More than a few people are skeptical of Citi's plans to cut the ownership stake held by the federal government. You can understand why it would want to make such a move, but it's hard not to agree that such plans are premature. The AP notes the views of Richard Bove of Rochdale Securities, who tells clients that plans to issue more shares together in combination with a sale by the government would be bad news.

"First, it suggests that the company intends to raise new common equity to replace preferred equity, further diluting shareholders. Second, it indicates that the stock now has an overhang of one-third of its shares which are to be sold in the open market." More importantly, such plans suggest "there are problems with the company's capital structure that still need to be resolved contradicting all of management's statements on this point." 

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