There have been growing concerns that the financial condition of Citigroup (NYSE: C) is getting worse and not better since the government bailed the bank out two months ago. Now, the question is coming up again regarding what will happen if Citi needs a lot more capital.

According to Reuters, "Veteran banking analyst Richard Bove widened his fourth-quarter loss estimate for Citigroup , saying the bank may take sizable write-downs in its capital-markets operations." That does not mention the huge problems that the bank may have with its consumer credit portfolios. Default rates on credit cards have been spiking up for several months and should go up further as unemployment rises.

What happens if Citi has to raise several billion more dollars? The government may not be as generous as it was the last time. It may want preferred stock at a better price and warrant coverage on the stock which could cause dilution for current shareholders, depending on how it is structured. If the government is smart it will require that some private equity needs to be put into the bank along with a federal investment.

All of that means that Citi's stock price is almost certainly moving down. The firm's shares trade at $7.83 and it has a market cap of $42 billion. If the company needs to bring in $10 billion it may have to offer stock at a below market price. That could cut the share price to $5 or perhaps lower.

No one in his right mind wants Citi shares now.

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

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.