Feds Consider Splitting Wachovia

Written by Sarah Batista

Charlotte, NC (WBTV) -- The battle over Wachovia has intesified.  The Wall Street Journal reported federal regulators are pushing for a compromise splitting Wachovia between Wells Fargo and CitiGroup.

Wachovia's branches would be split between the east coast and west coast.

Negotiations have been going on all weekend. The news came after Citigroup obtained a court order temporarily blocking the Wachovia/Wells Fargo deal.

Michael Smith with Center City Partners says he's not surprised by the lawsuit.

"There's a lot of shareholder value there that was negotiated that if this deal doesn't go through they leave on the table," said Smith.

Now Citigroup is claiming damages of $60 billion dollars from Wachovia for violating the contract.

Shareholders on the site Wachovia vote no, question whether Citi low-balled Wachovia by offering them 2.1 billion dollars.

"If their damages are 60 billion dollars, what they're implying is that Wachovia is worth 60 billion dollars. It makes no sense," said Wachovia shareholder Mark Beck.

And if Wachovia's value is potentially 60 billion dollars--then either Citigroup or Wells Fargo who offered 15 billion--is in for a steal.

That's not sitting well with Wachovia shareholders.

The lower the price tag on Wachovia the less money for them.

But will the courts see it the same way?

"Unless Citigroup changes their offer, I would be surprised that the government would step in and destroy all that shareholder value that's been offered by Wells Fargo," said Smith.

Wachovia filed its own suit against Citigroup late Sunday saying the bank had no right to stop their deal with Wells Fargo. The New York appeals court agreed, but did not rule.

Both sides will head to court Tuesday.