WASHINGTON - The FDIC's agreement to share potential multibillion-dollar losses on Wachovia Corp.'s mortgage loans with buyer Citigroup Inc. is a way for the government to ensure a solution at the least cost to taxpayers, banking experts say.

The government made similar deals with buyers of crippled institutions during the savings and loan crisis, and in more recent years, but never on this big a scale for an individual bank.

It's "a precedent-setting transaction," said Karen Shaw Petrou, managing partner of Federal Financial Analytics in Washington.

The playbook for resolving troubled banks "seems to be made up as the regulators go along," Petrou said, noting the different circumstances involving Washington Mutual Inc. and IndyMac Bank.

In the deal orchestrated by the Federal Deposit Insurance Corp., branch-hungry Citigroup is buying Wachovia's banking operations and agreed to absorb as much as $42 billion in losses from Wachovia's $312 billion loan portfolio. The FDIC will cover losses above that level. Citigroup is giving the agency $12 billion in preferred shares and warrants to compensate it for taking on the risk.

Looming behind the deal Monday was the U.S. House of Representatives' stunning rejection of the $700 billion bailout plan for the nation's financial system. There had been hope over the weekend, when a deal was reached between the White House and leaders in Congress, that the plan could shore up the sinking economy and financial markets.

The momentary optimism may have played into the weekend courtship in which Citigroup and Wells Fargo & Co. both reportedly pored over the books of Wachovia, which was weighed down by losses linked to its ill-timed 2006 acquisition of mortgage lender Golden West Financial Corp.

The loss-sharing arrangement in the Citigroup-Wachovia deal is consistent with the FDIC's goal to find a resolution that costs taxpayers the least, said Roger Cominsky, a partner in law firm Hiscock & Barclay's financial institutions practice.

"Loss sharing is nothing new for the FDIC," agency spokesman David Barr said Monday, adding that it's one of the tools the FDIC can use to encourage buyers to assume a greater share of assets of troubled institutions.