The Treasury’s Entity is seen as a Citigroup bailout by lot of people for the very simple reason that it is a Citigroup bailout. That might not be the only thing it is, but stupid is as stupid does, and one thing this stupid thing does (or will do, if it ever gets off the ground) is bailout Citigroup, which is reportedly on the hook for as much as $80 billion from it’s four mammoth SIVs. Since the fund could buy Citigroup’s SIVs, it would reduce the amount that Citigroup would need to write off. And reducing write-offs is something Citi desperately wants to do right now.

There’s at least a fair amount of quiet clapping about the Treasury Department’s role in creating the Entity. Citigroup, some say, is too big to fail, and the Treasury Department should step in to prevent the kind of financial market disorder that would come from the toppling of the towering financial giant.

But this kind of logic has some rethinking the wisdom of the financial regulatory reforms that allowed banks such as Citi to grow so large in the first place. When lawmakers reformed depression era laws that stood in the way of these financial super-markets, they tended to sound libertarian notes about allowing financial innovation and the operation of the free market to control the size and scope of Wall Street firms. The era of government planning was over. So the Glass-Steagall Act of 1933, which had separated investment houses from commercial banks—most famously requiring JP Morgan to part from Morgan Stanley—was changed to permit the growth of the universal banks.

Many now think that the universal bank is a failed strategy. From Citi to Merrill to Bear Stearns, there are calls for Wall Street firms to slim down, break-up and concentrate on the core businesses that made them wealthy and famous to begin with. But was it a failure? If growing into financial giants allowed them to unilaterally acquire a secret—and nearly costless—government insurance policy, it seems like a great gamble. The executives and shareholders get the upside, while the broader public insures against failure.

“What a scam that is,” writes William Greider in The Nation.

And it’s a scam the Greider thinks is over. Banking regulation will inevitably make a big comeback, he predicts.

“At least the unambiguous truth about ‘financial modernization’ is now on the table for all to see,” he writes. “That should keep the Wall Street guys from whining for a while about the oppressive nature of bank regulation. The next reform era, when it does finally arrive, will head in the opposite direction—restoring public protections for the little guys against the greedy excesses of big hogs.”

What Greider doesn’t mention is that this era of new regulations might be coming too late. Or, rather, right on time, depending on your point of view. Resistance to a new wave of banking regulation requiring bank breakups and dividing Wall Street according to regulatory fiats rather than market demand is likely to be weak in an era when many think the financial supermarket model has failed and should be abandoned. No-one expends much time, money or energy defending a right to do something they don’t want to do anyway. What’s more, there will be plenty of money made by investment bankers spinning-off, selling and acquiring the fragments they are shoring up against the ruins of the toppled giants. Some of these people may actually be the same ones who made fortunes building the giants.

And we’ll all raise a glass to the only saloon in town where it’s never last call: the Wall Street punch bowl.

Citibank: Too Big to Fail? [The Nation]

Citi is set to buy human replacement toy Automated Trading Desk for $700mm. Automated Trading Desk was born in 1988, fathered by two computer programmers and David Whitcomb, a finance prof at Rutgers. The firm makes money by being quick on the draw, apparently, using these crazy things called computers and algorithms. Even though the firm employs 100 people, it handled 6% of the trading volume in major US stock markets last year, processing over 200 million shares traded per day.

Citigroup In Talks To Buy Automated Trading Desk [Dow Jones via CNN Money]

Merrill has postponed the auction of $400mm in assets it seized from the High-Grade Structured Credit Strategies Enhanced Leverage Fund at Bear Stearns, Charlie Gasparino of CNBC is reporting. Merrill and other major lenders to the fund, including Citi and JPMorgan, are in a feel-good asset management “pow-wow” with Bear this afternoon. The fund is expected to make its case that it has a plan to recover from it recent catastrophe in the subprime market.

An announcement on what will really happen to the fund assets is expected later today or tomorrow.

