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This Day In Market History: FDIC Seizes Wachovia

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This Day In Market History: FDIC Seizes Wachovia

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened: On this day in 2008, the Federal Deposit Insurance Corporation seized control of Wachovia.

Where The Market Was: The Dow closed at 11,143.13 and the S&P 500 traded at 1,213.27.

What Else Was Going On In The World: In 2008, President Bush and Congress approved a $150 billion stimulus package in an attempt to stave off the recession. The U.S. government approved the production and marketing of food produced from cloned animals. Average monthly rent was $800.

FDIC Steps In: At the end of the second quarter of 2008, Wachovia was the fourth-largest banking organization in the U.S. with $812 billion in assets.

However, on Sept. 28, 2008, just two days after Washington Mutual failed, the FDIC was forced to step in and take over Wachovia after depositors withdrew more than $5 billion from the bank in one day.

At the time, the seizure was extremely controversial. At the urging of a group of regulators led by Treasury Secretary Tim Geithner, the FDIC negotiated a deal to have Citigroup Inc (NYSE: C) buy most of Wachovia’s assets for a price of roughly $1 per share. However, on Oct. 3, Wells Fargo & Co. (NYSE: WFC) stepped in with a higher bid, offering $15.1 billion in stock for Wachovia.

Photo credit: Ryan McFarland, Flickr

 

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