Jin Lee
When did Citigroup’s financial woes start? The New York Times points to its failed acquisition of Wachovia earlier this year, when Wells Fargo swooped in with a higher offer. “That collapse began a steady decline in Citigroup shares that snowballed this week.” According to one analyst, Citi now has two options: “a federally forced merger or nationalization.” The bank is struggling to raise $20 billion in capital to offset losses, despite receiving $25 billion from the federal government in October. Citi’s problems have existed since its creation 10 years ago, but were easily overlooked in the era of prosperity. “They never spent the time, the money or the energy to integrate all of the businesses,” says another analyst. “It’s not a functional family. And because it’s not a functional family, it’s extraordinarily expensive to operate all the separate businesses, and you don’t get any of the advantages.”