A lot of readers have been thinking similar thoughts to someone who commented on my recent post: Chasing Value: Watch BNI -- the heck with Citigroup.

• Donald wrote, "Why the hell would I take advice from a company, that as a whole, its Net income was US$ −27.684 billion for 2008.

While this is an obvious question from a skeptical investor, and we all have good reason to be skeptical, it obscures a more important issue. Is there a relationship between the financial standing of the bank and the value of an individual analyst or adviser? The answer is, absent any conflicts of interest, that there is not.

There is a theme developing on Wall Street that allows the rats to escape the sinking ships while placing caretakers in charge who are willing to mutter along with the engines out and the rudders damaged. This is the case as we find that Citigroup Inc. (NYSE: C) has installed Richard Parsons as Chairman.

Several things come to mind here. First, Citigroup has clearly been rudderless for some time and it is ironic that Parsons, who filled the same role at BloggingStocks.com's mother-ship, Time Warner (NYSE: TWX), would be tapped to do the same thing again. TWX stock has also been unimpressive the last five years and before that it only went down following the ill-timed merger with AOL.

Another issue with Parsons is that he is not known for radical or rapid decision making, and Citi is in need of change, and has been for a long time. Parsons has been on the board and could have acted long ago. Is this the guy that will lead a company and shareholders desperate for action to the promised land? It is a highly unlikely probability. Is he the guy that can mingle with the Washington and Wall Street elite to find the resources to keep the ship afloat? Perhaps.

Last month, I posted on 2008's eight worst ideas. At the top of my list was deregulation. Robert Rubin, who spent a decade as a director of Citigroup (NYSE: C) and is now retiring, is partly responsible for one very important act of deregulation -- the repeal of Glass-Steagall which separated investment and commercial banking. (It was former Citi CEO Sandy Weill's 1998 merger of his Travelers with Citi that spurred Glass-Steagall's repeal in the 1999 passage of the Gramm-Leach-Bliley Act which allowed commercial and investment banks to own each other.)

And by bringing down that barrier -- established in the wake of the stock market manipulations of the 1920s enabled by commercial banks that made margin loans to trade stocks -- the U.S. helped usher in the current financial catastrophe. Now the government is gradually reimposing Glass-Steagall -- in effect, if not in law.

Rubin was well rewarded for his decade of "service" to Citi -- taking in $126 million and being paid as an employee while claiming to be a mere advisor. But for that measly sum, Rubin's reputation -- which was at its zenith following his tenure as Treasury Secretary in the 1990s -- is shredded. It probably didn't help that since he joined Citi's board in October 1999, its stock has fallen 82% -- destroying $164 billion in stock market value. Meanwhile, the empire that Weill ushered in -- based on the idea that people wanted to buy all their financial services from one provider -- is being dismantled.

Vikram Pandit, CEO of Citigroup (NYSE: C), and his top managers may give up their 2008 bonuses as a show that they are willing to make sacrifices after the federal government saved the bank with a huge bailout package. Board member Robert Rubin may have been the first to suggest the move.

According to the FT, "People close to the situation said last week's government rescue made it almost impossible for Citi's board to award cash bonuses to other senior executives, led by chief executive Vikram Pandit."

For anyone not paying attention to the Citi mess, its stock has been down as much as 90% this year. The federal government is pouring money into the bank like water, and the company is still losing money due to consumer credit losses, bad LBO loans, and mortgage derivatives.

To put a point on it, why would the Citi board even consider bonuses in the first place without the risk of being tarred and feathered by shareholders and the government?

"Giving up" bonuses is a meaningless gesture for executives who do not deserve them and would likely get nothing in the first place. Maybe it is nice PR.

Douglas A. McIntyre is an editor at 247wallst.com.

The weekend is often the time when boards and the government decide the fates of companies and CEOs. It gives everyone involved at least two days, perhaps more, to weigh options and make decisions without the fury of stock market trading. A board of directors can start work on Friday at 4 PM and weigh options until 8 PM Sunday, when Asia opens, or 8 AM Monday if overseas trading is not an issue.

No one with any sense would believe that the board of Citigroup (NYSE: C), the FDIC, the Fed, and the Treasury are not working through this weekend, again. Most of the government people are so exhausted that those who leave with the current administration will be happy to have the rest.

