Wachovia Folds

The sale of Wachovia's banking business to Citigroup marked the second time in five days that a major U.S. bank was forced from existence in part by fleeing depositors, raising serious questions about the stability of other financial firms and the health of the banking system. The deal also continues the rapid consolidation of an industry that has long been kept fragmented as a matter of public policy but now is being encouraged by the government to conglomerate. In the latest rescue urged by federal regulators, Citigroup agreed to pay $2.16 billion for Wachovia, the nation's third-largest retail and commercial banking franchise. Wachovia was fast-growing and widely admired, run by Treasury Secretary Henry M. Paulson Jr.'s former deputy Robert Steel.