Merrill Lynch Switches Gears [CNBC.com]

Eddie Lampert may be betting that former US Treasury Secretary Robert Rubin is poised to take over as chief of Citigroup, according to a former colleague of both Lampert and Rubin. Earlier this week, Lampert’s ESL Investments disclosed that it had accumulated a 0.3% stake in Citi, setting off speculation about Lampert’s intentions. Speculation ranged from notion that Lampert might view Citigroup as cheap relative to it’s banking peers—this came from an unnamed banker who happens to work at Citigroup—to the idea that he might be poised to take an “activist investor” stance and agitate for change. Shares of Citigroup role 4% following the disclosure of ESL’s position.

“Lampert is tight with Rubin. He loves the man. Idolizes him. He may think that Rubin’s about to become a lot more involved at Citigroup, maybe even to take over for Prince,” the source said, referring to Citigroup chief executive Chuck Prince.

Rubin rose to Wall Street at Goldman Sachs before being appointed to the Treasury position by Bill Clinton. He is now the chairman of Citigroup’s executive committee. Early in his career Lampert worked under Rubin when he was an arbitrage trader at Goldman Sachs. This morning’s Wall Street Journal described Rubin as one of Lampert’s “leading role models.”

Yesterday CNBC’s Charlie Gasparino said that there was pressure for Rubin to take a more active role in the management of Citigroup. His position at the head of the executive committee brings him a hefty paycheck—reportedly $17 million—but some have said he doesn’t exercise much responsibility for the management of the bank. At least one banker employed at an investment bank described Rubin as “a relationship guy” whose job mainly involved using the connections he has made during his long career in finance and government to win business for the bank.

Prince’s tenure at the top of Citigroup has not been a happy one. The bank has been under-pressure from investors to change its management and some have even suggested that it spin off some of its constituent businesses. Prince is widely seen as unwilling to fundamentally change the structure of Citigroup.

Will Chorus Grow at Citi? [Wall Street Journal]

“Were you sacked, or did you quit?”
“I’m not sure, actually.”

- Lord of the Admiralty to his aide.

In the last 18 months, almost half of Citigroup’s senior management for consumer operations (and we use the term loosely) has jumped ship. The latest tri-fecta being Faith Massingale, head of Citi’s international cards operation, Ashok Vaswani, head of Asia Pacific, and Joyce Phillips, head of international retail banking. Massingale and Philllips brought in $16 billion in revenue last year. While it’s not news to anyone that Chuck Prince, aside from being named for a popular brand of pasta, has been blamed for the loss of top executives, over management style, coyly termed “differences of opinions concerning company perks”, the Financial Times notes that departures “lower down the chain are more worrying.” One anonymous soul commented that he doubts “whether many investors or even some more board members realize the extent of the losses.” If that doesn’t get Prince’s attention, perhaps the fact that several of the departees have joined noted arch-rival Jamie Dimon, at JPMorgan Chase will put some sauce on.

Citi unit sees exodus of managers [FT]

Maybe there’s a reason Citi is putting its umbrellas away. Citi announced that it will spend $50bn over the next 10 years on “investments, financings and related activities designed to address global climate change.” Citi claims the sum includes $10bn Citi has already invested in such endeavors. Unfortunately the “Let’s get it done” path to profitability closely mirrors the strategy employed by the underpants gnomes in South Park (Step 1- invest in green tech, Step 2 - [conspicuous silence], Step 3 - profit!), unless “addressing global climate change” involves throwing around all that Saudi money in a way that doesn’t directly choke baby seals.

In other Citi news, the first “Let’s get ‘er it done” spots started running last night (watch here). Seattle-based Publicis West devised the first ad, which unlike Citi’s identity theft campaign, overflows with optimism, violently climaxing in the image of a boy in a raincoat letting go of his mothers hand and venturing off into the unknown, of a $20k a year gated pre-head start program. The ad is just a few 300mph tennis serves away from “impossible is nothing” style ridiculousness. A transcript of the narration in the commercial:

Who first believed in you? [my sponsor]
Listened to your dreams? [my shrink]
Got you on your way? [greenies]

