Citigroup has filed a lawsuit in New York against Wachovia and Wells Fargo as it continues its fight to purchase Wachovia’s assets. Citigroup has asked for $20 billion in compensation and $40 billion in punitive damages. Yeah, right.

More info: Yahoo Finance

The feds have taken the reins in the sale of Wachovia to either Wells Fargo or Citigroup. Citi initially had a preliminary deal to buy Wachovia, but Wells Fargo punked them by announcing that it had reached an agreement to buy Wachovia without government aid.

Citigroup struck back in the courts, and initially won the right to negotiate for longer; this ruling was overturned today in a wind-sprint Court session.

Now the U.S. Federal Reserve is trying to broker a compromise between the companies and hopes that each will settle for a piece of the shattered Wachovia.

Scrambling Wachovia has finally found a sap willing to buy them in Citigroup. Citigroup has agreed to swallow the $42 billion in losses from Wachovia’s loan portfolio; the FDIC has agreed to cover any further losses. The FDIC insisted, however, that Wachovia had not failed. Great job, guys!

Further coverage:

• Yahoo Finance: Citigroup to buy Wachovia banking operations
• The Guardian: Wachovia agrees to Citigroup takeover
• The Wall St. Journal: Citigroup to Acquire Wachovia Assets

The chief financial officer of Wachovia, Thomas Wurtz, has resigned according to Yahoo finance.

Before I posted that after its loss of $8.9 billion, Wachovia would fire 6,350. Turns out, I was wrong and the real number is closer to 11,000 according to The New Observer.

Wachovia stunned Wall Street when it announced that in the last quarter it lost $8.9 billion dollars. In an emergency move, it has cut 6,350 workers, shut down its mortgage unit, and slashed its dividend. Company chairman, Lanty “The Smiler” Smith had this to say:

“These bottom-line results are disappointing and unacceptable.”

You said it, Smiler.

Wachovia’s St. Louis office was raided today by Missouri regulators who subpoenaed “more than a dozen agents and executives” regarding the auction of “auction-rate securities.”

More information: Fortune

Wachovia just announced some pretty abysmal 2nd quarter results causing the stock to hit a 17-year low. The short version: a loss of “between $2.6 and $2.8 billion.” The company has also said that its new CEO will receive a salary of up to $37 million per year in order to save the company.

A Wachovia analysts finally connected the dots and hypothesized that since fewer companies are hiring, job-hunting site Dice.com probably won’t do so well. Wachovia downgraded the stock and Dice.com shares dropped like a stone.

According to this blurb, Wachovia is rumored to have let go 10% of its equity researchers.