty incurred.

    I am only a little more up to speed with the Wachovia situation since the clearing firm my broker dealer uses and where all of my clients accounts are held is First Clearing which is a part of the investment branch of Wachovia and which Citigroup did not purchase.
     
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