Last month, Citigroup (NYSE: C) drafted a planto get taxpayers out of its hair. Now one of its biggest shareholders is calling for Uncle Sam to get lost, too.

Saudi billionaire and big-time Citi shareholder Prince Alwaleed bin Talal was recently quoted as saying, "The earlier the U.S. government exits its investments in [banks], the better ... We need to give confidence back to the shareholders and investors that these companies are moving along without government support." 

Agreed. Now that taxpayers own common shares, there's no reason to hang on other than gaining managerial control, which regulators vow they have no intention of. Even for banks taxpayers hold preferred stakes in, like Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC), deep and liquid markets for these securities have roared back-- the government could sell them to private investors without any material impact to the banks' balance sheets.

To be fair, though, if we want to follow the prince's advice and prove that Citigroup is "moving along without government support," more has to be done than just selling the government's equity stake.

For starters, Citigroup would have to back away from the $306 billion asset guaranteetaxpayers extended last fall. That would shift a tremendous amount of risk back onto its own books, increasing losses and dampening capital ratios.

It would also have to stop issuing debt backed by the Federal Deposit Insurance Corp. Just last month, Citigroup sold $5 billion of the stuff, which comes with an artificially low cost of capital, being backed by taxpayers and all. (In fairness, General Electric (NYSE: GE) has been a big fan of the subsidized debt, too.)

Citigroup would also have to stop selling asset-backed securities into the Federal Reserve's TALF program -- a subsidized mechanism for banks to sell assetswhere there might not otherwise be private demand.

So, sure, everyone wants to show the world these banks are moving along without government support. Truth is, they're not.

Careful what you wish for, Prince.

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This article was originally published as Citigroup Wants Taxpayers Out of Its Hair: Round 2on Fool.com

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