We all need a partner [for tax reasons]
And Citi has the people and expertise to make it all possible [17,000 less of them]
So buy that house [who doesn’t need more debt?]
Merge that company [we’ll even throw in a “buy” rating]
Ask out Sally Krawcheck [seriously, Sally is crazy horny]
Start that business [No really, a social networking site for ferret owners is a great idea, here’s your loan]
Send her to college [Send him to boarding school]
Steal that cable [they keep jacking up the monthly dvr/hd/on-demand rates!]
Build a fortune [1.5% per annum on that $832 from your bar mitzvah]
Take your business global [it’s not an office party, it’s an office “fiesta”]
Plan for the future [Citi is investing another $10bn in flux capacitors]
We all need a partner [redundant, in case you’re Mormon]
A partner that helps turns dreams into realities [or a cursed monkey’s paw]
Citi - Let’s get it done [sounds good, but the guy on the other side of the octagon looks angry]

And…scene.

The money shot is when the Citi arch appears, starting with the word “dreams” and ending with the word “realities.”

Citigroup to spend $50 bln over 10 yrs to address climate change – [MarketWatch]
Publicis, Citi Dare to Dream - [Adweek]

“Firing Jamie Dimon was the worst thing Sandy ever did,” the investment banker said. It was a glorious Friday afternoon. The weather had performed an April summersault, turning over from winter to what felt like summer almost overnight. It was the kind of weather that inspires people—okay, us—to leave work early and starting drinking with friends. Which is how we found ourselves looking out onto a narrow street in the East Village drinking pints and talking about Jamie Dimon, Sandy Weill, Citigroup and JP Morgan Chase.

“It was over something completely trivial,” the banker said. He definitely had our attention with this remark. Lots of people believe that Citigroup has suffered since Jamie Dimon was let go by his longtime mentor Sandy Weill. And a lot of people have theories about why this friendship soured. But we love hearing all of them. He took the head-off his pilsner while we waited for him to expand. This is an old interviewers trick—using silence to elicit elaboration. His counter-strategy of drinking more was testing the limits of his patience.

He took the bottom off his beer and looked to the bartender for another round. We broke. “Okay, okay. What was it? What was it that got him canned?” we asked.

The next round arrived. We placed a bill on the bar but kept our hand on it. The message in the motions: keep talking and this round is on DealBreaker.

“It was something involving his daughter. Sandy’s daughter,” he said. Our hand came off the bill. This round was definitely on us. What had happened between Dimon and little miss Weill that could get Dimon thrown out of Citigroup?

“Completely trivial. I think Weill wanted his daughter to get a job, some promotion. Dimon didn’t want to give it to her. Thought she was under-qualified,” he said. “The guy I work for was in the room one day when they had a fight over it. When the fight was over, apparently so was the relationship. It was very strange because Sandy and Jamie had this whole father-son thing going on. This was Sandy choosing blood over his more or less adopted child, Jamie. Like Hamlet in reverse. The step-father kills the kid. Or maybe King Lear, with Dimon as the daughter who won’t suck up to daddy Lear.”

We aren’t even going to call Dimon’s office to authenticate this. And certainly not Weill. They probably wouldn’t comment. And if they did comment, it would just be a denial. We’d actually heard this theory before but this was the first time we’d heard it from someone claiming to have anything this close to first hand knowledge of the dispute. It was second-hand knowledge but that’s as close as anyone has ever got to this story.

The next round was on us also. Not as a reward for that story. It was, after all, an old and often told story. But as an enticement for the next one, the one about Dimon’s plans for acquisitions and his meeting with Bear Stearns executives. But that will have to wait for another post.

Earlier this week we ran into an old friend who has been trading financial stocks for several years. We were in a small bar a few steps down from street level. The wall paper was a deep red, the furniture included antique looking couches, and faux-gas lamps lit the place dimly. It was the sort of place a Victorian era vampire might feel comfortable sipping absinthe while he hunted his next victim.

“It’s not that you’re wrong on Citi,” our trader friend told us. “It’s that you’re right. But everyone agrees you’re right. This is a broken company.”

“But you’re buying it?” we asked.

“Of course. I wouldn’t give Chuck Prince more than a year,” he said, referring to the chief executive of the financial giant. “And whoever replaces him won’t have any loyalty to the structure. None of the top guys have the sort of stake in it that Chuck has to Sandy.”

