Wachovia, of Charlotte, N.C., has massive exposure to exotic adjustable-rate mortgages and is one of the hardest-hit banks in the collapse of the U.S. housing market. Now it is seeking a lifeline by negotiating possible merger deals with Wells Fargo, Citigroup and Spain's Banco Santander, The New York Times reported Saturday.

Wachovia inherited $120 billion in "option ARM" mortgages through its ill-timed acquisition of Golden West, a big California mortgage lender, at the end of the housing boom in 2006, analysts said.

Unnamed sources told the Times that merger talks are at early stages, but it appeared Wachovia was seeking merger alternatives if a $700 billion financial industry bailout plan being debated by Congress fails to provide enough help.

Wachovia's share price, down nearly 80 percent in the last year, plunged 27 percent Friday to $10 per share after Washington Mutual, a similarly troubled bank, was seized by the federal government.

Britain readies Bradford & Bingley seizure LONDON, Sept. 27 (UPI) -- The British government says it is preparing to nationalize Bradford & Bingley Bank as the search for a private sector buyer is proving fruitless.

If the troubled lender is taken over, it would mark the second time in seven months the government has made such a move, rescuing Northern Rock in February, The Times of London reported Saturday.

British Chancellor Alistair Darling Friday ordered officials to prepare to takeover Bradford & Bingley, a Treasury spokesman told the newspaper, saying, "You would expect us to have contingency plans."

A government seizure of Bradford & Bingley would mean $74 billion of assets and liabilities onto the taxpayers' balance sheet, which in turn would likely trigger a revolt from the bank's shareholders, who just injected $737 million into the business, the newspaper said.

Bradford & Bingley specializes in buy-to-let mortgages and other higher-risk lending and this week endured a series of credit rating downgrades, with shares falling to an all-time low of 36 cents Friday.

SEC chief: Voluntary regulation a failure WASHINGTON, Sept. 27 (UPI) -- U.S. Securities Exchange Commission Chairman Christopher Cox, a longtime proponent of deregulation, says lack of oversight helped cause the financial crisis.

Cox made the admission Friday, saying the voluntary regulation program that had been in place to monitor Wall Street's largest investment banks had failed, The New York Times reported.