Wells to Buy Wachovia; Citi Threatens Suit

Additionally, Citi had been planning to raise $10 billion in common stock and cut its quarterly dividend in half to 16 cents a share, but at this point, it wasn't known if those strategies would still be pursued.

The biggest Wells Fargo shareholder is Warren Buffett's Berkshire Hathaway (BRK-A Quote), which itself has been on a buying spree of late. Berkshire recently made big investments in two other firms, Goldman Sachs and General Electric (GE Quote), the latter of which has a significant financial operation.

The end of Wachovia's days of independence continues a string of buyouts and bailouts that have radically transformed the financial sector in the past few months.

Along with the takeouts of Bear Stearns and Washington Mutual, Lehman Brothers filed for bankruptcy, the government arranged backstops for Fannie Mae (FNM Quote), Freddie Mac (FRE Quote) and AIG (AIG Quote), Bank of America (BAC Quote) agreed to buy Merrill Lynch (MER Quote), and roughly a dozen smaller banks have failed outright.

To attempt to stem the crisis, the Bush administration has proposed a multibillion rescue package for the financial group. On Monday, the House of Representatives voted down the plan, but two days later a measure passed the Senate. The House will hold a new vote on Friday to try to get legislation put in place.

A combined Wells Fargo and Wachovia will have assets of $1.42 trillion, deposits of $787 billion, and assets under management, through mutual funds, of $258 billion. Together, the companies have more than 10,000 banks in 39 states and Washington, D.C., 12,000 ATMs and 280,000 employees.

For Wells Fargo, the acquisition will give it a first-time banking presence in several states along the East Coast and in the South, including Alabama, Connecticut, New York, New Jersey, Tennessee and North Carolina.