• Citigroup announced yesterday that it would sell a majority stake in Smith Barney to Morgan Stanley, but more change is on the way: The bank is expected to dump two consumer finance units as well as its "private-label" credit card business, which means now your Save the Whales Mastercard is in jeopardy, too. [WSJ, NYT]
• Deutsche Bank reported a loss of $6.3 billion in the fourth quarter. [BN]
• HSBC may need $30 billion to stay afloat. [DB]
• Nortel Networks has filed for bankruptcy protection. [BN]
• Just in case it wasn't eminently clear by all the bad news above, today is expected to be a pretty bad day in the markets. [WSJ]
• Marcus Schrenker was caught last night, but there's a new financial exec to add to the fugitive list: Ex-UBS exec Raoul Weil is now a wanted man. [NYT]
• Bernie Madoff will be in court in person later today when a judge considers an appear from prosecutors who want to imprison Madoff pending trial. [BN]
• Robert Jaffe, the Madoff middleman who failed to show up to meet with regulators yesterday, says he missed the meeting because he's sick. [WSJ]
• More on Tim Geithner's little tax problem. [NYT]

As expected, Morgan Stanley took control of Smith Barney this afternoon, paying Citigroup $2.7 billion for a 51 percent stake in the brokerage firm. Even better: It allows John Mack, Morgan Stanley's CEO, to go home to his wife tonight and brag that he controls the largest brokerage firm in America, grabbing the coveted title out of the hands of Ken Lewis, the Bank of America chief who completed the acquisition of Merrill Lynch just two weeks ago. [Bloomberg]

• Citigroup and Morgan Stanley may announce a joint venture combining their brokerage divisions as early as today or tomorrow. The firms have already agreed to set aside $2 billion and $3 billion to retain top brokers. [WSJ, NYP]
• The joint venture isn't giving Citigroup or its CEO, Vikram Pandit, much of a boost. Shares dropped 17 percent yesterday as investors grew concerned the deal was prompted by Citi's desperation more than anything else. [NYT]
• Close to 2,000 former Merrill Lynch employees in London have been laid off by new parent Bank of America. [Times UK]
• AIG is expected to sell its Canadian life insurance operations to Bank of Montreal to repay government loans. [BN]
• Federal Reserve chair Ben Bernanke says a fiscal stimulus won't be enough to spur an economic recovery. [BN]

• Talks between Citigroup and Morgan Stanley continue as the two banks discuss a plan to combine Citi's Smith Barney unit with Morgan Stanley's brokerage division in a joint venture worth $20 billion. [FT, Bloomberg, WSJ]
• It remains unclear if Vikram Pandit will be able to hang on as Citigroup's CEO, especially amid rumors the bank will report a $10 billion loss for the fourth quarter. In the meantime, banking regulators are pushing for the removal of Citi's chairman, Win Bischoff. [NYT, WSJ]
• The man who will likely lead the Citi-Morgan Stanley joint venture, James Gorman, is now considered the frontrunner to take over for Morgan Stanley CEO John Mack when he retires next year. [Bloomberg]
• Phil Falcone's Harbinger is the latest hedge fund to limit redemptions. [DB]
• The board of the Federal Reserve of New York met with candidates over the weekend as part of their effort to find a replacement for Tim Geithner. [NYT]

Robert Rubin, a senior counselor and director at Citigroup who helped steer the megabank into taking on more risk, is quitting amid a firestorm of criticism. Why? Because he's "tired."

Maria Bartiromo turned up on Ellen the other day to explain to the American Express pitchwoman why it is she doesn't possess a credit card. First of all, she has a debit card, which is, like, almost the same thing, isn't it? Plus she has a corporate card, which she uses all the time. (No doubt!) And have you heard about all the people who load themselves up on credit card debt and are forced to pay high interest rates? It's tragic. Of course, if it weren't for those insane interest rates, how else do you think Citigroup would have been able to afford to fly Maria around the world on its private jet?

