Ain't no love in the heart of the Citi

Citigroup Breaks Up, "Financial Supermarket" Model Dead

The original financial supermarket is dead. Citigroup signaled the end of a decade-long experiment to create one-stop shopping for financial services _ everything from consumer loans to investment banking _ with Tuesday's announcement that it was merging its Smith Barney brokerage into a joint venture with Morgan Stanley.

The deal, which will give Citigroup $2.7 billion in badly needed cash as it gives up control of Smith Barney, comes as the company still struggles in the aftermath of the mortgage and credit crisis. There is speculation that CEO Vikram Pandit, who for months supported Citigroup as a "universal bank," will be taking further steps to simplify and streamline the company.

Citi could soon shrink itself by one-third, according to a Wall Street Journal report Wednesday. The Journal says Citi is likely to announce plans next week to shed two consumer-finance units, the bank's private-label credit card business and cut back on trading it does on its own behalf.

Whither the "too big to fail' mega-conglomeration? Let us mourn the passing of an era where massive financial corporations finally became too big and collapsed after being sabotaged by minorities who wouldn't pay their mortgages. It was a good model, it's only flaw was a tiny susceptibility to poor people who hated living up to their obligations. But now it's dead and people on Wall Street think the model is never coming back. Given their recent prediction rate, I'd say the model will be back inside of a year. Analysts blame Citigroup's collapse on a failure to integrate all their disparate businesses, but I think they're forgetting to note the terrible management and horrible ideas they had.

This isn't the end though, because if old man government has its way Citigroup will be broken into even tinier pieces and scattered into the wind. Unfortunately I've yet to see any news piece address the most important question yet: what does this mean for the Mets new field, dubbed Citi Field? Will they have to resell naming rights or will we use bailout cash to keep it going? After all, marketing for a non-existant company is critical. But there you have it, all those big beautiful mega-groups are dead or folded into other corporations, all our problems are solved, and Wall Street promises it'll never happen again. Now release that other $350 billion or everything will collapse again.