Once mighty Citigroup trades below $1

Just after 11.35 AM today, Citigroup (C) traded below $1. Its market cap is now only $5.3 billion. In June 2007, the stock was close to $54.

Citi became the latest of the iconic American financial companies to become a penny stock. AIG (AIG), Fannie Mae (FNM), Freddie Mac (FRE), and MBIA (MBI) have all traded for under $1 for months.

Citi was built by Sandy Weill, whose goal was to create a massive financial operation which did business in virtually every country in the world and served everything and everybody, from retail investors to the largest corporations with a commercial bank, brokerage operation, insurance company, and investment bank. It was never clear why having all of these businesses under one roof made sense. Weill's dream was never backed up by clear and convincing reason.

Citi ended up cutting its own throat, along with the likes of Merrill Lynch and Lehman. It was willing to leverage its balance sheet by purchasing derivatives that were supposed to be safe and carried triple-A credit agency ratings. But mortgage-back securities lost their value rapidly as the housing market imploded. Citi and it peers made a terrible call about the risk of the derivatives, and are now paying the price.

All that may be left for Citi now is for the government to take it over and auction off the pieces that Weill put together.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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