Stocks opened down this morning as the market waited to see whether the bailout package lawmakers finalized this weekend will be passed by Congress and learned that Citigroup Inc. will acquire the banking operations of Wachovia Corp.

At 9:22 a.m., the Dow Jones industrial average was down 335.48 points to 10,807.65 and the Nasdaq composite index was down 97.84 points to 2,085.50.

Speaking this morning in support of the bailout proposal before it went to the House for a vote, President George W. Bush said the measure is needed to “keep the crisis in our financial system from spreading throughout the economy,” the Associated Press reported.

The package made it to the floor of the House this morning with a 220-198 vote that moved it into three hours of general debate, with a final vote expected by early afternoon. It is still questionable whether the bill will pass both the House and the Senate. The Senate is not scheduled to vote until Wednesday.

The controversial deal would give the government $250 billion immediately, $100 billion more if the president certifies it is necessary and $350 billion with a separate certification to buy bad debt – mostly mortgage-backed securities – that is plaguing U.S. financial markets. The money will go to banks, credit unions, securities brokers and dealers and insurance companies, among other organizations, as long as they had “significant operations” in the United States.

The bill also includes safeguards including checks and balances on the program’s operations, curbs on bonus packages for top executives of firms receiving help and assurances that taxpayers would eventually be reimbursed by the companies for any losses. The deal also requires the government to take ownership stakes in companies that receive federal money.

The compromise bailout plan is “a good beginning,” said Suku Radia, president of Bankers Trust Co.

“I think the original legislation had some fatal flaws, so I think it is good there has been discussion,” Radia told the Business Record. “I think what we have now is better than we had 11 days ago.”

Adding further accountability to the plan, such as the provision that the Treasury Department would receive warrants to purchase stock from companies that receive assistance, was a good move, Radia said. “I’m not in favor of writing a blank check for someone who, while the going was good, was of the mindset that it was because of what they were doing,” he said.

Overall, Iowa’s banks remain “fairly healthy,” he said, but getting that message across to the average person has been difficult. “At the end of the day, there has to be some way to market ourselves better to the consumer, so they can realize the industry in Iowa is still in fairly good shape,” he said.

Wachovia’s bailout

Citigroup Inc. announced this morning that it will acquire the banking operations of Wachovia Corp., further concentrating American’s bank deposits in three major banks: Bank of America Corp., JPMorgan Chase & Co. and Citigroup.

Citigroup will absorb up to $42 billion of losses in the deal, with the Federal Deposit Insurance Corp. (FDIC), which helped facilitate the deal, absorbing any remaining losses. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.

Wells Fargo & Co. also was reported to be in talks with Wachovia, which has suffered from mortgage losses mostly related to its 2006 acquisition of mortgage lender Golden West Financial Corp.

The FDIC assured investors that Wachovia didn’t fail and all depositors are protected. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson expressed support of the deal and the FDIC’s actions.