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Citigroup swallows up Wachovia

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In the latest consolidation of the banking industry brought about by the credit crunch, Citigroup Inc. will absorb up to $42 billion in losses on loans on Wachovia Corp.'s books to acquire the Charlotte, N.C.-based company's banking operations.The Federal Deposit Insurance Corp. is on the hook for losses above and beyond that amount, but does not expect to draw on its Deposit Insurance Fund.Federal regulators insisted that Wachovia "did not fail," but is being acquired by Citigroup "with assistance from the FDIC." Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate for the risk it's taking on.The deal fully protects Wachovia depositors and ensures no interruption in services and "business as usual" for bank customers, FDIC Chairwoman Sheila Bair said in announcing the move.The news came on a day when the U.S. House of Representatives voted 228-205 against a $700 billion plan for the government to buy up troubled assets ...