Wachovia: A Split May Boost the Banking Industry

The legal battle between Citi and Wells Fargo over Wachovia is suspended, for now. But at least it shows there are assets worth fighting over

For Washington policymakers, the prospect of a grinding, slow-motion legal fight between Citigroup (C) and Wells Fargo (WFC) for the spoils of troubled Wachovia (WB) is clearly unnerving. In a period when the markets seem to come more unhinged with each passing day, regulators fear that a protracted battle in the courts could cause an acceleration in public bank runs. That explains the news reports on Oct. 6 that officials from the Federal Reserve were brokering a compromise that would end with Citigroup and Wells Fargo carving up Wachovia's assets.

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