Still more details are emerging from the weekend bailout of Citigroup. And in what is no surprise in this corner, it appears Citigroup is not well capitalized and Faces Pressure to Slim Down.

The government rescue of Citigroup Inc. reversed the perilous slide of the company's stock, but pressure is mounting on its executives and directors to do even more to stabilize the financial giant.

Citigroup executives acknowledged Monday that the government made it clear in weekend negotiations that it expects the company to continue to reduce its appetite for risk, and to seriously weigh more drastic actions, including possibly breaking up the company.

"This is a reprieve, but it's not a complete pardon," said another person familiar with the matter, referring to the government rescue plan. "Nobody's confused about that."

The company faces swelling losses on loans that aren't covered under the government's loss-sharing agreement, which amounts to insurance on a $306 billion pool of assets. Under the plan, Citigroup will shoulder the first $29 billion in losses on that pool. After that, three government agencies will absorb 90% of any remaining losses, which amounts to $249 billion.

The arrangement covers Citigroup's portfolios of U.S. residential and commercial mortgages and its leveraged corporate loans, among other assets. The assets aren't just risky ones; the government insisted that the agreement cover entire asset classes, so that Citigroup couldn't simply dump toxic loans and securities in the lap of taxpayers.

Absent from the arrangement are Citigroup's giant credit-card business, where defaults have been rapidly piling up, and its overseas lending operations, which also are showing signs of stress.

While the government deal bolsters Citigroup's capital ratios, "we are concerned that losses may eventually exceed the government's backstop," said Standard & Poor's equity analyst Stuart Plesser.

In exchange for covering hundreds of billions of dollars in potential losses, Citigroup is issuing the government a total of $27 billion in preferred shares, in which the government will receive regular dividends. The government now holds a 7.8% stake in Citigroup, which entitles it to $3.4 billion a year in dividends.

On Friday, Citigroup Vice Chairman Lewis Kaden and investment banker Edward Kelly spoke by phone with New York Fed President Timothy Geithner to discuss the worsening situation.

Inside the government it was far from clear that action was needed. Citigroup's stock price was tumbling, but there was no sense the company was in danger of failing. But over the weekend, as they pored through Citigroup's books, it became clear to top officials that the company needed government help.

On Saturday morning, Citigroup executives sent a blueprint based on the Wachovia structure to government officials.

Policymakers balked, thinking the plan too beneficial to Citigroup. If the U.S. were to take another equity stake, Treasury Secretary Henry Paulson wanted it to be small, since otherwise the government would end up owning Citigroup. The officials worried that appearing to nationalize the company would further roil markets. They agreed that $20 billion was the limit for what they would invest.

Not everyone was satisfied. FDIC Chairman Sheila Bair harbored reservations about a bailout because it exposure her agency to big losses. She wanted government officials to consider an arrangement that would be more punitive to Citigroup shareholders. An FDIC spokesman said "limiting the potential exposure of the deposit-insurance fund is always a high priority for Chairman Bair."

On Sunday morning, the disagreement ignited a heated debate between Ms. Bair and her counterparts at other agencies, say people familiar with the discussions.

Around 6 p.m. on Sunday, Mr. Paulson called Ms. Bair to talk to her privately. He told her helping Citigroup was important and that if she couldn't play a meaningful role, the Fed and Treasury could do it without her.

Ms. Bair agreed to be involved but would only accept the FDIC taking $10 billion of the losses, with the Fed guaranteeing most of the rest.

The question now is "Just how bad are Citigroup's books?" Don't expect answers from the Fed, but when FDIC Chairman Sheila Bair wants no part of the action, we at least have an indirect answer: Things at Citigroup (and no doubt everywhere else), are not as good as the financial institutions are letting on.