Citi Split

Split Citi. That's the radical move being advocated by the company's own executives "under pressure from Washington and Wall Street," reports the Financial Times, the New York Times, and the Wall Street Journal. Citi will "place unwanted assets and businesses worth more than $600bn—a third of its balance sheet—into a 'non-core' unit to isolate them from healthier parts of the company," unnamed sources tell the FT. News of the plan comes on the heels of yesterday's announcement that it will spin off its Smith Barney brokerage into a joint venture with Morgan Stanley. The rush to shed damaged goods comes as Citi is said to be bracing itself for a fourth-quarter operating loss of at least $10 billion. Having already bailed Citi out twice in the last six months, the U.S. government has let the bank know it is keen to avoid doing so a third time.

If Citi does split, it will join a growing list of fractured financial-services companies. Yesterday, Royal Bank of Scotland offloaded its $2.4 billion stake in Bank of China, raising much-needed capital and acknowledging the folly of its previous aggressive international expansion, the FT reports. Another Brit bank, Barclays, has decided to slash 2,000 jobs, while Bank of America has taken another $10 billion in government bailout funds, part of $14.8 billion the Treasury recently invested in 43 regional banks. No wonder Fed Chairman Ben Bernanke came out and said the bailout fund needs to "pour hundreds of billions more into" troubled banks. Even before the reality of Citi hit home yesterday, the "unpleasant message" that America's banks were close to the brink yet again was percolating through Congress and President-elect Barack Obama's financial team.

At least one member of that team has his own financial problems. Timothy F. Geithner, the man tapped to lead the nation out of the recession, was on Capitol Hill yesterday explaining to senators how, in the words of the Washington Post, "he made almost $43,000 worth of mistakes on his own tax returns." While much of the Senate committee that must approve Geithner's nomination as Treasury secretary seems predisposed to the economic whiz kid, the "innocent mistakes" represent a "major embarrassment for the man chosen to head the Treasury Department, which oversees the Internal Revenue Service, especially as Mr. Geithner worked at the Treasury under three presidents," the NYT notes.

Yahoo has appointed veteran technology executive Carol Bartz as its new CEO, CNN Money reports. Yahoo is betting that the former Autodesk chief's "technology experience and blunt style" will revive its fortunes, writes the San Francisco Chronicle, but her appointment raises "questions on Yahoo's strategic direction, specifically whether the struggling Internet company will now sell its search business to Microsoft," notes the WSJ. For her part, Bartz said Yahoo "frankly needs a little management," reports Business Week. At least she'll have a free hand in managing: Yahoo also announced that current President Susan Decker, who also was in the running for CEO, will leave the company.

Finally, the term executive flight is taking on a whole new meaning with the latest news that two more disgraced financiers are on the lam. Yesterday one of Bernie Madoff's  associates, Robert Jaffe, failed to turn up for a scheduled meeting—issued under subpoena—with the Massachusetts Securities Division. Meanwhile, Raoul Weil, a former UBS AG official indicted for conspiring to help wealthy Americans hide assets from the IRS, has been declared a fugitive by a U.S. judge, Bloomberg reports. At least they caught the failed Indiana businessman who flubbed faking his own death in a plane crash.