There was some good news coming out of Bank of America today. They completed repaying their $45 billion from TARP. And since there was no price tag attached to the loan guarantees, Fed swaps, or other put options courtesy the US taxpayer, they’re now square. Bonuses will now commence.

Feeling a bit left out, Citigroup has announced plans to repay TARP via a $20 billion secondary offering. This is roughly equal to the amount they’ve reported as losses in the last year, or about a quarter of their currently listed market cap. Citi prints stock faster than the Fed prints dollars (no, not really). This would be great news for Citigroup’s highest paid employees, though not necessarily great news for shareholders. Dilution is seldom fun.

However, a tremendous run on Citigroup may be imminent. Zero Hedge points out that the Kuwait Investment Authority may be making a small withdrawal from Citi. This would present a rather large liquidity problem for Citi, who probably also has solvency issues masked by awful-but-standard accounting. It’s not often that a large depositor wants to withdraw a few tens of billions of dollars at once.

While it would make sense that Kuwait is less than pleased with the performance of their dollar denominated holdings in Citigroup, my guess is that Kuwait is trying to gain some sort of political favor and that this is nothing more than a stunt. To what end? I would guess the opportunity to renegotiate some oil contracts, but that is based solely on the geographical location of Kuwait.

The thing to think about is the power that even relatively small players can wield against the United States while it is in this economically vulnerable position. Citigroup was judged to be systemically important. How far will the US go to protect Citi from Kuwait? What happens when a bigger player wants out? It’s worth noting that there are bigger players that are not as friendly as Kuwait.