Prior to becoming chief executive, Prince had worked as the bank’s top lawyer under former chief executive Sanford Weill. It was during this era that Weill had built the bank into a behemoth through mergers and acquisitions. Prince has vigorously resisted calls to fundamentally reform the bank by spinning off business. Several of the top executives at Citigroup have been recently hired from outside the bank and lack the personal ties to the Weill build-up that some feel have led to Prince’s resistance to change.

“The next boss is going to start spinning things off. None of this reduction through attrition business. He’ll make his mark by remaking the bank in a leaner, meaner image. Get out from under the shadow of Sandy. And then you’ll see the stock climb,” the trader continued. “I’m buying this thing now because I think once the rumors of Prince’s retirement get out, the stock is going to start to climb.”

He twirled the olive in the bottom of his empty martini glass and scanned the room. A trio of girls were sitting by the window. They were too far from where we sat at the bar for us to overhear their conversation. We doubted they were discussing the fate of banking chief executives.

He gestured to the barteneder for another round.

“Let’s go say hello,” he suggested. He nodded toward the girls. A smile came across his face. His bright eyes sparkled. For a brief moment we thought we saw fangs where his incisors should be. A trick of the light, no doubt.

There’s been lots of chatter about Citigroup this week in anticipation of Monday’s first quarter earnings announcement. Market Beat lists five reasons why Citigroup should be broken up. Eddy Elfenbein defends Chuck Prince against the charge that he’s doing a poor job of running Citigroup. Michelle Leder wonders if Citi will disclose the Todd Thompson settlement in its 10-K. Felix Salmon hopes that Bob Druskin will succeed Chuck Prince, pointing out that he has a very evil looking mustache. Roger Ehrenberg points out that its not a good sign when you have to pay someone $800 million just to start working for you.

So let us add some fuel to this fire. We’re hearing rumors that Robert Rubin, who has been at Citigroup since leaving the Clinton administration in 1999, may step down to take a position in Hillary Clinton’s campaign for the Democratic presidential nomination. The addition of Rubin to the Clinton campaign would no doubt be a boon to fundraising—Rubin was a favorite of Wall Street as Treasury Secretary and a fundraising powerhouse for Bill Clinton. Perhaps more importantly, having Rubin attached to the campaign would make Team Obama seem intellectually shallow, particularly on financial and economic issues.

The market responded to Citigroup’s much heralded—and telegraphed—restructuring and cost-cutting plan with a big Bronx cheer yesterday, dropping the stock price nearly 2%.* The paltry savings Citi said it could achieve, the fact that the biggest savings still lie years in the future, and the news that Citi’s overall workforce would keep growing seems only to have renewed calls for more fundamental changes at the financial behemoth.

More particularly, folks we spoke to who watch Citi’s stock think its time to bring down the house that Sandy Weill built. None of them would speak on the record, but Bill Smith, chief executive of Smith Asset Management, spoke to Crain’s and nicely captures the widely held sentiment.

“You can’t fix a structure that’s broken,” Mr. Smith argues, adding that Citi’s different components would collectively be worth $90 a share if they traded separately. He says its investment banking division, formerly known as Salomon Brothers, would trade at a higher price-to-earnings ratio than Citi does. So too, he argues, would Citi’s Smith Barney brokerage unit and international commercial banking operations if granted their independence.

We’re also hearing that this might be the beginning of the end for Chuck Prince. For years he was Sandy Weill’s lawyer, and many think he lacks the audacity to start tearing apart the financial structure built by his mentor.

“He’s the last of Sandy’s cronies still in place,” said a banker at a rival firm. “Citi won’t work right until he’s gone too.”

[Please remember we’re still looking for stories from inside Citi. Get a pink slip? Email it to us! Completely unaffected by the cuts? Let us know. Skipping work this week because, hey, you might get fired anyway? Great. Tell us about it! Send it all to tips@dealbreaker.com. Thanks]

*Editor’s note: we realize this comes perilously close to violating our rule against asserting post hoc, ergo hoc explanations for market movements. So let us once again restate our official position on why this stock—or almost any stock—moved the way it did yesterday: it was the cumulative effect of buying and selling by investors.

