Citigroup (C) is back to it new lows, trading down to $29.52.

Citi could have been driven down by the losses at Bear Stearns (BSC). It could be that Fitch cut its outlook on Bank of America (BCA) to negative from stable due to weakness in the residential mortgage market, according to MarketWatch.

Wall St. obviously thinks that there is a great deal of negative news that has not come out of the big bank. The mortgage market is likely to get worse. There are auto and credit card CDOs on some bank books.

If the bank’s cash and balance sheet problems get worse, Citi will have to cut its dividend. It also may need to go to the market or sovereign funds for more capital. In other word’s the traditional sources of capital may not be available. Citi may be considered too risky.

The Fed is not done providing funding to the nation’s big bank. Not by a long shot. The liquidity infusion that looked so promising a day ago appear to be no blessing at all as money center banks drop further

New management did not have a honeymoon.

Douglas A. McIntyre

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