Citigroup says it won't be paying year-end bonuses to Vikram Pandit, Bob Rubin or chairman Win Bischoff. But we imagine Pandit will still be in good spirits tonight when he celebrates the New Year, particularly since he has that string of lovely holiday lights that he didn't have to pay for. [Bloomberg]

It's not just Ivy League-educated investment bankers in Manhattan who are getting shown the door as Citigroup trims its payroll. The 50,000 job cuts are taking place at the bank's offices around the world, a process that doesn't seem to be going all that smoothly judging by the email we received from a recently-terminated Citigroup employee in India by the name of Chetan Kelawala. It's a rather depressing and complicated tale, and we're not sure we follow what happened to Kelawala exactly. (The details are contained in the email that Kelawala sent to Citi CEO Vikram Pandit, which appears after below.) And while we have no doubt that the Hindi-speaking Pandit will get to the bottom of this situation just as soon as he possibly can, just in case he forgets (or decides that the goings-on at Citigroup's Pushp Vihar office in Delhi don't merit his time), you're more welcome to email him a reminder at vikram.pandit@citi.com.

• The number of workers filing new claims for jobless benefits jumped by 30,000 to a 26-year peak last week. [Reuters]
• AmEx and CIT will get $5.72 billion in bailout money. [Reuters]
• Doubts about Bernie Madoff now appear to date back several decades. [WSJ]
• Liliane Bettencourt, the world's wealthiest woman, is believed to have invested in Bernie Madoff via Thierry Magon de La Villehuchet, the money manager who committed suicide at his office yesterday. [Bloomberg, NYT]
• Steve Feinberg's Cerberus, which has suffered several losing months, is now limiting investor redemptions. [Bloomberg]
• Execs at Old Lane, the hedge fund operated by Vikram Pandit before it was acquired by Citigroup, may be leaving the bank to start a new company. [WSJ]
• Hedge funder Larry Robbins is cutting compensation and staff. [NYP]

• President Bush announced a rescue plan for General Motors and Chrysler that will provide $13.4 billion in federal loans. [CNN]
• Jamie Dimon and Bob Rubin will go bonus-less this year. [Reuters]
• Not surprisingly, Credit Suisse's plan to pay out bonuses with "toxic" securities has "elicited livid reactions from senior bankers." [WSJ]
• A former Lehman employee has been charged with insider trading. [CNN]
• One person who will profit from the Madoff mess: Bruce Wasserstein. Lazard has been appointed to sell the trading operations of Madoff's company. [WSJ]
• There are two—yes, two—books already in the works about Madoff. [TBS]

• The SEC admitted last night that it failed to follow up on repeated warnings over the years to investigate Bernie Madoff's firm and says it plans to conduct an internal investigation; it also is looking into the relationship between Eric Swanson, a former lawyer at the agency, and Shana Madoff, a niece of Bernie, who later got married. [WSJ, NYT, ABC]
• A look at Walter M. Noel, the founder of the Fairfax Greenwich Group and the middle-man who handed over $7.5 billion to Madoff's firm. [NYT]
• More on Bernie's lifestyle, including his fondness for manicures, steak dinners at the Palm, and trips aboard his boat named Bull. [Bloomberg]
• Morgan Stanley reported a fourth quarter loss of $2.29 billion. [WSJ, CNN]
• To cut costs, Citigroup has announced that it plans to combine its corporate and investment banking businesses. [DB, Dealbreaker]

A few weeks ago, Mort Zuckerman was doing his darndest to prop up an ailing Citigroup. The real estate kingpin (and Daily News owner) may have taken time out of his schedule to appear on MSNBC four times in one day because he was worried about the impact a Citi bankruptcy would have on the global financial markets—or it may have had something to do with the fact that the bank has long been one of his largest tenants. (You decide!) Whatever it was, though, it appears his mood has shifted. Zuckerman's Boston Properties announced that it now plans to strip the bank's name from the Citigroup Center on Lexington Avenue early next year. "We're tired of the fact that every time Citibank has a problem all of the TV cameras come and photograph the Citigroup Center sign on the front of our building," a Zuckerman lieutenant told a reporter today. The exec didn't indicate what the new name of the building would be—and it's doubtful any company in its right mind would shell out millions for naming rights given the current state of the economy—but if you have any clever suggestions, send them along. We'll pass them along to Mort tout de suite!

Citigroup has had a rough time recently. But the bank wouldn't want all the grim news to discourage the bright-eyed college students who signed on to join Citi's investment banking analyst class this May, would it? Of course not! Above you'll find the warm, fuzzy e-card the bank sent to its new recruits this week, which was accompanied by animated snowflakes. One thing it didn't come with, unfortunately: a guarantee that Citigroup will still exist by the time graduation rolls around.