Wall Street not impressed with Citi cuts [Crains]

Morale at Citigroup is “bleak,” according to a source inside the bank. Even before today’s job cuts were officially announced today, the widespread rumor that they were coming was dampening morale at the financial giant.

“Morale is right down in the toilet,” the source told DealBreaker.

The cuts—which many on Wall Street think may not go far enough—have engendered so much bad blood in certain quarters of Citigroup that they are hoping the cost cutting plan fails.

We’re starting to hear from workers at Citigroup and we want more. Email any first hand accounts of today at Citigroup—or even second or third hand accounts—-to tips@dealbreaker.com

Earlier: Citigroup Announces Cuts: 17,000 Jobs To Go [DealBreaker.com]

Citigroup announced plans to cut or reassign 26,500 jobs today. The cuts hit the “whisper number” that Wall Street had been talking about all week—surprising some observers who had predicted that chief executive Chuck Prince might try to impress investors with deeper and wider cuts. Apparently Prince does not have this “better than expected” game down yet.

The actual job eliminations, in fact, barely exceeded the 15,000 number that had so notably failed to impress the markets earlier this year. Citi is cutting just 17,000 jobs out of its total workforce of 327,000—a number that some scoff at as barely better than attrition. “Accelerated attrition,” was how one Wall Street analyst put it to DealBreaker this morning. Only 1,600 jobs are being eliminated in New York City.

Another 9,500 jobs will be relocated from expensive financial labor markets such as New York, London and Hong Kong to less costly areas—perhaps India.

Citi remains an institution caught in a bind. Although Sandy Weill tried to build the bank into a one-stop financial institution, the dream of a unified banking firm remains largely unrealized. That dream, some believe has been stymied by regulations in the US and abroad that prevent Citi from realizing synergies from its combined business. Others say Citi has been damaged by a lack of leadership in its top ranks.

Even as it announced plans to streamline operations and save $2.1 billion this year through cost cutting, the bank is apparently considering spending $600 million to buy a hedge fund founded just one year ago by a former Morgan Stanley executive Citi wants to hire. That’s a pretty expensive executive acquisition program.

We’re looking for more news from inside Citi. And that’s where you come in. Email your Citi-cuts stories to tips@dealbreaker.com or leave a comment below.

Citi to Cut 17,000 Jobs in Broad Overhaul [DealBook]

Ask most people in finance and they’ll tell you that Citigroup has been one of the worst managed firms on Wall Street for at least a decade. (Maybe even longer but nobody who speaks to DealBreaker can remember back any further than that.) Chuck Prince is said to be under heavy pressure from his investors—especially another guy named Prince—to cut costs and get the stock price up.

Standing in the way of the plan to fix Citi, however, has been the inability of the bank to assemble a credible senior management team. Most of Sandy Weil’s “cronies”—we’re not sure why, but Sandy is the only Wall Steeter we know whose staffers are consistently referred to as “cronies”—have left or been let go. Many executive positions remain vacant, there are consistent rumors that top people are leaving and many of the top spots have been filled by outsiders. The move to hire a former Morgan Stanley bigshot by buying his hedgefund for $600 million looks like a sign of desperation to fill out the top ranks of the firm.

Can Citigroup be saved? Or do we need to destroy this Citi in order to save it? We’re inviting you to share your ideas on how to fix the bank that Sandy built.

Citigroup’s Chuck Prince was apparently disappointed by the market’s reaction to the announcement that Citi was eliminating 15,000 jobs. Now he’s throwing another 11,000 jobs onto the funeral pyre, according to published reports.

When Citigroup went public with the job cuts and other cost cutting measures, it was clear that they hoped the market would read this as a serious effort to improve Citi’s bottom line. But the stock price stubbornly refused to cooperate. This time around Citi is reportedly coming back with a plan to “eliminate or reassign” 26,000 jobs. Will this move the needle when it is announced tomorrow?

Perhaps not. According to a hedge fund trader we spoke with this morning, timing the additional job cuts announcements with news that Citi might spend $600 million to acquire one guy—former Morgan Stanley executive Vikram Pandit—and his year old hedge fund undermines the credibility of the bank when it comes to cost-cutting. Then again, the hedge fund trader we spoke with was admittedly jealous that no-one was offering him $600 million for his fund.

