Wachovia Corp reached a multibillion-dollar settlement with regulators and governments on Friday, joining the banks settling allegations they improperly urged customers to buy a type of bond that fell apart in conjunction with the subprime mortgage crisis, according to dpa. Wachovia will buy back from customers 8.5 billion dollars worth of auction-rate securities - a type of bond without a set interest rate for which rates are instead set at periodic auctions. The agreement announced by New York Attorney General Andrew Cuomo is the latest in a series of deals worth 35 million dollars and involving some of the nation's largest investment banks, including Citigroup, JP Morgan Chase, Morgan Stanley and UBS. On Friday, Cuomo also put pressure on Merrill Lynch & Co and Goldman Sachs Group Inc for the practice, saying they faced a lawsuit if they did not agree to buy back the bonds, Bloomberg financial news reported. The Securities and Exchange Commission, Cuomo and others alleged the banks pushed the securities to customers as providing easy access to their invested cash, without much risk. The system functioned as long as there were customers willing to buy the bonds. But the market for the bonds evaporated in February and the auctions failed after bond insurers that guaranteed the investments got caught up in the subprime mortgage crisis. Investors were left unable to sell the securities.
