What happens to Wachovia?

Wells Fargo and Citigroup spent much of the weekend fighting in state and federal court -- as well as a judge's home in Connecticut -- over which party was entitled to move ahead with a deal to buy Wachovia assets. The Federal Reserve views resolving the dispute as important, having already decided that Wachovia must be sold for the sake of the stability of the financial system, a person familiar with the matter said. Citigroup reached a preliminary agreement to buy Wachovia's banking assets for $2.2 billion in a deal backed by the U.S. government on Sept 29. Wachovia did not sign an official merger agreement with Citi, although it did sign an agreement to negotiate exclusively with Citigroup through Oct 6. But on Friday, Wells Fargo, the seventh-largest U.S. bank by assets, said it signed an agreement with Wachovia to buy the entire company without the government's help, apparently topping the Citigroup offer.