The bailout package heads for a vote in the midst of more turmoil in the banking industry. It was announced Monday that Citigroup is buying most of the assets of the troubled banking giant Wachovia.
The Federal Deposit Insurance Corp. brokered the deal. Citigroup will absorb up to $42 billion in losses, with the FDIC covering any remaining losses.
Wachovia is one of the banks that have suffered big losses — $8.9 billion in the second quarter of 2008 alone, NPR's Jim Zarroli tells Steve Inskeep. Its stock was down 74 percent this year, and the chief executive officer was fired.
"The problems apparently accelerated after Washington Mutual was seized by the government last week, and that really forced the situation," Zarroli says — the FDIC felt that it had to step in. Treasury Secretary Henry Paulson said allowing the bank to fail would have meant systemic risk to the economy.
"We're seeing a real concentration of banking power in the hands of a few survivors: JPMorgan Chase, Citigroup, Wells Fargo, basically a few others," Zarroli says.
A lot of skepticism remains in the markets, despite the compromise bailout legislation that the House is considering Monday.