Citigroup was last night close to securing a deal that will see America’s biggest bank dispose a quarter of its leveraged debt to three private equity firms at a 10 per cent discount.

The move will mark the latest attempt by Vikram Pandit, Citigroup’s new chief executive, appointed in December, to cut costs and reduce exposure to illiquid debt securities. It also represents the first time an investment bank has managed to sell a significant block of such securities since the credit crisis began last summer.

Citigroup is believed to be in the final stages of negotiating the sale to Apollo, Blackstone and Texas Pacific, the US firms. Apollo is believed to be preparing to take about half the debt. Citigroup declined to comment and Blackstone did not return calls last night.

Although Citigroup was poised to reduce its exposure to the leveraged debt, which has sunk in value amid the credit turmoil, minutes from the US Federal Reserve’s Open Market Committee, responsible for determining the level of American interest rates, yesterday showed how far the financial crisis on Wall Street has spilled over into the wider economy.

The latest minutes showed that all members of the Fed’s rate-setting committee voted for a cut in the cost of borrowing last month.

Although the minutes from the March 18 meeting showed that two committee members voted for a more modest rate cut compared with the three quarters of a percentage point reduction that was made, central bankers were so concerned about the depth of a US recession that they all favoured a decrease in the cost of borrowing.

Their decision to cut to 2.25 per cent was yesterday justified by new housing figures that showed US property sales fell in February to the lowest on record in a data series begun in 2001.

According to the National Association of Realtors, pending sales of existing homes plunged in February and the housing research group predicted that the market would stagnate for another few months before recovering in the second half of the year.

The index of pending sales fell to 84.6, from January’s 86.2 reading. It stood at 107.6 in February 2007.

While the Fed minutes showed that the bankers had engaged in a lengthy discussion about the risk of stoking inflation in the medium term by cutting rates too aggressively, one Wall Street economist underlined the sagacity of the Fed by predicting that the US housing market will fall further.

Ian Shepherdson, chief economist for High Frequency Economics, said: “We still think the next move in the index will be a further decline, as it becomes clear that the accelerating drop in prices means bargain-hunting is seriously premature.”

Lawrence Yun, the Realtors’ chief economist, said that the decline in pending home sales “implies that we are not out of the woods yet, though an era of successive deep sales declines appears to be over.”

The data emerged as Washington Mutual announced a $3.5 billion (£1.7 billion) writedown on its mortgage book for the first quarter as America’s largest building society agreed a $7 billion cash injection from a consortium led by TPG, the US buyout firm. WaMu’s writedown left the group with an overall loss of $1.1 billion for the first quarter and came after a $1.87 billion deficit in the previous three months, as the housing crisis continued to hit its bottom line.

WaMu said that it had agreed to sell $2 billion of new common and preference shares to TPG and $5 billion of new stock to institutional investors in the group, to shore up its balance sheet.

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