The financial crisis of 2008 showed how fragile financial institutions and the entire financial system could be. In the United States, many banks have been on the verge of bankruptcy, requiring significant assistance from the government. Some received a bailout in the form of a capital injection or loss-sharing agreement, while others entered into a forced marriage with healthier financial institutions, organized by the Federal Deposit Insurance Corporation (FDIC). Among the banks that benefited from this latest treatment was Wachovia, the fourth largest U.S. bank holding company by assets, in September 2008.1 The eventual sale of Wachovia to Wells Fargo, like other crisis-time transactions, is the result of an extremely complicated negotiation process. What is particularly interesting about this case is that the FDIC initially chose Citigroup over Wells Fargo as a buyer, but ultimately opted for Wells Fargo when the latter returned to the negotiating table. This article will examine how the FDIC, the intermediary for transactions involving troubled banks, influenced the negotiation dynamics of the Wachovia deal. In addition to FDIC influence, other government actions crucial to the transaction would also be examined. More specifically, the paper will analyze how the government and the FDIC contributed to Wachovia's diminished trading leverage, Citi's inflexibility, and Wells Fargo's unexpected comeback. in the United States in 2007. After the failure of Lehman Brother, Wachovia became increasingly concerned about its ill-equipped position in the face of adversity and included the merger in its contingency plan. It quickly began merger negotiations with s...... middle of paper ......ax Change helps Wells Fargo acquire Wachovia. “Calculated Risk: IRS Tax Change Helps Wells Fargo Acquire Wachovia. » The Washington Post, October 4, 2008. Phinisee, Tamarind "FDIC's U-turn Changed Wachovia's Fate, Court Records Excerpts - San Antonio Business Journal." RSS widgets. Np, October 19, 2008. Web. April 20, 2014. .13. Subramanian, Guhan and Nithyasri Sharma. “Citigroup-Wachovia-Wells Fargo.” Harvard Law School (): n. pag.14. Davidoff, Steven M.. Gods at War: Shotgun Takeovers, Government by Deal, and the Implosion of Private Equity Hoboken, NJ: John Wiley & Sons, 2009..