With Citigroup's stock plummeting last week, over fears about its exposure to toxic mortgage assets, regulators are reportedly working on plan to bail out the embattled bank, saying the US government would guarantee more than $300 billion in company assets, while injecting an additional $20 billion in capital. In return for the cash infusion, the government would get an additional ownership stake of $7 billion in Citigroup.

Over the weekend, the Treasury Department and the Federal Reserve have been involved in discussions to devise a strategy to stabilize the company. As per the new agreement, the bank would be prohibited from paying out a dividend of more than a penny per share and would face restrictions on executive compensation.

Citigroup was especially hard hit by the meltdown in risky, subprime mortgages made to people with tarnished credit or low incomes. Foreclosures on those mortgages spiked, leaving Citi and other financial companies racking up huge losses on the soured investments. The troubled bank, which has failed to turn a profit during the past four quarters, has already received $25 billion from the Treasury Department's $700 billion financial bailout program.

The company has seen its shares lose 60 percent of their value in the past week, reflecting a crisis of confidence among restless investors. Hammered on worries about its financial health, they feel all the risky debt on Citigroup's balance sheet will turn into nearly irreversible losses, as the economy worsens and the markets stay turbulent.

Citigroup is a large, interconnected player in the financial system, with its operations stretching around the globe in more than a hundred countries. If the bank were to collapse, it would wreak havoc on already fragile financial and economic conditions!