Citigroup’s Revamp May Trim Its Compliance Corps [New York Times]
Citigroup’s mulls U-turn on Old Lane [Financial Times]

So now we know how much it costs to buy off the chief executive of American Express—$10 million. That’s the compensation package for incoming Citigroup chief financial officer Gary Crittenden disclosed today in a filing with the Securities and Exchange Commission. That’s about twice what he was making as chief financial officer of American Express.

But is it enough? Some people in the banking industry we spoke to today have their doubts. They wonder if Crittenden could have been enticed to leave his job at American Express, where he has a long history and a loyal base that might have eventually boosted him up to the chief executive slot, for the disclosed compensation package. So was he offered or promised more?

Now, by way of background, Citigroup has a history of luring top executives away from their companies to work under the Citi umbrella. (And, yes, we know that metaphor doesn’t work any more. Just try to keep up.) Before Crittenden there was Sanford Bernstein chief executive Sallie Krawcheck, who was hired on by then-CEO Sandy Weill to clean up a scandal-wracked brokerage division. She went on to become chief financial officer before returning to the brokerage after the latest scandal-tinged reshuffling at Citi saw Todd Thomson, a former chief financial officer and head of the brokerage unit, leave under a cloud of lavish spending and inappropriate use of a corporate jet to transport CNBC stewardesss anchor Maria Bartiromo around the world.

So maybe it’s just so sweet working for Citi that any executive would jump at the chance. But doubts persist (notice the weasely passive tense there we use to conceal that the doubters are us and some folks we talk to) that Crittenden would leave AmEx for the chance to work for Chuck Prince. After all, Chuck isn’t exactly a legend like Weill, and being the chief financial officer of Citigroup isn’t exactly like being put in charge of cleaning house after a serious financial scandal. Rumors had it that the job was so awful—and the details of the awfulness were never clear but we can guess that boring, thankless and Sarbanes-Oxley were a part of it—that Sallie Krawcheck was practically jumping out of her skin to get back to the brokerage.

But what could they have offered Crittenden? A source who has never worked at Citigroup and therefore has little credibility offers this completely irresponsible speculation—they offered him the chief executive spot once Prince retires.

The major problem with this notion is that it leads directly to the question of why Sallie Krawcheck would stick around Citi if she wasn’t expecting to score the chief executive spot. With Thomson out of the way, she faced little internal competition. And surely her network inside Citi is good enough that she’d know if Crittenden had been promised the top slot. We suspect that if Krawcheck knew that succeeding Prince was out of the question, she would leave Citi altogether. She certainly doesn’t need the money, and even if she did there are plenty of other Wall Street firms who would be all too eager to score someone of her stature.

So we’re faced with a paradox. It’s not entirely plausible that both Krawcheck and Crittenden would both be at Citi if either one of them had been promised the top slot. And it’s not entirely plausible that either one of them would be there without such a promise. Yet there they both are.

Facts are stubborn things. Is there a way to untie this Gordian knot? Well, perhaps they’ve both been promised the top spot. If that sounds way too scheming, too much like something out of HBO’s “Rome”—well we suggest you do some reading up about what happened when Citicorp and Travelers merged. Short answer—Citicorp head John Reed and Travelers boss Sandy Weill shook hands and agreed to jointly run the place. Next thing anybody knew, Reed was gone and Sandy sat alone at the top of the newly minted Citigroup.

There’s always the more innocent answer, of course. That is that neither Crittenden nor Krawcheck have been promised anything, and will both spend the next few years fighting to establish themselves as the CEO-in-waiting. Which, come to think of it, sounds like it will have exactly the same result as the two promise paranoid theory. Pick your poison. Either one sounds like it should make for some interesting times at a Citigroup facing the world without its umbrella.

[Note: An earlier version of this item incorrectly identified Crittenden as the former CEO of American Express.]

Citigroup Lists Crittenden Pay [Wall Street Journal]

Yesterday Maria Bartiromo, uhm, scored with a top Citigroup executive.

Sorry. Scratch that.

