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Similarly, in September 2007, Wachovia Bank detailed its exposure to the subprime crisis, and disclosed an anticipated exposure of up to $3.51 billion. In fact, on October 19, 2007, Wachovia’s CEO told investment analysts in an earnings conference call that the company could see $1.3 billion in markdowns in the value of its loan portfolio by the end of 2007, as the company suffered from the “continued deterioration in the broader credit markets, in particular residential mortgages, commercial mortgages and acquisition finance.”
On December 5, 2007, Wachovia disclosed that “the value of CDOs we have in our portfolio CDOs experienced declines and the Company’s third quarter 2007 market disruption-related losses totaling $1.3 billion pre-tax included $347 million of subprime-related valuation losses.” The Company further disclosed that “due to the October market deterioration, these ABS CDOs experienced further declines in value in the month of October 2007 by an amount we currently estimate to be approximately $1.1 billion pre-tax.”
On September 29, 2008, federal regulators announced that Wachovia was insolvent, and that Citigroup had agreed to purchase Wachovia’s banking operations for $2.1 billion in a deal arranged by federal regulators, making the Charlotte, N.C. based bank the latest casualty of the widening global financial crisis.
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