Futures Plunge on More Banking Fears

Wall Street was set to plunge at the open Monday as a $700 billion plan approved by Congress on Friday failed to restore confidence in the global banking system.

Fears spread around the world as news of more bank troubles emerged over the weekend, and Asian and European stocks plummeted between 4 percent and 5 percent.

UK Chancellor of the Exchequer Alistair Darling is considering a dramatic taxpayer-funded recapitalization of Britain’s banks, the Financial Times reported on Monday on its Web site.

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Germany offered a blanket bank deposit guarantee on Sunday in a bid to contain the spreading credit crisis as officials clinched deals to rescue Germany’s Hypo Real Estate and recapitalize two other European banks.

It was followed by similar moves by Austria and Denmark, after Ireland issued the first such guarantee last week. Austria said it would raise the limit of guarantees from the current 20,000 euros — but the new level is to be decided — while Denmark guaranteed all deposits.

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The U.S. banking sector is facing more headwinds this week as a district court judge set a court hearing for Tuesday to decide whether an exclusivity agreement in Citigroup’s [C 18.35 -4.15 (-18.44%) ] bid to buy Wachovia’s [WB 6.21 2.30 (+58.82%) ] banking assets prevents a competing deal by Wells Fargo [WFC 34.56 -0.60 (-1.71%) ] to go forward.

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