Yesterday Maria Bartiromo scored an exclusive interview with former Citigroup CEO Sandy Weill. There was a bit of a double news hook for the interview. Yesterday Citigroup had revealed in its annual report that the Securities and Exchange Commission is investigating the bank’s accounting and tax reserves related to its $31 billion purchase in 2000 of Associates First CapitalThere. Sandy was chairman in those days, so Maria and co-host Dylan Ratigan asked him some questions. Which he totally declined to respond to. It was all no comment this, and I haven’t read the annual report that. This was actually kind of newsmaking. The world learned that Sandy Weill, the man who built Citigroup, doesn’t read the annual reports right away and doesn’t watch the daily movements of the stock prices.

The other alleged news hook for the interview was some sort of charity thing involving schools. Someone won an award. Maybe it was Sandy. Snore.

But apparently nobody but us paid attention to anything as esoteric as what happened in the interview. It was all just jaw-dropping amazement that CNBC, or Citigroup, or Sandy Weill or Maria Bartiromo had the gall or the guts or something else to set up this interview in light of the recent questions about the propriety of Bartiromo’s possibly compromising relationships with Citigroup executives.

TVNewser’s anonymous sources give voice to the shocked masses:

An longtime CNBC viewer wrote to TVNewser: “Have they lost all ethical thought and reason in Englewood Cliffs? I sat there with a stunned look on my face the whole time the interview was going on.”

“Why shouldn’t she do the interview? She did nothing wrong,” a CNBC insider responded…

> Update: 9:35pm: “Just the hint of scandal makes the interview stupid from a P.R. point of view. Why risk credibility with viewers by giving the interview to Bartiromo?,” an e-mailer adds…

Ex-Citigroup CEO Weill Declines To Comment On SEC Probe [CNBC]

Bartiromo Interviews Former Citi CEO [TVNewser]

Is all not well in the house of CNBC? We’ve mentioned again and again the love that CNBC executives, and their bosses at GE, have for Maria Bartiromo. But is their love unrequited? San Antonio Express-News business columnist David Hendricks writes that Maria didn’t even so much as mention the network at a recent speech in San Antonio.

Curiously, it was difficult to know from her speech Tuesday who employs Bartiromo: I don’t remember her mentioning CNBC even once. She was busy instead dropping the names of the people she has interviewed, from President Bush to Bill and Melinda Gates and the heads of high-powered private equity firms.

So is Maria giving CNBC the cold-shoulder?

Actually, that excerpt is probably unfair to Maria and Hendrick’s column, which makes it abundantly clear that she’s “an asset to business journalism” who understands the financial world better than many “award winning” business journalists, including “how private-equity acquisitions of public companies boost the value of U.S. corporations.” He just wishes she’d cut-out the “corporate promotional appearances”—which is the most polite way of describing all that time she spent with Citigroup executives we’ve seen in weeks.

Bartiromo avoids the difficult questions in San Antonio [San Antonio Express-News via Talking Biz News]

That was the allegation (*cough*) flying around last week. Several large Citigroup investors were quoted in a Financial Times story complaining that Citigroup’s board was dominated by chief executives from other large companies who were sticking up for Citigroup chief executive Chuck Prince because he is one of their own.

Some of Citigroup’s biggest shareholders have raised questions about the strong public support for Chuck Prince, the chief executive, from the bank’s board.

The large number of chief executives from other companies on the board made it “naturally sympathetic to Chuck”, said one of Citigroup’s top 30 investors, who declined to be named.

This very public criticism comes close on the heels of recent controversy at Citigroup following the firing Todd Thomson, a prominent wealth-management executive at the bank. Thomson was reportedly fired in part for his relationship with bigshot CNBC on-air personality Maria Bartiromo.

In a work of amazing Wall Street jujitsu, the Thomson-Bartiromo affair seems to be fueling criticism of the Citigroup CEO. Last week, Wall Street insiders heard rumors alleging that Thomson—who was until very recently considered as a potential successor to Prince—was fired because Prince viewed him as a threat to his position. According to these rumors, the Bartiromo affair was simply a pretext to get rid of Thomson.

