What happened
Banking behemoth Citigroup agreed to sell a 51 percent stake of its profitable Smith Barney brokerage unit to Morgan Stanley. The deal, which will net Citi $2.7 billion in cash, is widely expected to be a first step by Citi CEO Vikram Pandit to unravel the “financial supermarket” stitched together by predecessor Sandy Weill. (AP in Yahoo! Finance)

What the commentators said
The “well-deserved break-up” of Citigroup is an about-face for Pandit, said The Wall Street Journal in an editorial. But he could no longer indulge “Citi’s old ambitions” of one-stop banking after it took “$45 billion in taxpayer cash and secured a $249 billion taxpayer guarantee for lousy assets.” Now it’s a matter of public policy, not just business, to make sure Citigroup is cut down to a manageable size, so it will never again be “too big too fail.”

It could still fail, as Citi’s two recent government bailouts were just “a bucket to bail out a sinking ship,” said Michael Shulman in BloggingStocks. The “leaks and holes are still there”—Citi still has “dodgy assets” on and off its highly leveraged balance sheets—and the company badly needs capital that only taxpayers will provide.

So what went wrong at Citigroup? said Justin Fox in Time online. “It’s possible that this was all just a case of mismanagement,” since the European-style universal banking model it emulated “doesn’t invariably bring disaster.” But it could also be that investment banking and commercial banking “simply don’t mix” well in the same firm.

Citi’s “financial supermarket” strategy might have worked if its executives had understood the point of a supermarket, said Holman Jenkins in The Wall Street Journal. A financial supermarket should focus on retail customers, bringing together all “the products and services a consumer would need to manage his financial life.” Citigroup lost sight of the consumer, and it took a federal intervention to point it back on track.