Citigroup Buys Bank Operations of Wachovia

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.

IBC News: MTA bigs still have 20% of recalled MetroCards and E-Z Passes

Former MTA honchos kept one in five lifetime passes that the agency recalled after a Daily News exposé - and their electronic freebies will be switched off within days.

Ex-Metropolitan Transit Authority big shots still have three free E-Z Passes, 10 MetroCards and at least 16 suburban rail passes more than two months after they were told to hand in a total of 143 perks, officials said.

"Our former board members have been very cooperative, and we expect to have all of the passes returned shortly," MTA spokesman Jeremy Soffin said.

Soffin refused to name those who failed to return the passes and said some of them may not know about the recall because of summer vacations.

He noted that nearly 80% of the passes were returned.

The agency plans to pull the plug on the E-Z Passes and MetroCards by the end of the week, meaning some of the ex-bosses may find themselves stuck at bridge toll gates or subway turnstiles, officials said.

The passes for Metro-North and Long Island Rail Road are paper and cannot be electronically deactivated.

For decades, the MTA doled out the lifetime perks to board members and some of their spouses, which the MTA called a token of appreciation for unsalaried service.

A firestorm about the perks erupted in May when The News reported on the distribution of free E-Z Pass tags to nearly 60 past and present board members.

Former MTA Chairman Peter Kalikow, a multimillionaire with an extensive classic car collection, had been granted eight E-ZPass tags.

After The News report, state Attorney General Andrew Cuomo told the MTA that the passes were illegal compensation because board members are supposed to serve for free.

The MTA disagreed but ultimately decided not to fight it out in court, calling the freebies a distraction from more pressing problems, like major gaps in its operating and capital budgets.

In a June letter, the MTA ordered dozens of pass holders, including ex-board members and their spouses and spouses of sitting board members, to return the freebies.

Former board member Warren Dolny on Friday reluctantly mailed his E-ZPass tag and MetroCard to the MTA.

"I'm disappointed," Dolny said, adding that he plans to file a lawsuit and wouldn't comment further on the advice of his lawyer. He previously said he worked hard for no pay, adding that at age 79 he was still working to pay the bills.

The MTA can't do much about the commuter rail passes because those passes are shown to conductors, not swiped or scanned like MetroCards and E-ZPass tags.

Current board members were allowed to keep their passes, but they are supposed to use them only on official MTA business.

Soul singer Isaac Hayes, 65, is dead

Isaac Hayes, whose towering persona and musical brilliance on groundbreaking records like "Shaft" helped shape both the style and sound of his era, died Sunday in Memphis at age 65.

Steve Shular, a spokesman for the Memphis sheriff's office, said Hayes' wife found him unconscious at his home, near a treadmill that was still running. He was rushed to the hospital, where he was pronounced dead.

Hayes suffered a stroke last year that had left him with residual speech impairment. A devout Scientologist, he followed a health regimen that included a 30-day fast every 12 months.

Although Hayes was a singer, composer, musician, arranger and radio host, he was best known for his 1970s concert-stage role as "Black Moses," a hugely powerful man with a glistening bald head rising in massive chains he seemed capable of snapping like twigs.

He reached the peak of his popularity in the early 1970s after winning an Academy Award and a Grammy for his score to Gordon Parks' movie "Shaft."

"People don't appreciate what an achievement that was," said friend and fellow artist James Mtume on Sunday. "It wasn't just a breakthrough for a black musician. It broke composing for all films into the modern era."

"He was more than an artist, he was a trailblazer," said the Rev. Al Sharpton. "He was an innovator, a creative genius."

Bobby Jay, the former WCBS-FM host who met Hayes at WDIA in Memphis in 1970, noted that Hayes was a central creative force for Memphis' legendary Stax label, where he and David Porter wrote songs like Sam and Dave's "Soul Man."

Hayes remained active in the music business throughout his life. From 1996 to 2001, he was a high-rated morning host at WRKS (98.7 FM) in New York.

"He was a good brother," said Bob Slade, his newsman at WRKS. "Just a real good guy."

In more recent years, he was the deep voice of the dashing Chef on the TV series "South Park." He left after the show mocked Scientology.

Mtume said Hayes "opened up music," helping clear the path to Barry White and rap. Jay recalled how Hayes' 1969 "Hot Buttered Soul" was "one of the first concept albums."

