Cityfile: New York's Most Notable and Influential

• The chief executives of nine Wall Street banks have been "summoned" to Washington to testify before Congress next week. [BN]
• UBS has held talks with Wachovia about combining their wealth management units; this comes amid the news UBS tried to sell its brokerage unit to Morgan Stanley late last year. [NYP, Reuters]
• After repeatedly saying it wasn't a possibility, Citigroup is now contemplating backing out of the $400 million deal to name the Mets' new stadium. [WSJ]
• Under pressure to boost lending, Citigroup says it will spend $36.5 billion to issue new mortgages and make credit card loans. [AP]
• Credit Suisse is cutting bonuses by 55%. [BN]
• What's BofA been doing with its bailout cash? Hosting parties. [ABC News]

• Wells Fargo reported a $2.55 billion loss for the fourth quarter; it also said recently acquired Wachovia lost $11 billion during the period. [BN, WSJ]
• Steve Schwarzman says it's a "wonderful time" for the industry, despite the fact his net worth has dropped by $7 billion in recent months. [BN]
• Andrew Cuomo has subpoenaed former Merrill chief John Thain. [WSJ]
• Wall Street bonuses dropped 44% in 2008. [BN]
• Bank of America's board of directors is now feeling the heat. [NYT]
• It was Tim Geithner who convinced Citi to scrap plans to buy a new jet. [FT]
• Lunch with T. Boone Pickens: now up for auction on Ebay. [DB]

♦  Bad day ahead? Stocks fell sharply in Europe and Asia overnight and ugly corporate earnings have investors worried. [MW]
♦  Wachovia, which is being acquired by Wells Fargo, reported a third-quarter loss of $23.9 billion. [Bloomberg]
♦  Yahoo says it will lay off 10 percent of its work force. [NYT]
♦  Federal prosecutors looking into the collapse of Lehman have subpoenaed other firms to find out if their analysts were misled by Lehman execs. [WSJ]More

♦  In a extraordinarily bold move, the U.S. will use $250 billion to take equity stakes in major financial institutions like Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase as part of an effort to restore confidence in the system, unlock the credit markets and "avoid financial collapse." [WSJ, NYT]
♦  The government's move isn't unprecedented, although not everyone is very happy with the "partial nationalization" approach. [NYT, WaPo]
♦  Global markets continued to rise overnight as investors responded to news of the government's plan.  [Bloomberg]
♦  Notwithstanding the bailout, some hedge fund titans like Steve Cohen, John Paulson, and Israel Englander are staying on the sidelines and keeping their billions in cash. [WSJ]More

♦  The Federal Reserve said on Wednesday that it would provide up to $37.8 billion to AIG. That's on top of the $85 billion lifetime the insurance giant got a few weeks ago. [NYT]
♦  Hank Paulson suggested yesterday the government may invest in banks as part of the next step in trying to resolve the credit crisis. [Bloomberg, NYT]
♦  Talks continue between Wells Fargo and Citigroup, who are both vying for control of Wachovia, although they appear close to a settlement. [WSJ, DB] More

♦  The world's central banks are joining together to carry out a coordinated (and unprecedented) cut in interest rates, part of a plan to restore confidence in the global economy. [WSJ, NYT]
♦  Speculation that Morgan Stanley's deal with Mitsubishi UFJ had fallen through led to a huge drop in Morgan's stock price; the Japanese bank now says the deal will be done by this weekend. [Bloomberg]More

♦  Invoking emergency powers, the Fed will create a special fund to buy up commercial paper—short-term debt that companies typically use for such things as payroll—in an effort to ease up the credit markets. [Bloomberg]
♦  Wachovia and its sparring suitors, Citigroup and Wells Fargo, have agreed to a two-day truce as negotiators try to work out a resolution. [WSJ, DB]
♦  Did you miss Lehman CEO Dick Fuld's testimony before the House yesterday? A recap. [WSJ, FT, NYT]
♦  Bank of America reports that profits plunged 68% in the third quarter. [CNNMoney]More

