Now that Citigroup (C) has botched its takeover of Wachovia (WB) it hopes to turn to the US court system to be its savior.

Wells Fargo (WFC) moved in under the cover of night and got Wachovia to agree to merge with it. Citi though it had a firm deal of its own with WB.

Citi took at baby step toward derailing Well Fargo. According to the FT, "Citigroup Inc said it won a court order late on Saturday blocking Wells Fargo & Co. from buying hobbled U.S. bank Wachovia Corp until the court rules otherwise."

Now, Citi can fiddle while Rome burns. Wachovia is extremely troubled, weighed down by toxic assets and mortgage loans. Before the offer from the New York bank to take it over, WB shares had fallen to under $2 from a 52-week high of $52.25.

Both Citi and Wells Fargo risk watching their prey destroyed as they fight over ownership. Several large financial institutions from Fannie Mae (FNM) to Washington Mutual have already fallen and been auctioned off or nationalized. Wachovia appeared to be the next company on that list.

If the court fight goes on long enough, the value of Wachovia could be severely damaged and the winner of the battle will be left with less than it bargained for.

Douglas A. McIntyre

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