Citigroup Pieces For Sale, Starting With Smith Barney

This sale smacks of a preemptive move orchestrated by the Fed and/or Treasury. Claims made by Citigroup in its Town Hall Meeting that it was well capitalized were a joke. Likewise, Citigroup's blaming of shorts when only 2.7% of the float was short was an act of desperation.

Had the Fed not stepped in to provide capital to Citigroup, it would have gone the way of Lehman.

Citigroup is still in jeopardy and the Fed is not willing to risk another massive run on any bank like we saw at Bear Stearns and Lehman. This is a preemptive move and I speculate not a choice made by Rubin or Pandit but rather made for them.