Fed steps in to prod Wachovia deal along

WASHINGTON, Oct. 6 (UPI) -- The U.S. Federal Reserve bank is trying to negotiate a compromise between two banks trying to purchase parts or all of Wachovia Corp.

Unnamed sources said the Fed was relaying information between the three banks, not suggesting a solution, The New York Times reported Monday.

Wachovia accepted an offer in principle from Citigroup last week to purchase its banking operations for $1 a share. Four days later, Wachovia announced it was ready to accept an offer from Wells Fargo for its entire corporation for $7 a share.

A New York judge Saturday temporarily halted the $15.1 billion Wells Fargo deal but a superior court blocked that ruling, the newspaper said.

Fearing a prolonged legal battle that could drag down financial markets already in turmoil, the Fed stepped in, the Times reported.

Each company has a different view of the deal-making. Citigroup and Wells Fargo have both said they have exclusive rights to dealing with Wachovia. Wachovia, however, said it was now betrothed to Wells Fargo but was willing to negotiate.

"Citigroup is always free to make a superior offer to Wachovia," the bank said in a statement.