At last Citigroup (C) has decided to do something to save itself beyond having town hall meetings and firing tens of thousand of people.

Shares of the big bank fell to a low of $3.57. In the summer of 2007, that stock traded about $52.

Finally, Citi has determined that it may not have the people or the balance sheet to stay in business on its own.

According to The Wall Street Journal, "Executives at Citigroup Inc., faced with a plunging stock price, began weighing the possibility of auctioning off pieces of the financial giant or even selling the company outright, according to people familiar with the matter."

Citi’s board may be looking at the difficulty that Barclays (BCS) is having raising $10 billion in new capital. Some large shareholders are against the pricing and dillution which would come from the deal, and the plan to issue shares may be voted down. If that happens, Barclays is in real trouble having lost access to a huge new pool of capital

If the Cit’s stock continues to fall and customers of the firm lose confidence in its ability to operate, Citi could face a fate like Wachovia’s, which the federal government forced into a sale to Wells Fargo (WFC), or AIG (AIG) which sold a controlling interest to the Fed in exchange for what has turned out to be over $100 billion in loans.

Citigroup still has time to avoid coming to an ignominious end, but that time is running out. If Barclays shareholders turn down it plan to raise money, Citi will also be running out of options.

Douglas A. McIntyre

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