Has Citibank Entered the Death Spiral?

Amid news that the company is selling Smith Barney, its prized asset, and selling off the rest of its assets, the stock is down 20% and is below $5 again. is it possible that it has entered the death spiral?

I am afraid that the answer is yes.

The financial supermarket is gone, and so is Citibank.

As this article suggests, the government is forcing the sale of Smith Barney and the split of Citibank.  They want their money back; they aren't giving more.  They are a bondholder and can direct this.  It is very, very bad news for shareholders, but this is the same thing that happened with AIG.

Nortel, too, was too big to fail and it failed this morning.  Citibank, I am afraid, is next.

This is bad.

This explains why Robert Rubin quit.

At least the Sheik is going to get it too.


Aron Livrone
Aron Livrone: Aron is a 2008 Wharton MBA with a consulting background prior to moving from Sweden to the US to begin his MBA.

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  • Sam Cass

    January 15, 2009

    I posted an article with much the same thought. I think as it shrinks it no longer becomes too big to fail.

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