Being 34% owned by the U.S. government, Citigroup's (NYSE: C) destiny is somewhat murky. Yet, to pay off the loans, this massive financial institution must shrink. To this end, Citigroup has filed a public offering for its Primerica Financial Services. According to the prospectus, the deal is expected to raise $100 million, but it's likely the amount will be much larger.

Primerica certainly has an interesting history. Back in 1977, an aggressive financial service executive, Arthur Williams, started the company, with the focus on providing term insurance to consumers as well as mutual fund products. However, he had an interesting twist on distribution: he used network marketing. Basically, a Primerica agent would get incentives by recruiting new agents. As a result, the company's growth exploded.

ClusterStock has put together a countdown of the biggest financial losers of 2008.

The results aren't too surprising: Executives at big banks with large stock holdings lost huge chunks of their fortunes. Former Citigroup (NYSE: C) head Sandy Weill saw his net worth plunge from $1.8 billion to $1.3 billion, and former Lehman head Richard Fuld lost about $1 billion.

But before you feel too bad, it's important to remember that these guys were playing with the house's money. As CEOs, they received huge stock and option grants as part of their compensation -- it's not like they ever paid cash for any of their shares, with the exception of the occasional token insider buying. No matter how you look at it, these guys were paid enormous amounts of money while destroying other people's wealth.

Over the weekend, the New York Post reported that former Citigroup Inc. (NYSE: C) Chief Executive Sandy Weill and his family flew on a company jet for a vacation in Mexico weeks after the New York-based bank received a $45 billion bailout from the federal government and said it would slash 75,000 jobs. Today, the now-disgraced banker said he will give up the perk

According to the Wall Street Journal, "Weill's office said in a statement on Monday morning that `in light of the unprecedented circumstances that Citi finds itself in' he decided to stop using Citi aircraft immediately." Wow, if you did not know any better you would have thought he had given up his left arm instead of a seat on a luxurious jet.

Citigroup (NYSE: C) is the result of grand ambitions of a Wall Street dealmaker, Sandy Weill. But, of course, this week things came to an end as the company announced a dramatic dismantling of the global financial empire.

The bank's CEO, Vikram Pandit, has little choice. After all, Citigroup's stock continues to plunge, with the market cap at a lowly $19 billion.

But the new strategy has a big problem: In light of the continued dangers in the banking system -- such as Bank of America's (NYSE: BAC) horrible experience with its purchase of Merrill Lynch -- it's going to be tough to find willing buyers of Citigroup's far-flung assets. The asset sales are likely to be prolonged and priced at distressed levels.

Interestingly enough, despite the urgency for change, Citigroup has indicated that certain assets are off-limits, such as the Nikko Cordial Securities unit (the #3 brokerage operation in Japan) and Grupo Financiero Banamex SA (the banking platform in Mexico). This was the situation just three days ago.

No doubt, these assets are key for the growth of Citigroup. Right?

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.

A lot of investors think that the house Sandy Weill built has too many rooms. Citigroup (NYSE: C) operates financial divisions for everything from banking in South America to commodities trading in New York. Many shareholder think that some of these businesses would be better off on their own and that Citi could sell them for nice premiums.

Current management at the big financial company obviously thinks keeping Citi together is a good idea. So far, there has been no move to spin out, or auction off, any of the firm's really large divisions.

Management's reluctance to change the face of Citi has not kept the American Federation of State, County and Municipal Employees -- a big U.S. union -- from starting a push to pull the financial company apart. According to the FT, "In a letter sent on Friday to Sir Win Bischoff, Citi chairman, Gerald McEntee, Afscme's president, urged Citi's board to "restore shareholder value that is currently trapped in the sprawling financial supermarket approach.""

The board and management at Citi will ignore the plea, and that is too bad. Even though Wall Street was glad that the company's last set of earnings were not worse, they were certainly bad enough. Some analysts see Citi losing money for several more quarters as it continues to write down investments that have been damaged by the credit crisis.

It is hard to defend keeping assets like Smith Barney when they are likely to fetch a large enough sum to shore up Citi's balance sheet. That logic has escaped the powers that run Weill's creation, which is too bad for anyone who has watched the value of Citi drop by more than 50% in the last year.

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

Citigroup (NYSE: C) may fire as many as 18,000 more people this year. In the second quarter, it is faced with write-offs as high as $8 billion. According to The Times, "Although Citi has raised more than $50 billion in new capital to repair its balance sheet, analysts believe it will need even more new cash to see it through the financial crisis."

Based on Citi's current market cap of $90 billion and its stock price, just above $16, raising another $10 billion could push the stock as low as $10.

One of the ironies of this is that the man who created the financial services companies through a series of mergers, Sandy Weill, still sits on the Forbes 400 list with a $1.3 billion net worth. Too bad he can't send each shareholder a small check.

Weill is an example of why some part of a CEO's pay should not be held in escrow until a decade after he retires. At least then, they might give some thought to what their actions could cause a few years down the road.

