Vikram Pandit is making moves. They may not mean much, but he’s making them nonetheless. Citigroup says it’s considering a reverse split of its own stock—a move the New York Times describes as “the market equivalent of giving investors a $10 bill in exchange for two fives.”

“Clearly reverse splitting a stock has virtually no impact on running the company or its results,” Richard Bove, a bank analyst at Rochdale Securities. Regardless of the reverse split, the company’s stock will tumble if its operations don’t improve, he says. He may have been right. Citigroup shares slide nearly 16 percent to $2.60 after announcing the reverse split of its stock Thursday. (But the shares are up to just over $3 per share in this morning’s trading.)

Bove suggests other reasons for Citi’s move. Many brokerage firms have rules that prevent the solicitation to purchase a stock that’s selling below $5 per share. Further, many firms are unable to buy stock under $5. Plus, a stock above $5 just looks better, as in a non-penny stock. Too bad it didn’t work out that way for Citi—its stock hasn’t seen anything above $4 since mid-January.

In other questionable moves by Pandit, Edward “Ned” Kelly, previously Head of Global Banking, will succeed Gary Crittenden, as Citi’s CFO. Kelly is an outsider. He was recruited by Pandit and joins Citi from the Carlyle Group, a private equity firm.

That’s a no-no, Bove says. “This is a terrible mistake.” He says Citigroup “is the New York Yankees of banking,” as it has destroyed its “farm” team seeking “big hitters” from outside. For years, Citigroup has made the mistake of thinking the CFO is not an “inside” position.

Whereas Crittenden was previously CFO of American Express, Bove says Kelly “has a superb reputation but there is nothing in his background that suggests that he is qualified for this job.” Kelly’s strong background in law—he was a partner at Davis Polk and Wardell before he joined J.P. Morgan as its General Counsel—his number of investment banking positions and his experience as CEO at a regional bank later sold to PNC Financial do not qualify him for the Citi post, Bove says.

Seek and Destroy
What should you do when you want someone else’s money? If you’re Congress, you tax the heck out of them until they’ve got close to nothing left. Last week, the House approved a 90 percent tax on bonuses paid to AIG employees and other firms that accepted bailout funds.
The tax comes after outrage over AIG’s $165 million in retention bonuses to employees this year, but it would apply to bonuses to employees earning at least $250,000 at companies that accepted at least $5 billion in federal bailout money. According to the New York Times, the tax would affect executives at Goldman Sachs, Bank of America, Citigroup, Wells Fargo, JP Morgan Chase and, of course, AIG.

There are questions surrounding the bill, which will be voted on by the Senate this week. Critics of the tax say the bill will do more harm than good. Scott Talbott, vice president of the Financial Services Roundtable, a Wall Street lobbying group, told TIME, "The week's events will cause a brain drain of salespeople, rank and file and middle management to non-TARP companies.”
There are also doubts about the legality of the proposed tax since it may violate Article 1, Section 9 of the U.S. Constitution outlawing “bills of attainder,” says Senator Judd Gregg, a New Hampshire Republican. “It’s basically targeted on a small group of people, which is technically a bill of attainder,” Gregg told Bloomberg. “Even though it may be drafted to be broad, it’s actually targeted.” For more on the legality of the proposed tax, click here.

Meanwhile, Rep. John Lewis (D-Ga), chairman of a House subcommittee overseeing the federal bailout reported Thursday that at least 13 firms owe back taxes. The firms owe a total of more than $220 million in unpaid federal taxes, according to the AP. While the committee said it could not legally release the names of firms, two firms owe more than $100 million apiece.

Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes, but the Treasury Department did not ask them to turn over their tax records.

“We are going to get to the bottom of what is going on here," Lewis says. We don’t doubt it—the government’s response to the economic crisis is beginning to read more like the avenger in an action cartoon every day.

To lighten the mood—Bloomberg reported that novelty items such as bags, umbrellas and stress balls that were mistakenly transferred to Barclays through the sale of Lehman’s brokerage unit will be returned to Lehman and sold to pay creditors, according to a court filing yesterday. While the companies wouldn’t comment on the fate of some 1,630 green canvas duffle bags, 353 green compact golf umbrellas, 75 Waterford Marquis Treviso crystal clocks, 682 white Lehman coffee mugs, 130 Swiss Army pens, and some 24 Titleist PRO VI golf balls inscribed “LB,”—we hazard a guess that you might see a flood of Lehman trinkets on eBay. Happy Bidding.