This was one of those "sell-the-news" trading days that many of the bears were expecting over the last two weeks. In fact, some bears might finally feel vindicated after weeks of being slapped silly. The European markets started lower and the U.S. followed suit. Credit concerns for banks getting worse ahead and what Uncle Sam will do with his stakes in the banks was just a part of it.

Here are today's unofficial closing bell levels:

Dow 7,841.73 -289.60 (-3.56%)
S&P 500 832.39 -37.21 (-4.28%)
Nasdaq 1,608.21 -64.86 (-3.88%)

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Financial giant Citigroup, Inc. (NYSE: C) will get its chance to impress Wall Street tomorrow morning when it reports its first quarter results.

The stock, which has been in free fall since late 2007, has actually been doing pretty good over the past month, and now it is time to see if the company can live up to expectations. The stock hit a low of $1.02 on March 5, and since that time has climbed a very impressive 290% to its current price of $4.00 a share.

Investors have had little reason to be hopeful during the past two years as the economic news seems to get more depressing by the day. But lately, the stock market has turned optimistic and investors begin the week bracing themselves for any word that the good times may not last.

Stocks appear poised to open higher as Express Scripts Inc. (NASDAQ: ESRX) agreed this morning to acquire Wellpoint Inc.'s pharmacy benefits management business for $4.68 billion, proving that the once-moribund mergers and acquisitions market is showing signs of life.

There could be an opportunity to tweak the way we pay CEOs of big public companies. I hope this doesn't sound too harsh. But when you consider that the average 2008 compensation for the 10 highest paid public company CEOs was $40.7 million, while their companies lost half, or $30 billion, worth of their stock market value -- I wonder whether some change may be in order.

The year 2008 put a big exclamation mark on, hopefully, the end of an eight-year sentence of stabbing common shareholders in the back. Of the 10 highest paid CEOs, here are the four who destroyed the most stock market value while getting well above average pay. The companies are listed in descending order of the percentage destruction in stock market value, along with the CEO's 2008 compensation and loss in stock market capitalization:

• Citigroup (NYSE: C) paid CEO Vikram Pandit $38.2 million while its stock fell 78% destroying $124 billion in stock market value
• Motorola (NYSE: MOT) CEO Sanjay Jha made $104 million while overseeing a 75% stock plunge which wiped out $27.9 billion in stock market value

Citigroup Inc, (NYSE C), Bank of America Corp. (NYSE BAC), and JPMorgan Chase & Co. (NYSE JPM) are the crybabies of Wall Street. They are complaining vigorously to Congress about the tax on their bonuses.

Here's a sample of their complaints: Bank of America's Kenneth Lewis said the tax is "unfair" in a memo to his employees. Citigroup's Vikram Pandit said his bank is "working in every appropriate way with policymakers." Jamie Dimon of JPMorgan held a conference call with executives and said that he is working with lawmakers.

Congress is sending a bill to President Obama's desk that limits banker pay. Specifically 11 pages in the 1,073-page $787 billion stimulus bill describe a provision that limits bonuses for executives at all financial institutions getting government money to a maximum of a third of their salary. And these are not cash bonuses -- instead they'll be paid in company stock that executives can't sell until the government investment has been repaid.

Citigroup (NYSE: C) CEO Vikram Pandit, volunteered to take a $1 salary until his company returns to profitability. Assuming Citi posts a loss in 2009, Pandit's maximum bonus for the year will be 33 cents -- which at today's price would amount to a tenth of a share of Citi stock.

An era of greed that began with the election of Ronald Reagan has come to an abrupt end. That means that the seething emotions of greed and envy that come along with bonus time at investment banks will have fewer dollars attached to them. And talent will flow to government and academia rather than Wall Street. This could be good for the U.S.

Some of those masters of the universe in the investment banking industry have seen the value of their stock tumble (and many of them are going without bonuses this year). Here are some of the "casualties":

I am reaching the limits of my ability to stand more waste of our money. Today, I learned that Citigroup (NYSE: C) is taking delivery of a $50 million corporate jet from French manufacturer, Dassault. (For that kind of money, it could have at least bought from an American manufacturer).

I know the U.S. invested $45 billion worth of taxpayer money with no strings attached -- but is it really possible that Citi does not get that buying a corporate jet with that money is blazingly stupid?

There is some irony on this front. This evening Maria Bartiromo conducted an interview with John Thain who was deposed last week for various sins. Bartiromo was in Davos, but Thain was not -- although one of his sins was that he had accepted an invitation to attend Davos. But back in 2007 -- almost exactly two years ago -- it was Bartiromo who got in some hot water for taking Citi's corporate jet with then Citi-executive Todd Thomson.

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?

Citigroup, Inc. (NYSE: C) has gone below $5 a share which triggers the dreaded sell-off by institutional investors who are not allowed to own stocks that trade below that level. And rumors of Vikram Pandit's departure from the CEO role are beginning to accumulate.

Unfortunately, the Credit Default Swap (CDS) market is now also kicking in. When this happens, it generally means that a company needs to come up with lots of cash to continue to insure its bonds. And since Tuesday, the CDS premium for Citi bonds rose 55% -- the annual cost of protecting $10 million of Citi debt against default for five years rose to $410,000 on Wednesday from $265,000 on Tuesday.

Meanwhile, CNBC's Charlie Gasparino claims that "the market is betting that Vikram Pandit's days are over." And with Citi just announcing that it will move up its quarterly reporting date from the 22nd to the 16th, the bad news should be out soon. I am sorry to say that it looks like the value of Citi's equity is about to hit bottom and never recover.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and is the author of You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He owns Citi shares.