A lot of options have been thrown around. But, the fate of Citi comes down to two things. At this point, the bank is believed to be in such bad shape that putting in a new CEO, even Jack Welch, would make no difference. Chapter 11 would wipe out too many firms that have non-insured deposits at Citi, too many companies that have loans with a bank that could be called, and too many common, preferred, and bond holders in the financial firm would lose everything.

That leaves the government taking over Citi the way it did AIG (NYSE: AIG) or forcing a sale as it did with WaMu or Wachovia (NYSE: WB).

Monday morning cold be quite a drama.

Douglas A. McIntyre is an editor at 247wallst.com.

Over the past few weeks, as the full dimensions of the economic meltdown have come into focus, most analysts have concluded that the financial crisis is the child of numerous parents, including predatory lenders, deregulating legislators, and excessively optimistic borrowers. Even so, the vast majority of the responsibility has managed to attach itself to the financial industry.

While taking the blame for tanking the economy, establishing Republican socialism, and possibly destroying Western Civilization, Wall Street has had its own problems. As the major players in the financial industry have crashed and burned or been eaten up by other, lesser players, the streets have been filled with the saddest form of performance art. Once arrogant masters who strode the universe on the southern end of Manhattan have become masters of the cardboard box, carrying their personals home to overpriced condos that were purchased at the height of a real-estate boom. The dive in the housing market, which has already hurt so much of the country, has only threatened New York; right now, fingers are crossed from TriBeCa to Harlem.

In the midst of this, Doubledown Media held its annual Wall Street Boxing Charity Championship in New York's Hammerstein ballroom. Admission prices ranged from $125 for general seating to $10,000 for a ringside table, and the event raised money for two charities: a youth village in Rwanda and Tuesday's Children, an organization that serves the families of 9/11 victims. The fight card featured professionals from some of Wall Street's biggest names; for anybody who is particularly interested, the winners included a guy from Deutsche Bank, a guy from Citi, and a guy from the NYMEX. The guy from Morgan Stanley lost in a decision.

Minyanville contributor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

• We're gonna have French Toast for breakfast, French Fries for lunch and French Poodles for dinner in honor of our most recent socialist step. This is a historic juncture in the history of the world, as we edge through interesting times.
  
  
• I spoke about this on CNBC in 2003 -- yes, I had more hair and less chin -- and felt like I was screaming about a monster nobody yet saw. Now granted, I was five years early and there were a LOT of opportunities between then and now but "socialism," "stagflation" and the perils of Fannie Mae (NYSE: FNM) were officially flagged.
  
  
• Why do I highlight this? Simple -- the issues existed five years ago and have cumulatively built since, percolating under the system, growing in magnitude, magnifying in consequence. That's why there isn't a single, simple solution.
  
  

An analyst who follows Citigroup (NYSE: C) believes that the financial services company will sell it Primerica division. The operation provides customer life insurance and investment products including mutual funds.

According to Reuters, Ladenburg Thalmann analyst Richard Bove said, "Primerica does not fit into Citigroup Chief Executive Vikram Pandit's goals of making the bank an international company across business lines." Bove thinks that Primerica could bring in over $7 billion.

Pushing Primerica out the door does not address Citi's core problems. Pandit has said he will cut costs across the company by 20%. If selling off revenue reduces those costs, it hardly helps the bank's margins. It's really not expense reduction at all.

At the center of Citi's troubles are its mortgage-related securities portfolios, LBO debt, credit card business, and slowing revenue into its investment banking operation. There has been no clear sign that Pandit plans to take tremendous costs out of these operations that are critical to the bank's recovery.

Fixing Citi does not involve selling a life insurance company.

