Tuesday Update: The Wachovia Battle Continues; Fed Buys Short-Term DebtThe Wachovia bank battle continues between Wells Fargo and Citigroup, with yesterday's afternoon announcement of a "cease-fire" of sorts between the rival suitors.
This was after Citigroup filed a $60 billion suit because Wachovia entertained a better offer from Wells Fargo on Friday. All three banks' stocks slid in Monday's trading.
Analysts now are speculating that the bidding banks may split Wachovia geographically because the original Citigroup bid aimed not just to acquire Wachovia, but buoy Citi's financial position.
On Tuesday morning, the Federal Reserve announced the creation of the Commercial Paper Funding Facility (CPFF), to buy commercial short-term debt (three-month and asset backed commercial paper) to help provide liquidity in the credit markets that are being squeezed shut for many borrowers including small businesses and governments.
In the global response to the continuing credit crisis, Australia's central bank slashed its benchmark interest rate by the biggest amount in 16 years. The move by Australia sparks hopes for more easing of interest rates by other central banks.