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

MAJOR PAPERS:

• In what may trump a GBP1.6B bid from a private-equity led consortium consisting of The Goldman Sachs Group Inc's (NYSE: GS) Goldman Sachs Capital Partners, Candover Investment (OTC: CDRIF), and Alpinvest, Expro International Group (OTC: EXPRF) said it received a GBP1.71B bid proposal from Halliburton Company (NYSE: HAL), the Wall Street Journal reported. Expro said the proposal "does not amount to a firm intention to make an offer and is subject to certain preconditions."
• The Wall Street Journal also reported that the oil industry and some U.S. lawmakers are looking to end long-standing bans on domestic drilling put in place to protect areas that are environmentally-sensitive, fueled by concerns about global energy.
• In an interview with the Financial Times, Citigroup Incorporated's (NYSE: C) former chairman and CEO Sandy Weill acknowledged that choosing Chuck Prince as his successor in 2003 turned out not to be the "right thing" for the company and was flawed. Instead of handing the job to Prince, Weill said the board should have fostered competition among the bank's top managers for the job.

OTHER PAPERS:

• According to the Washington Post, MedImmune, a unit of drug giant AstraZeneca Plc (NYSE: AZN),settled with Genentech Inc (NYSE: DNA) a lawsuit over a patented component of its best-selling drug Synagis, which is aimed at preventing respiratory infections in infants. No details of the settlement were provided.

TheStreet.com's Jim Cramer says AIG's Sullivan joins the "formers" at Citi and Marsh & McLennan as Eliot Spitzer's appointee failures.

Three strikes, and Spitzer's guys should all be out.

That's my thoughts about this Martin Sullivan/AIG (NYSE: AIG) (Cramer's Take) scandal. Remember that Sullivan was basically appointed to run AIG by Eliot Spitzer after he kicked out Hank Greenberg for a laundry list of bad deeds. Just like Chuck Prince was appointed to run Citigroup (NYSE: C) (Cramer's Take) when Spitzer booted Sandy Weill, and Mike Cherkasky was appointed to run Marsh & McLennan (NYSE: MMC) (Cramer's Take) when Spitzer axed Jeffrey Greenberg.

All three men were brought in to clean up the mess. Both Prince and Cherkasky were lawyers who were way over their heads as operators.

Prince presided over the destruction of a great American bank -- although it was kind of a re-destruction in light of how bad it was in 1990 -- when he allowed billions in off-balance-sheet borrowings that he simply did not understand.

BusinessWeek interviewed former Citigroup Inc. (NYSE: C) CEO Sandy Weill about a range of topics regarding Citi's performance and prospects as well as its efforts to raise capital. He defends the complex business structure he created and declines to reveal how much he invested in its latest round.

After reading the interview, I get the impression that he still wields tremendous power over Citigroup and that it could be stuck with its current corporate strategy until Weill departs from the scene. His defense of the current corporate strategy is not compelling, at least not to me. Arguing against breaking up Citi, he says, "One of the advantages of the company is that it is in 100-plus different countries and has diversity in income streams."

He continued by defending the merits of this diversification. "Since the merger of Citi and Travelers in 1998, we've had a big corporate business and we've had a big consumer business. We've watched times when the consumer business did poorly and the corporate business did very well. Now, we're watching a time where the global consumer business has done well, whereas the U.S. consumer business has had to add to loan loss reserves. Over time, they balance out."

The New York Times raises an important question facing Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER) -- is the financial supermarket -- an idea pushed by former Citigroup CEO Sandy Weill -- an idea whose time is past? I think it's time to kill this failed concept -- it's bad for customers, employees, and shareholders.

Twenty-five years ago, I won a competition at the consulting firm where I worked to advise an insurance company about how it should respond to the financial supermarket idea. Back then, Sandy Weill had taken his brokerage firm -- Shearson -- and merged it with Lehman Brothers (NYSE: LEH) and ultimately American Express Co. (NYSE: AXP) to create a company where someone could get all their personal financial needs taken care of under one roof. My job was to find other companies that this insurance company could buy to implement the financial supermarket concept.

But the financial supermarket is a non-starter from the customer's standpoint. It doesn't even work inside the institution where it's housed. After Sandy Weill got kicked out of American Express, he tried to rebuild the concept from scratch -- starting with Commercial Credit and extending to Travelers Co. (NYSE: TRV) and ultimately merging it all together into Citigroup. This is all well described in Amey Stone's King of Capital.

I was wondering when the bloom was going to be off Chuck Prince's rose when he took over from financial legend Sandy Weill at Citigroup, Inc. (NYSE: C) years back. Since Weill engineered some of the most stunning financial company mergers in the last few decades and positioned Citi to become the pre-eminent financial services company on a global scale, Prince had quite a bit to live up to.

Is that effort already over so short a time into Prince's tenure? As Peter Cohan wrote yesterday, Citi is possibly looking to buy a hedge fund to get access to one of its managers and folding him into Citi's alternative assets group -- no big surprises were coming forward. Oh wait -- I forgot -- Prince wants to can 5.2% of the Citi workforce (upwards of 17,000 people) in Citi's largest restructuring in over 10 years. On top of that, Prince intends to send 9,500 additional positions into "lower-cost locations." Maybe he's been talking to Circuit City's CEO or something. And as Douglas McIntyre mentioned, other banks aren't making such cuts.

If it's true that all these cuts are meant to save money and to get Citi's alternative assets arm bringing in some impressive returns and business, then that's the company's right. Or is it? I just love it when thousands of job cuts meant to trim excess expenses wait until the last second. Could Citi have needed these layoffs a few years ago? Probably -- there is almost always excess capacity in any company just waiting for the ax.

It seems like leaders wait until prompted by something to take action, which is a ludicrous mistake. RIF, right-sizing, what ever you want to call it, are usually a last-ditch effort to get profitability up by reducing expenses. They are not a sound business move meant to align the company's business needs with its headcount.

[Disclosure: I own C shares as of 4-12-07]