Today, the nation's largest bank announced that it's selling off a whopping $400 billion in assets. It's part of a restructuring effort for Citigroup, with an eye toward moving beyond the current financial crisis. In recent weeks, there was a sense of optimism on Wall Street but the worst may be over. But the bleeding hasn't stopped. Late yesterday, the major insurance company American International Group reported nearly $8 billion in losses. NPR's Chris Arnold has this story on Wall Street's mixed outlook.

CHRIS ARNOLD: A lot of people in Wall Street are sleeping a little better right now. But while some things are improving, there are some scary monsters in the closet. Until very recently things were really a mess in the mortgage system in the broader credit markets. You had Bear Stearns imploding, companies afraid to do business with each other.

BRIAN BETHUNE: This thing was just continuing to deteriorate. It was a vicious cycle that was caught spiraling downwards and there was a lot of disparity that there was really no way for to stop it.

ARNOLD: Brian Bethune is an economist with "Global Insight". _ the record numbers of bad loans and foreclosures had the debt markets all fouled up with 90 firms not wanting to buy even the stocks backed good loans with low risk.

BETHUNE: They didn't want to touch any of these assets even if they were high quality assets. So, that became, you know, irrational, in some sense, or crazy.

ARNOLD: Home buyers and even big companies couldn't borrow the money that they needed and that's very bad for the whole economy. Then in March, the Fed stepped in and propped struggling investment banks that were at the center of the storm. The Feds promised to loan the money to save them basically. That did a lot to dispel the real panic on Wall Street.

BETHUNE: That, in some respects, represents a watershed because there's a sense that there's light at the end of the tunnel. There's a sense of hope there that we can get beyond this.

ARNOLD: Bethune says the log-jam is showing signs of breaking up. Lower-risk mortgage securities are starting to trade in more rational ways. Some banks have even been able to sell some of the riskier stuff to get it off their books. And companies are looking to the future. Today Citigroup unveiled plans to streamline itself. CEO Vikram Pandit acknowledged in a conference call today, that the company had problems in its securities and banking unit.

VIKRAM PANDIT: The volatility in this business and the overall returns have been unacceptable, and its clear to me we need to restructure our model. That said, I would also add that the entire industry in this area is transforming and searching for the future.

ARNOLD: Citigroup has become a financial behemoth with all sorts of off shoots in more than a hundred different countries - that is more than $2 trillion in assets. That's just too much says Peter Morici, an economist and professor at the University of Maryland.

PETER MORICI: They have become large and inefficient and in a crisis that catches up with you in a way that it doesn't in good times. What has become apparent is that these large companies like Citigroup cannot manage risk effectively when they are so diverse, because they don't know what the various units are doing.

ARNOLD: That is she's not going to be sold overnight and the few and risky _ says there's another big problem. The housing market is not getting any better and its _ prices fall that would spark even more foreclosures. Big companies will suffer more losses and more small and regional banks are likely to fail. Peter Morici.

MORICI: My feeling is we don't know how deep the hole is right now.

ARNOLD: Many an economists think all these will mean, at best, a mild recession followed by very sluggish growth that drags on for at least a couple of years. Meanwhile, foreclosures are at their highest rates in 50 years and rising. Chris Arnold, NPR News.

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