♦ The events of the past few months signal that "there is no more Wall Street," according to Ace Greenberg, the former chief of Bear Stearns. [Bloomberg]
♦ Hedge funds dropped another 2.7 percent last month. [WSJ]
♦ Morgan Stanley's new bonus plan has a "claw-back" provision. [NYT]
♦ The hedge fund Copper River Management has closed its doors. [WSJ]
♦ Cowen Group has rejected an unsolicited takeover offer. [MW]
♦ In corporate layoff news, Sony plans to cut 8,000 full-time workers and the same number of part-timers. Other companies cutting back today: Wyndham Worldwide and Danaher Corp. [Bloomberg, CNN]
♦ Citi may be keeping its high-priced sponsorship of the new Mets stadium, but a holiday toy-train exhibit wasn't quite as lucky. [Bloomberg]

♦ A bruising day in the markets is expected to follow the scary job news this morning: Employers slashed 533,000 jobs last month, making it the most jobs lost in a single month since December of 1974. [CNN]
♦ Merrill Lynch shareholders will vote on the bank's merger with Bank of America today. [DB]
♦ Things are getting worse for hedge fund king Ken Griffin: His Citadel Investment Group was down another 13% in November. [WSJ]
♦ Neel Kashkari says the TARP is working; he and Hank Paulson may be the only ones. [Bloomberg]
♦ Citi has closed on the sale of its German subsidiary to Credit Mutuel-CIC for $6.6 billion. [MW]

Citigroup might want to consider keeping its branches open 24/7: It's going to take a really long time to thank 270 million tax-paying Americans! [EVGrieve]

♦ Layoff announcements, grim unemployment data, and dismal retail sales figures should lead to another nasty trading session on Wall Street. [CNN]
♦ A group of managers and senior execs from Neuberger Berman won the auction to take over Lehman's money management business. [NYT]
♦ Credit Suisse is laying off 5,300 people. [Reuters]
♦ Citigroup's top execs like Vikram Pandit and Bob Rubin say they're willing to forgo annual bonuses. How generous of them! [FT]
♦ Thomas H. Lee may shut down two hedge funds it launched recently. [WSJ]
♦ Poor Steve Schwarzman is "knocking on more doors and pressing more flesh than ever" to get business done these days. [NYP]
♦ Fortress Investment Group is falling apart fast. [NYT]
♦ Carlyle Group LLC is cutting 10 percent of its staff. [WSJ]

Citigroup isn't the only financial services company seeking to sell off its lavish corporate jets as the economy heads south. We've learned that the insurance giant Travelers (which, coincidentally, was once part of Citigroup) is heading down precisely the same path and put its Dassault Falcon 900C up for sale in just the last couple of weeks. The price? It's listed for $27.5 million, although keep in mind that it comes with "custom-patterned carpets" and the interior is finished with black nickel. The jet is currently located at Connecticut's Bradley International Airport and a local brokerage, Guardian Jet, LLC, is handling the sale. You can see what $27.5 million gets you—and read about how many satellite phones and microwave ovens come with the purchase—after the jump.

It looks like no executive perk is off-limits as an ailing Citigroup slashes costs, lays off employees, and tries to beef up its balance sheet. The banking giant has put two of its corporate jets on the market in recent weeks via a Maryland-based airplane broker called AvPro, we've learned. Both are Dassult Falcon 900 jets (click here for a larger pic) and are owned by Citigroup Corp Aviation in White Plans. Naturally, both also come with top-of-the-line everything, including mahogany woodwork, luxurious leather seating, gold accents, and very spacious bathrooms. Citi's airplane broker didn't put a price tag on either jet—the model begins at $35 million if purchased new—but we're guessing Citi won't be driving a hard bargain. (The full specs are below, just in case you're in the market for a new plane.) And don't feel bad for the likes of Bob Rubin and Vikram Pandit. Citi has several other planes in its fleet, and those have yet to be put up for sale (as far as we can tell) so there's no need to fear that senior execs will be forced to fly commercial in the near future.

♦ The Big Three automakers are putting finishing touches on new business plans to take to Congress this week, part of a last-ditch effort to secure a federal bailout. [WSJ, Bloomberg, NYT]
♦ Shoppers spent $41 billion over the four-day weekend, up 7.2 percent from the year before. That was better than expected, but retail experts are still pessimistic about the holiday season outlook. [CNNMoney, WSJ]
♦ Hedge funder Paul Tudor Jones has suspended withdrawals as he splits his $10 billion flagship fund into two. [FT]
♦ The bailout has already cost more than World War II, in case you're keeping count at home. [Clusterstock]