The Citi Suit | Citigroup's lawsuit against Wachovia and Wells Fargo is now public: Citi is asking for a whopping $60 billion (including $20 billion in compensatory damages and $40 billion in punitive damages) for breach of contract and tortious interference. Of course, the suit may be moot if the Fed brokers a deal between the three banks, as it has been suggesting. But if you're bored today and you're not interested in looking through Sarah Palin's tax returns (or you're interested to see what you get when you hire 80 lawyers to work round the clock for an entire weekend), the lawsuit is after the jump.More

♦ The legal battle between Citigroup and Wells Fargo raged over the weekend as both banks sought the upper hand in their bid for Wachovia. A Fed-led settlement which would divide Wachovia's assets may put an end to the dispute. [NYT, WSJ]
♦ Bank of America has agreed to settle government claims related to Countrywide Financial. The total price tag could exceed $8.6 billion. [WSJ]
♦ Dick Fuld will make his first appearance in weeks when he speaks before a House committee today. [NYP]
♦ Eli Lilly has agreed to acquire ImClone Systems for $6.5 billion. [Reuters]More

Citi's Ad Campaign Backfires | Oops! Citigroup's marketing department had already started running ads announcing the purchase of Wachovia when it found out this morning that the bank was backing out of the deal and selling itself to Wells Fargo instead. [AdAge]

Citigroup v. Wachovia? | Remember how Citigroup was supposed to buy Wachovia earlier this week for pennies and then it was announced this morning that Wachovia had actually changed its mind and decided to sell itself to Wells Fargo? Yea, well, now Citigroup is majorly pissed and is threatening Wachovia with a lawsuit. [Dealbook]

♦  Citigroup isn't getting Wachovia after all: Just four days after the banks agreed to a deal, Wachovia has changed course and will now sell the company to Wells Fargo for $15.4 billion. [WSJ, NYT]
♦  The $700 billion bailout bill will reach the House for a vote today. This should be interesting. [NYT]
♦  JPMorgan Chase, which purchased a failed Washington Mutual last week, is already cleaning out the executive suite. [Bloomberg]More

Remember when Jim Cramer recommended buying stock in Wachovia a couple of weeks ago? Yea, neither do we. But just in case the dozen or so examples of how embarrassingly misguided Jim Cramer usually is don't suffice (remember his enthusiastic support for Bear Stearns just before its collapse?) and you need further proof that taking financial advice from a cable news show isn't such a hot idea, feel free to take a moment to watch Cramer's overly dramatic apology from last night's broadcast of Mad Money. Two weeks ago Cramer welcomed Wachovia CEO Robert Steel to the show, who told the manic talk show host that his bank was doing great, prompting Cramer to describe Wachovia a "winner." We all now how that "winner" turned out, although Cramer seems to have already formulated his defense. He claims that Steel, a longtime pal, took "advantage" of him. Funny, that sounds familiar!

♦  A recap of what happened on Wall Street yesterday, just in case you've been asleep for the last 36 hours. [NYT]
♦  In a statement this morning President Bush said he was disappointed the bailout bill didn't pass and warned that "painful and lasting'' economic damage will follow if a settlement isn't reached. Then, like the rest of Congress, he used Rosh Hashanah as an excuse to skip out for the rest of the day. [CNNMoney, Bloomberg]
♦  Wall Street bonuses could be down as much as 50 percent this year. [DB]
♦  Mitsubishi has completed its deal to invest $9 billion in Morgan Stanley; thanks to yesterday's market it's only down $500 million since the deal was announced last week. [NYT]More

♦  President Bush turned up outside the White House early this morning to urge lawmakers to pass the $700 billion bailout and a vote is expected later today. Bored today? The full text of the bailout is here. [NYT, WSJ]
♦  Citigroup has agreed to buy Wachovia in a deal brokerered by the FDIC. [Dealbook]
♦  The governments of Belgium, Luxembourg and the Netherlands have teamed up to bail out Fortis, one of Europe's largest banks. [WSJ, Bloomberg] More