The Federal Deposit Insurance Corp. (FDIC) is reportedly pushing for a massive overhaul among top executives at Citigroup (C) as the bank restructures to raise capital. FDIC chair Sheila Bair called for efforts from another regulator to lower the US government’s own confidential rating of the bank’s viability, making room for regulators to more closely control the goings on at Citi, unnamed sources told the Wall Street Journal. The move would essentially allow the FDIC greater control in shuffling executives at the same time Citi restructures internally to preserve capital. The bank earlier this week told five former executives it would halt severance payments in fear of a compensation flop like that at American International Group (AIG), according to the WSJ. But with reports the administration may soon appoint a pay czar to ensure banks and financial institutions receiving government aid adhere to strict executive compensation rules, the caution may have been unnecessary. A regulator overseeing compensation would essentially do the same job of avoiding bonus-flop situations like that at AIG. The news that the FDIC may shake up executives comes as Citi faces its last days on the Dow Jones Industrial Average before the scheduled delisting on June 8 due to “a substantial restructuring which will see the government with a large and ongoing stake,” Dow Jones editor-in-chief Robert Thomson said Monday. The bank was recently found to be in need of $5.5bn to meet the government’s expectations in the case of more severe economic circumstances. Citi got creative with capital-raising efforts ahead of the test results, with news reports saying it might consider paying larger base salaries to avoid criticism over bonuses and forcing holders of more than $15bn of trust preferred shares to transfer to common stock to raise capital. Write to Diana Golobay.

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