By Eddie Evans

NEW YORK (Reuters) – Regional bank Wachovia Corp succumbed to the worldwide credit crisis and authorities propped up a slew of European banks, while lawmakers began voting on a $700 billion bailout of the financial industry.

U.S. stocks fell more than 2 percent on Monday following sharp declines in Asian and European shares on fears the crisis was spreading. Global money markets remained frozen, even as central banks poured in cash in an attempt to boost liquidity.

“The contagion is spreading to mainland Europe and everyone’s asking, ‘Who’s next?’” said Mark Sartori, head of European sales trading at Fox-Pitt, Kelton in London.

With a tight vote ahead, President George W. Bush urged lawmakers to pass the bailout package quickly, saying it was needed to keep the financial crisis from spreading.

The bailout was too late for Wachovia Corp, which agreed to sell most of its assets to Citigroup Inc for $2.16 billion in stock in a deal brokered by the Federal Deposit Insurance Corp.

“In this period of market stress, we are committed to taking all actions necessary to protect our financial system and our economy,” Treasury Secretary Henry Paulson said after the Wachovia deal was announced.

The Dow Jones industrial average was down 2.3 percent and the broader S&P 500 index was off 3.76 percent. The U.S. dollar gained against the euro and British pound after the European bank bailouts, but pared some gains after the Citigroup-Wachovia deal. Oil fell $8 a barrel.

Shares of U.S. regional banks sank, with National City Corp  Continued…