Chart of the Day: Citigroup

Citibank has to be the worst run of the major banks. The result of ridiculous mergers of Citicorp, Travelers, Smith Barney, Salomon Brothers, this unwieldly mess was a disaster that should never have happened. Now, Citigroup has a market cap lower than U.S. Bancorp, a company with only one-eighth the asset base as Citi.  Paul Volcker recently said banks of this size pose a threat to the county and should not exist.

If you remember, there used to be laws to separate banking companies and insurance companies. But, this law was retroactively repealed in 1998 at the urging of the banking lobby and the Clinton Administration to allow the Travelers-Citigroup and similar mergers to happen. Citi is the product of deregulation. But, things have unraveled for the firm and the stock is selling for less than $6 a share.

It is a travesty that the bank was even allowed to take over Wachovia before Wells Fargo stepped in. Everyone in finance knows that Citibank needed the deposits. One had to ask who was bailing out whom.

Nevertheless, I wanted to show you a graph of Citigroup’s share price. The interesting thing about this graph is the yield: 11.35%.

What does that tell you? It tells me, Citi is either going to drastically cut its dividend or it’s share price is going to crater even more. Stay tuned.

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Volcker blames ‘alchemists’ and bloated bonuses – Guardian