If the latest rumors are correct, it looks like Citigroup (NYSE: C) will not change very much from its current structure. So Citi may fail to follow the compelling story arc of repealing Glass-Steagall to form itself in 1998 only to reinstate that 1933 law in 2009 by splitting its investment and commercial banking operations. Instead, it looks like Citi will do a bit of trimming around the edges.

At the core of the problem is $150 billion in toxic assets -- consumer, corporate, and leveraged loans -- which appears to be the amount of cash Citi will need to raise assuming it writes off all that toxic waste and then attempts to raise the same amount of capital through asset sales.

So Citi's new strategy is to find buyers who in total are willing to pay $150 billion for the various pieces of Citi's business. And this push appears to be coming from FDIC chair Sheila Bair who may be representing taxpayers' 7% stake -- the single largest -- in Citi. But after all the selling Citi will still have consumer, commercial, and investment banking operations (basically the same corporate strategy).

So what is Citi going to try to hawk? Here are four candidates:

It's back to the future time at Citigroup (NYSE: C). We can just pretend that the last 11 years never happened. As I posted, that's when Sandy Weill merged his Travelers with Citi, which led to the repeal of the Glass-Steagall Act. But as I suggested in a recent post, that whole process is being reversed with with Citi spinning off Smith Barney for $2.7 billion -- yielding a $5.8 billion after-tax gain for Citi.

And today, it looks like things are going a step further. That's because Citi CEO Vikram Pandit is talking about separating its commercial and investment banks. As someone who has been railing against this idea for decades, I am glad to see that Citi is talking about bagging that lousy financial supermarket idea.

It looks like Citi wants to dump the consumer side of its its business and keep the corporate and investment banking side. Interestingly, this is not that different from a proposal I posted about almost two years ago -- in April 2007 -- to divide Citi into Citigroup Consumer (CC) and Citigroup Business (CB). In that post I suggested Citi should have sold CC in 2006 and kept CB.

It's pretty obvious -- but not certain -- that Citigroup (NYSE: C) will report a worse-than-anticipated fourth quarter loss. Otherwise, why would there be so much discussion about selling Smith Barney, replacing Citi's Chairman Win Bischoff with Dick Parsons, former Time Warner (NYSE: TWX) Chairman, and maybe dumping current Citi CEO Vikram Pandit? The way the game is played, it looks better to be making changes prior to the announcement of bad numbers rather than after it.

But after losing $10 billion in the first three quarters of 2008, Citi appears poised to add not $2 billion but as much as $10 billion in losses to that total. Of course, the board is expressing confidence in Pandit's first year of leadership at Citi. He's been able to convince the government to cough up $45 billion in cash and guarantees on $269 billion of illiquid mortgage assets. And he might be able to sell Citi's share of Smith Barney to Morgan Stanley (NYSE: MS) for $2.5 billion in cash which would create a $6 billion after-tax gain.

The key threat for Pandit appears to be that Rubin -- who left Citi after a decade in which he took in $126 million as an advisor while Citi lost $164 billion in market value -- was a Pandit supporter. With Rubin gone, Parsons, who is Citi's lead director, has been weighing Pandit's future. The New York Times reports that Parsons has "met privately with several of the bank's top executives for lengthy discussions about their businesses, and in some cases, Pandit's management style."

If Citi announces a $20 billion loss, will it also announce Pandit's replacement?

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and is the author of You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He owns Citi shares and has no financial interest in the other securities mentioned.

The Wall Street Journal says that Citigroup (NYSE:C) CEO Vikram Pandit has the support of the board. That is even with the bank likely to lose another $10 billion in the most recent quarter. Over at The New York Times, the business desk sees Citi sacking its chairman. "Federal banking regulators are pressing Citigroup to shake up its board and replace its chairman, Winfried F. W. Bischoff, in an effort to restore confidence in the beleaguered financial giant."

Since Pandit and Bischoff have overlapped during much of their time in power, the division of blame does not make a great deal of sense.

It would appear the government and board at the bank want to show that someone was punished for Citi's performance. Director Robert Rubin has already left. That was apparently not enough of a sacrifice. The reality of the matter is that the whole board and most of management have been part of the Citi strategic decision-making process for the last year to two years. There is plenty of responsibility to go around.

It sounds like Bischoff is gone. But, it is just a little theater. He did not do anything special except to sit on a board with a number of people who made a remarkable number of mistakes.

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

A strange piece of news made it out just as the market closed yesterday, Citigroup (NYSE: C) is considering a joint venture to put its brokerage unit, Smith Barney, together with the similar unit from Morgan Stanley (NYSE: MS).

According to The Wall Street Journal (subscription required), "Uniting the brokerage units of Citigroup and Morgan Stanley would represent another dramatic turn in the reshaping of Wall Street since the credit crisis erupted in 2007." Citi may be under pressure from the federal government to do a deal to monetize some of the bank's assets.

The possible deal raises two questions. The first is how does Citi benefit from the arrangement? The answer is that it may not benefit at all. One of the rumors related to the deal is that Morgan Stanley would pay Citi over a billion dollars to own the majority of the joint venture, but if that is true, why is Citi simply not selling the entire division?

The other relevant issue is why this action was not taken months ago, if not with Morgan Stanley then with another financial firm? The answer may be that Morgan was having trouble of its own, but there were banks in Japan and China that may well have been purchasers.

Vikram Pandit, Citi's CEO, has proven something about himself: he is remarkably slow to act. The value of Smith Barney has certain come down over the past year. He is getting cents on the dollar for a valuable asset.

Douglas A. McIntyre