Perhaps it is a remarkable failure of imagination or just animal panic. A day after Citigroup (C) hit a multi-year low and spent time below $10, CEO Vikram Pandit’s answer was to buy a few crummy shares in the bank and prepare to fire another 10,000 poor souls. He also decided to raise rates on credit cards, which would seem to undermine the federal government’s programs to help consumers during a liquidity crisis.

According to The Wall Street Journal, there is a way to save some jobs."Managers can minimize the number of employees they fire by dismissing higher-paid traders and bankers." Very clever.

Pandit is stuck in mud he created on his own. While other banks like Wells Fargo (WFC), Bank of America (BAC), and JP Morgan (JPM) were buying financial institutions to build deposit and talent bases, Citi did not do much. Some companies like Wachovia and Merrill Lynch (MER) even had the foresight to do something. They sold themselves before being reposed by the government.

Pandit came into Citi with the promise that he would emphasize the institution’s strengths and sell-of operations which would not be part of his "strategic" view of the future of the world’s financial industry. Analysts would be hard pressed to find much of that. If anything did happen, it must have been during the dead of night.

Citi is face with the unenviable prospects of more losses and a consumer credit portfolio which is likely to go through substantial rates of default among its customers. There are very few large financial institutions to buy. Citi may even face an AIG-like event if its write-offs get large enough and its share price drops far enough.

Perhaps, the Fed could merge Citi and AIG (AIG). There must be come cost savings in that.

Douglas A. McIntyre

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