A source familiar with the situation at Citigroup dismisses these rumors as “pure spin” likely coming from enemies of Prince. The Citigroup CEO certainly has his enemies. Prince inherited an ungainly and perhaps unmanageable corporate structure built by his predecessor, Sandy Weill. A legacy of scandal, corporate infighting, and rumors of high level resignations and job dissatisfaction, have not helped make the job of running Citigroup any easier. Some investors and analysts have been calling for Prince to dismantle Citigroup, a move Prince has strongly resisted.

Still, even if these rumors are nothing but the whispers of Prince’s enemies, this can’t be a comfortable time in the executive suites at Citigroup. It’s clear that the sharks smell blood in the water.

Meanwhile, CNBC and its corporate parent, GE, have stuck by Bartiromo. GE big shot Jeffrey Immelt was quoted in press reports saying, “I support Maria and I support CNBC.” Last week we reported that CNBC writers were allegedly penning some of Maria’s apparently off-the-cuff remarks at recent speaking engagements, including her crack that she was late to a dinner where she was scheduled to speak because she “had to fly commercial”—a sly-reference, self-deprecating to the fact that she no longer has access to the Citigroup corporate jet.

But the final chapter in the Money Honey scandal may not yet have been written. We hear that while Bartiromo is no longer involved with Thomson, she has begun seeing another Wall Street executive. But that’s probably way, way too good to be true.

Citi shareholders question support for Prince [Financial Times via MSNBC]

The rather under-whelming reaction in much of the media to the revelations about top dog CNBC reporter and “Closing Bell” anchor Maria Bartiromo’s relationship with former Citigroup honcho Todd Thompson—today, for instance, the New York Post’s Keith Kelly reveals that both Business Week and Reader’s Digest are keeping Bartiromo on board as a columnist—brings to mind one of the first lessons we ever learned in journalism ethics.

It was Spring, the early nineteen nineties, Bill Clinton had recently been elected and we found ourselves living in Washington, DC and considering a career in political journalism. (We eventually recovered from that brief enthusiasm.) One day we were having lunch with an old-school newspaper editor who was, if we recall correctly, then working at Reader’s Digest.

We asked about the “revolving door” problem—people from the political side becoming journalists once they are their patrons were voted out of office. Chris Matthews is now a prominent example at the type, but Pat Buchanan, Tim Russert and countless others have gone through the door. Some of them seem to be perpetually spinning in and out.

The weathered editor told us that he thought the problem was overblown. What’s more, he said, former political staffers might have a kind of expertise and familiarity with the relevant players that a pure outsider would lack. They might add to the public understanding.

Which isn’t to say that it couldn’t be problematic. The real test was weather the journalists were truly independent of their old political ties or still serving or giving the appearance a politician or party.

“I don’t care if you’ve got clowns covering the circus,” the editor told us, “Just as long as they aren’t still fucking the elephants.”

Editors Still Sweet On Money Honey Maria [New York Post]

DealBook has the official Thomson Financial league table results for Global M&A, with Goldman just edging out Citigroup for total deal volume:

After giving us a preview late last year, Thomson Financial this week sent DealBook its official tally of last year’s merger and acquisitions activity. Global M&A topped $3.8 trillion in 2006, a bump of nearly 38 percent over the previous year. Nearly 20 percent of the year’s deals involved private-equity buyers. And large swaths of the deal-making were handled by two investment banks, Goldman Sachs and Citigroup

[Cutting tired bonus news rehash] In the year-end league tables — the rankings scrutinized and boasted about by investment bankers — Goldman Sachs took the crown for advising on the largest volume of global announced deals. It advised on $1.09 trillion in deals, for a 28.6 percent market share. Perhaps more surprising was last year’s showing by Citigroup, which leaped from fifth place in 2005 to second last year. Citigroup advised on $1.03 trillion in transactions, claiming a 27.2 percent market share, Thomson Financial said.

Citigroup’s gap with Goldman Sachs narrowed in the last two weeks of the year: A previous DealBook item noted
that as of Dec. 20, Citi had a total deal volume of $987 billion, by Thomson’s count.

Goldman, Citi Top List of 2006 M&A Deal Makers [DealBook]