Federal Reserve officials are pushing Citigroup and Wells Fargo to agree to a compromise giving each a piece of struggling Wachovia, with the Charlotte-based bank's 3,346 branches divided along geographic lines and Wells Fargo acquiring its investment units, reports the Wall Street Journal. The new deal, still being negotiated late last night, would not involve monetary support from the federal government.
The two banks have been battling over Wachovia for two weeks, with Citi making a tentative deal last weekend to buy Wachovia's banking assets, only to see Wells Fargo step in again with a new offer for the whole bank. Lawyers are sparring over whether the Wells Fargo talks violated an "exclusivity agreement" that was part of the Citi deal. Fed officials—worried about just how shaky Wachovia’s position is—have hopped in to accelerate a firm deal and avoid a collapse.