US President Barack Obama's administration has forced beleaguered Citigroup to scrap the buying of an executive jet worth $50 million, at a time when the entity is dependent on taxpayers money for survival.
"The US financial sectors new political masters began exerting their influence on Tuesday as Citigroup was forced to scrap the purchase of a $50-million executive jet. . .," UK daily The Financial Times has reported.
The buying of the aircraft was 'seen as a misuse of money at a time when the bank is reliant on public support'.
The report said that Citi, which earlier insisted that it would go ahead with the purchase of the jet, backed out after officials acting for Treasury secretary Tim Geithner, expressed strong opposition to the move.
"Geithner's action came as he raced against time to change public perception of the government's bank rescue effort of the troubled asset relief programme inherited from the Bush administration," the daily noted in an online report.
The Financial Times pointed out that the rules and the intervention over the Citi jet, which sets a new tone in the relationship between the government and banks, are intended to reassure a sceptical public that TARP funds would not be misused.
Quoting White House spokesman Robert Gibbs on the Citi aircraft purchase, the report said that Barack Obama "does not believe that is the best use of money at this point. That money should be used to lend to consumers".
Attributing to a statement from Citi, the report added, "We have no intent to take delivery of any new aircraft".
Attributing people close to Citi, the newspaper noted that the troubled bank could end up paying around $4 million to cancel the order for the aircraft, "believed to be a Falcon 7X made by Frances Dassault, unless it can find a buyer for the aircraft".
Meanwhile, Democrat Senator Carl Levin of Michigan had asked the government to stop Citi from buying the jet.
"The notion of Citigroup spending $50 million on a new corporate jet, even as it is depending on billions of taxpayer dollars to survive, does not fly," Carl Levin had said.
To permit Citigroup to purchase a plush plane, foreign-built, no less, while domestic auto companies are being required to sell off their jets is a ridiculous double standard," he added.
Vikram Pandit-led Citi has received two lifelines from the Federal government, in turn making it a significant stakeholder.
Till now, the government has pumped in $45 billion of fresh capital into the company and is also guaranteeing assets worth more than $300 billion.
Citi has posted losses for five straight quarters in the wake of the financial turmoil