Douglas A. McIntyre is an editor at 247wallst.com.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Activision Blizzard Inc. (NASDAQ: ATVID) sees strong Q1 results driven by Guitar Hero.
• Allegheny Technologies Inc. (NYSE: ATI) raised its Q2 earnings guidance ahead of its report.
• Cintas Corp. (NASDAQ: CTAS) strong Q4 and full-year results included a record quarterly revenue.
• Citigroup (NYSE: C) posted better-than-expected results despite a big loss on further write-downs.
• eBay Inc. (NASDAQ: EBAY) reported better-than-expected results and offered a soft outlook (see transcript).
• Fastenal Co. (NASDAQ: FAST) posted strong Q2 earnings despite the housing slump but lower revenues.
• Grainger Inc. (NYSE: GWW) posted strong Q2 results on expansion in Mexico and China.
• Harley-Davidson Inc. (NYSE: HOG) beat Q2 expectations despite profit and revenue declines.
• International Business Machines Corp. (NYSE: IBM) easily topped Wall Street earnings expectations.
• Johnson & Johnson (NYSE: JNJ) beat Q2 estimates and raised its full-year forecast (see transcript).
• Kimberly-Clark Corp. (NYSE: KMB) warned of lower Q2 earnings due to energy and distribution costs.
• Merrill Lynch & Co. (NYSE: MER) reported worse-than-expected Q2 results on further write downs.
• Microsoft Corp. (NASDAQ: MSFT) earnings surged but investors were put off by its full-year guidance.
• Procter & Gamble Co. (NYSE: PG) reaffirmed its guidance following the Kimberly-Clark warnings.
• United Technologies Corp. (NYSE: UTX) beat Q2 estimates, lifting shares from a recent 52-week low.
• ValueClick Inc. (NASDAQ: VCLK) posted weak results and warned about the second half of the year.

For more highlights from this week, see: Google, Intel, JPMorgan, Coca-Cola, Nokia and others

The earnings crunch continues next week. Among companies scheduled to report are Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), Merck (NYSE: MRK), Texas Intruments (NYSE: TXN), Caterpillar (NYSE: CAT), Halliburton (NYSE: HAL), United Parcel Service (NYSE: UPS), Wachovia (NYSE: WB), Yahoo! (NASDAQ: YHOO), Amazon (NASDAQ: AMZN), Anheuser-Busch (NYSE: BUD), AT&T Inc. (NYSE: T), McDonald's (NYSE: MCD), PepsiCo (NYSE: PEP), Pfizer (NYSE: PFE), Boeing (NYSE: BA), Hershey (NYSE: HSY), and Southwest Airlines (NYSE: LUV).

Visit AOL Money & Finance for more earnings coverage.

Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.Minyanville.com.

• I'd again like to highlight the tight correlation between the BKX and S&P Indexes. It's imperative that the banks hold, or the market will cascade lower.
  
  
• That Citigroup (NYSE:C) is closing its hedge fund is an embarrassment. I worked for Vikram Pandit at Mother Morgan (NYSE:MS) and he's a smart guy, evidenced by the fact that he sold his hedge fund to Citigroup for $800 million and the company dumped it 11 months later.
  
  
• Another black mark, Lehman Brothers (NYSE:LEH) CFO Erin Callan was getting rave reviews for her poise as recently as yesterday. This morning she was tossed into the volcano. It just goes to show you that, on Wall Street, you're only as good as your last trade.
  
  
• Finally, my brother suggested that the Lehman Brothers news is good for Goldman Sachs (NYSE:GS), which he knows I have a position in. At first I thought he was messing with me, as he does, but then he explained: "The Lehman business has to go somewhere." Given that I'm more concerned about the risk of contagion, I hadn't really thought about it like that. And while I'm happy to sell strength, I wanted to share that fare.
  
  R.P.

News that financial services giant Citigroup (NYSE: C) is selling shares of common stock to raise capital is disturbing. According to a report in Bloomberg: "The company announced plans to sell $3 billion of stock to increase capital depleted by writedowns on subprime-related mortgages and bonds."

To dilute investors even more is just plain "Chutzpah." Shareholders over the last year or so have already lost more than 50% on their City shares; there has got to be a better way for the company to increase capital. Instead of diluting investors why not try and unlock some value for shareholders? It's not like the company has no assets. It could spin off the credit cards division, separate domestic and global consumer banking, spin off the capital markets division, and so on. It could generate a lot more than a measly $3 billion, and actually make shareholders happy!

Commenting on the move, as reported by Bloomberg, "Super Analyst" Meredith Whitney, who basically has been correct each step of the way as the banking crisis has worsened, said, "The fact that the company raised such a small amount of capital at this time confounds us. We believe Citi needs to raise an additional $10-$15 billion or sell several hundreds of billions worth of assets in order to truly shore up its capital position.''

