Tangling with regulators definitely has its downside. Just at the top dogs at Citi. The Fed has told the bank that it is barred from making acquisitions until it has tightened its internal controls and fixed up its regulatory issues. The list of troubles at the bank includes a scandal in Japan, helping Enron in its shenanigans, and yes, allegedly allowing market timers to work their magic.

The speculation is that the Federal Reserve will nix any deals by Citi for at least 12 months as the bank proves its integrity. Fed officials gave Citi honchos the bad news even as it approved Citi's takeover of First American Bank SSB.

"It (is) important that management's attention not be diverted from these efforts by the demands that mergers and acquisitions place on management resources," explained the Fed said in its approval of Citigroup's purchase of the Bryan, Texas-based bank.  

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