Assume for a moment that Citi is successful in raising $3 billion for private equity and hedge funds, and assume for another moment that the U.S. government takes away these businesses away from Citi, as legislators are threatening. What happens next? Why is Citi building a business it may soon have to sell? And why would any investor give money to a hedge fund manager that may have to sell its business?

Investors will not likely care about whether the bank will sell its alternative asset management business. Customers care most about who is investing their money day to day, not which corporate logo is on the stationery. And if Citi has to sell the business, it will get a slightly higher price for a business that has an extra $3 billion under management.

Citi is still walking into a mine field by building a business that lawmakers are explicitly trying to keep banks out of. One thing for sure–if Citigroup is building alternative asset management businesses, nobody can accuse it of being under the thumb of the government, which still owns billions of the bank’s shares.