Citigroup’s Muni-Market Exit Sows Fears of a Wall Street Retreat

For years, small investment banks have been pulling out of the business of underwriting municipal bonds, leaving the job of raising money for US state and local governments dominated by Wall Street’s giants.

Now, there’s concerns that the big banks may start dropping away, too.

Citigroup Inc.’s announcement Thursday that it is shutting down its municipal-bond division highlighted the pressures on a corner of finance contending with diminished fees, a debt-sales slowdown and pushback from local Republican politicians intent on drawing banks into America’s culture wars. Chief Executive Officer Jane Fraser indicated that underwriting state and local debt was, ...