Citigroup (C) and Bank of America (BAC) are near collapse if we use the share price as a gauge. Both of these companies are in dire trouble and Wall Street knows it.

Over the past 24 hours we have learned that Citigroup is planning to announce a large restructuring in order to survive. And today Bank of America is pleading with Hank Pauslon for more money to keep them alive.

Citigroup and Bank of America are on the verge of failing if they don’t get Government money and/or sell major parts of their companies. The Government is going to keep bailing them out because they are too big to fail (sarcasm).

If these companies are really as bad as I think they are, then they should be left to their own devices. Let them die and the market vultures will pick over the carcass and take the good parts. The FDIC will take care of all the insured deposits. There will be some collateral damage of letting these companies go, but I strongly believe it will cost far less to do ‘clean up’ afterward as opposed to bailing them out again and again.

Tonight we learn that both Bank of America and Citigroup have rescheduled their quarterly earnings losses statements to now be tomorrow morning. Also tonight we are learning that Bank of America will get a huge bailout courtesy of the tax payers.

Will Citigroup also have an announcement of more money from the Government? It is expected that Citi’s losses will be extremely large, they are a company with so many holes in their balance sheet that they can’t hold on to the money they have now. So will Citi ask for more money after revealing their earnings losses tomorrow?

Vikram Pandit, CEO of Citigroup, issued a letter to his employees yesterday:

From the WSJ…

January 14, 2009From: Vikram Pandit

Dear Citi Colleagues,

I want to make sure you know that we’ve moved up our Q4 2008 earnings announcement to this coming Friday, January 16. Since we are ready to release 4th quarter earnings and talk about 2009 and the future, we saw no need to wait.

As I told you yesterday in my video message, economics and psychology are both important in the markets. The economic model of our business is sound and positions the company for success over the long term. The clarity we provide as we report earnings should address the psychology of the market.

Until then, here are the things you should know:

* While we are embarked on a long-term transformation of Citi, our core mission is unchanged. Our goal is to streamline our operations, strengthen our balance sheet, position ourselves to take advantage of historic global growth opportunities, and deliver to clients all the benefits of our strength, insight, and unique global reach.

* We are and will remain a bank. We will continue to help clients save, borrow, invest, transact, and we will provide them advice.

* Our commitment to our clients remains unchanged. We will continue to deliver what our clients expect from us. That is our firm commitment. Please reiterate that to the customers and clients you speak with today.

We continue to be focused on creating value for our shareholders and debt holders and restoring profitability sooner rather than later.

Thank you for your dedication, focus, and hard work. I look forward to speaking with you on Friday.

There is one thing Mr. Pandit forgot to add to his memo.

‘And we will accomplish all of these goals by continuing to take advantage of the U.S. taxpayers who have been so wonderful in providing us with much needed capital so we can continue to operate just as recklessly as we always have’

Rumors have been all over the map today with what happens to Citi. Even becoming nationalized has been floated on the Street today. This is one of the reasons why you have witnessed the share prices of Citigroup and Bank of America deteriorate rapidly in the past 48 hours. The fear of the common shareholders being wiped out is what is driving the mass exodus from these companies.

So with these two companies releasing their statements tomorrow morning what will happen to the market? Remember that tomorrow is options expiration day. If someone wanted to goose the market upwards they would do it on opex day. So we have to wait and see how the market ‘perceives’ the announcements. We will either have one heck of an upward rally, or a massive selloff event.

Tomorrow WILL be a wild one…

Updated S&P 500 futures charts (I removed some indicators to improve clarity for tonight):

S&P 500 E-Mini Futures - Daily

S&P 500 E-Mini Futures - Hourly

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