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The Federal Reserve Board announced Sunday its approval of the application by Wells Fargo (NYSE:WFC) to acquire Wachovia Corporation (NASDAQ:WB) and its subsidiary banks for $11.7 billion, finally removing the deal’s last major regulatory barrier.

In its brief statement, the Fed said that based on the “unusual and exigent circumstances affecting the financial markets, the weakened financial condition of Wachovia, and all other facts” the Board had shortened the usual notice period it generally gives regulators about such takeovers to ten days.

The Board also said it had been in close contacts with the U.S. Department of Justice and banking regulators about the deal, and noted that those agencies indicated that they had no objection to the approval of the proposal.

The Fed’s move comes after Citigroup (NYSE:C) walked away on Thursday from its own efforts to buy Charlotte, North Carolina-based Wachovia. As a result, antitrust regulators immediately began consideration of the filings submitted by Wells Fargo & Co. on Oct 9 for approval to acquire Wachovia Corporation.

According to court filings made by Citi on Friday, Wachovia lost on Sept. 26, $5 billion in deposits in a silent run, leading regulators to tell the bank that it would be shut down within days if it were not acquired. Citi initially agreed to buy Wachovia’s banking operations under FDIC’s direction for $2.1 billion. However, several days later, Wells Fargo offered a rival bid, which Wachovia accepted. After a legal fight, Citi backed down allowing Wells to move forward with its acquisition. However, Citigroup plans to seek $60 billion in damages for breach of contract.

Wells will complete the deal by the end of the fourth quarter ‘08. The acquisition still needs the approval of Wachovia shareholders.

Source: Fed Approves Wells Fargo-Wachovia Deal; Citigroup Seeking Damages