Fed court trumps state court

Court tilts Wachovia fight toward Wells Fargo

Excerpt:

U.S. District Judge John Koeltl late Sunday blocked an order by New York State Supreme Court Justice Charles Ramos issued late Saturday at the request of Citigroup Inc.

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It was clear from documents filed in federal court Sunday that Wachovia was in considerable trouble when it agreed to the deal. Wachovia disclosed that it agreed to the deal "with the understanding that a seizure of its banking assets later that day by the Federal Deposit Insurance Corp. would occur" unless it accepted Citigroup's proposal.
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It was quite possible that litigation among the three banks could go on for some time; any ruling by either judge was likely to be appealed. A protracted court fight raised the possibility that Wachovia, already hurt by billions of dollars in losses from failed mortgages, will further weaken. However, the government, which has closed and then seized failing banks including Washington Mutual Inc., the nation's largest thrift, would likely step in if the bank were in jeopardy.

Comment: I'm sure my readers think I am obsessed with this drama. I'm not, but I am fascinated!