It's time for Citi to be broken up, so that investors can finally reap some rewards.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/30/08

Bloomberg News reports that Citigroup Inc. (NYSE: C) lost $5.11 billion in the first quarter. This was worse than analysts had expected and was its second straight quarterly loss on at least $15 billion of writedowns and increased loan losses as customers fell behind on home, car and credit-card payments. Specifically, Citigroup's loss of $1.02 per share is the opposite of its profit of $5 billion, or $1.01 per share, in the first three months of 2007. Analysts were expecting a loss of 95 cents per share.

But it looks like Citi is doing something about the problem. Bloomberg News reports that Citi plans to cut costs by as much as 20%. It cites a Financial Times story that quoted CEO Vikram Pandit as saying: "It is clearly feasible for Citigroup to take 10, 15, 20 percent off its cost base, especially in information technology and operations." The cuts would include job losses among Citi's 370,000 employees.

And although its revenue plunged 48% to $13.2 billion, Citi beat analysts' expectations of $11.1 billion. Investors seem to be cheering the news about the cost cuts and the lower than expected drop in revenues. Citi is up 8.8% in pre-market.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup shares.

Citigroup (NYSE:C) was planning to open 100 branches a year for the next several years. Now, it is reversing course and will close some of its newer branches. It needs to save money and finds that, in some regions, it cannot compete with the locals. According to The Wall Street Journal, "Citigroup will focus on several large U.S. metropolitan areas where its market share of deposits is strong or growing, including Boston, Miami, New York City and San Francisco."

If a Citi customer happens to be in one of those metro areas, things may be fine. If a client of the bank is in one of the areas where the bank is "downsizing" it could be a problem.

The decision is an indication that Citi may even be willing to let some customers go to other banks if it cannot support the infrastructure to serve them. It is a sharp reversal of the visions of Sandy Weill, Citi's former brains and CEO. He wanted Citi to be central to the lives of consumer and retailer customers all over the world and to be the banker to every business from Bombay to Boston.

But, Sandy is gone now, and so is the vision.

Douglas A. McIntyre is an editor at 247wallst.com.

Today's announcement that Citigroup (NYSE: C) will take $49 billion worth of Structured Investment Vehicles (SIVs) onto its balance sheet suggests to me that its new CEO is following a path I wrote about earlier this week -- the first step of which is to take a big bath write-down fast. I think Citi stock will fall further before hitting bottom -- say $15.

Why is Pandit doing this? First, investors give a new CEO a chance to put all his predecessor's mistakes in the past through a write-down -- which generally includes closing businesses and firing staff. Second, Pandit probably realized that the alternative -- a fire sale of securitized assets (the average net asset values of SIVs tumbled to 55% from 71% a month ago and 102% in June) -- would be the lesser of two evils.

Nevertheless -- Pandit's move came with pain attached. Bloomberg News reports that two hours after Citi's announcement, Moody's Corp. (NYSE: MCO) lowered its credit ratings to Aa3, the fourth-highest level, from Aa2, saying "capital ratios will remain low." Citi's capital ratio is likely to tumble far below its target -- causing it to take further capital preservation moves. Specifically, its Tier I capital ratio is likely to hit 6.8% by the end of this year from 7.32% on September 30 -- far short of its 7.5% target.

Expect more unpleasantness -- like a cash dividend cut -- as Citi stock continues to tumble. But I think if it hits $15, it may be worth considering an investment.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup shares and has no financial interest in Moody's securities.

Several sources, lead by the Wall Street Journal (subscription required), are reporting that Vikram Pandit, the head of Citigroup's (NYSE: C) investment bank, is likely to be made the new head of the firm early next week. There have been rumors that several outsiders have turned their backs on the job. That would not be surprising. No one is certain whether there is another shoe to drop if and when Citi takes more write-offs to its huge portfolio of mortgage-backed financial instruments.

But, if not Mr. Pandit, then who? He has been at the bank and knows its structure. It might take an outsider several months to learn about all of the pieces of the big bank. Citi does not have the luxury of schooling a new chief.

Citi's board will certainly keep in daily touch with the bank's progress. There may be only one CEO, but he will have a number of coaches. The board cannot afford to be seen as the group that let the company fall apart on its watch.

The other reason for appointing Pandit is that the truth about a company the size of Citi is that the CEO does not run it. He may set policy, but there is no practical way for him to make all of the critical decisions. Charles Prince learned that lesson the hard way when some of his key aides made bad calls on risk management.

Mr. Pandit? Yes. The sooner, the better.

Douglas A. McIntyre is an editor at 247wallst.com.