Hayes said in 1996 that while he was ambivalent for a time about the "Black Moses" image, he came to see that it represented "a black man rising in chains, as we were for so many years, and breaking free."

Born in a tin shack in Covington, Tenn., Hayes was raised by his grandparents. His family moved to Memphis in 1948, and he decided to go into the music business after winning a ninth-grade talent contest with Nat King Cole's "Looking Back."

Largely self-taught, he worked his way up to Stax in 1964. His honors over the years included induction into the Rock and Roll Hall of Fame in 2002.

"Where are you going to find someone to replace Isaac Hayes, as a musician, writer, composer?" asked Jay. "Someday, someone will, but I don't know if it will be in our lifetimes."

Survivors include his wife, Adjowa, and their 2-year-old son Nana. He had three older sons.

Picture Of The Week

A large rock slide lies across the highway between Vancouver and the ski resort of Whistler in Porteau Cove, British Columbia, July 30, 2008. A small tour bus narrowly missed being crushed in a massive landslide in Western Canada that buried a highway that is scheduled to play a key role in the 2010 Winter Olympics in Vancouver.

Tech Tuesday: BlackBerry Curve

The feature that differentiates this from other Blackberries is UMA - unlicensed mobile access. In contrast to the AT&T Blackberry 8820, this T-mobile 8320 allows one to SPEAK over wifi. The 8820 can only use wifi for data.

It roams seamlessly between wifi networks and EDGE/GSM networks without dropping the call. I started a call from a Starbucks wifi network and walked out of its range. The phone switched over to the GSM network without dropping the call - no problem. I then walked into my office where there is wifi, and the phone switched over to wifi.

BUY BLACKBERRY CURVEHere.

Hand injury to keep Shia LaBeouf off 'Transformers' sequel for month

LOS ANGELES - "Transformers" star Shia LaBeouf will need a month off to recuperate after getting hurt in a car accident that got him busted on drunk driving charges.

His reps say he'll that much time to heal the mangled mitt he received when his truck smashed into another vehicle and rolled across a West Hollywood intersection around 2:30 a.m. Sunday.

"Shia is currently recovering from extensive hand surgery with plans to return to work on the set of Transformers 2 within one month," a statement from LaBeouf's publicist and lawyers said.

The "Transfomers" sequel was scheduled to resume filming Monday in Los Angeles with the notoriously hard-driving director Michael Bay at the helm.

Sheriff's officials said LaBeouf showed "outward sings of intoxication" after he turned left at the intersection of La Brea Ave. and Fountain Ave. and hit another vehicle with his giant Ford pickup.

Originally facing felony charges, LaBeouf was booked for misdemeanor DUI after Sheriff's deputies followed him to the hospital and determined the injuries to his unidentified female passenger and the driver of the other vehicle were minor.

LaBeouf, who also appeared in "Indiana Jones and the Kingdom of the Crystal Skull," has had minor scrapes with the law before.

The onetime star of Disney's "Even Stevens" TV show, LaBeouf was arrested Nov. 4 in Chicago after a guard in a Walgreens drugstore said the actor was drunk and refused to leave. The case was dismissed.

He was cited for unlawful smoking in Burbank last February and temporarily was the subject of a bench warrant when he failed to make a court appearance.

Last month he was busted for illegal smoking in the bathroom of the Smithsonian National Air and Space in Washington D.C. during filming for "Transformers: Revenge of the Fallen."

2009 Maserati GranTurismo S

A year after the unveiling of the GranTurismo, Maserati will be back at the Geneva International Motorshow with yet another world premiere, the GranTurismo S. The ultimate expression of the Trident coupé's sportiness shifts the emphasis onto performance and driving enjoyment. Two main novelties are at the heart of the new Maserati: the 440 HP V8 4.7 engine and the electro-actuated gearbox with fast MC-Shift arranged in the Transaxle layout typical of high-performance sports cars that represents the technological DNA of all Maseratis. The GranTurismo S makes use of the high-performance brake system developed in collaboration with Brembo and introduced for the first time in the automotive field on the Maserati Quattroporte Sport GT S. The system features front brake discs made with dual-cast technology - a dual casting of cast iron and aluminum, paired with aluminum mono-bloc 6-piston brake calipers, ensuring optimized braking performance.


2009 Maserati GranTurismo S Hot Wallpaper


2009 Maserati GranTurismo S


2009 Maserati GranTurismo S Wallpaper


2009 Maserati GranTurismo S's Rim