And Citi could be yours...

Apparently, there are rumors making the rounds that Citigroup is on the verge of bankruptcy. Management is considering drastic action. Yves Smith of Naked Capitalism writes.

Financial institutions are too capital starved to be sticking their necks out now, and private equity firms cannot meet their target returns without leverage, which they cannot get right now. And who pray tell would buy the entire bank? Citi is so large that any acquirer runs the risk of at least a partial reverse takeover. And do not say JP Morgan. That bank is already too large to fail, and merging with Citi would greatly increase systemic risk in the long term.

Taxpayers. My prediction is that this situation will be resolved in the coming days with the taxpayer owning the all or most of Citi - probably stuck with the least desirable portions of this turkey. Treasury will improvise a takeover under the vast authority of EESA. Paulson was keeping some powder dry for just this sort of occasion. I think I might end up working over Thanksgiving.