Good news: Citigroup takes bailout money, buys new $50M corporate jet

posted at 1:20 pm on January 26, 2009 by Allahpundit

Sounds like a sweet ride. To think, you and I will own it soon.

Citigroup decided to get its new wings two years ago, when the financial-services giant was flush with cash, but it still intends to take possession of the jet this year despite its current woes, the source said.

“Why should I help you when what you write will be used to the detriment of our company?” replied Bill McNamee, head of CitiFlight Inc., the subsidiary that manages Citigroup’s corporate fleet, when asked to comment about the new 7X.

“What relevance does it have but to hurt my company?”

It’s not uncommon for large companies to pay a deposit on a new plane then cancel the order before delivery, according to a source in the corporate aviation business.

Citigroup execs are also quietly trying to unload two of their older Dassault 900EXs.

No wonder they have no cash to lend; their capital’s all wrapped up in important expenses like this. Serious question: Do these turds want to survive, at least as private entities? Public support for the Big Three cratered when they were caught taking private jets down to D.C. for their first congressional hearing. They got their money anyway, of course, but letting companies like GM and Citi fail isn’t the only “punitive” option for an angry electorate anymore. After reading the Post piece on the jet, this passage from the Times story on nationalization tempted even my withered libertarian heart:

“The case for full nationalization is far stronger now than it was a few months ago,” said Adam S. Posen, the deputy director of the Peterson Institute for International Economics. “If you don’t own the majority, you don’t get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It’s the mistake the Japanese made in the ’90s.”

“I would guess that sometime in the next few weeks, President Obama and Tim Geithner,” he said, referring to the nominee for Treasury secretary, “will have to come out and say, ‘It’s much worse than we thought,’ and just bite the bullet.”

Mind you, this is a company that’s already planning to cut 50,000 jobs. Exit question: How long before they have a change of heart on the jet? Over/under is a week.


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Comment pages: 1 2

By all means, the tax payer benefits if Citi goes ahead with the order, puts no hours on the plane, then later divests it, rather than throwing away millions and cancelling, perhaps even sending the manufacturer of that plane into bankruptcy.

Medicated on January 26, 2009 at 4:05 PM

So? What does that have to do with why they’ve received taxpayer money?

Taxpayers would also benefit if I spent that kind of money on a private jet. Does that mean I deserve a bailout?

Esthier on January 26, 2009 at 4:22 PM

Furthermore, Citi can charter the jet and actually make up much of the cost of depreciation. Certainly not all, but you can safely assume the costs will be far less than a cancellation.

Not only that, stop whining about jets. It’s no different than a marketing budget. Multi-million dollar deals don’t get made when you’re sitting in airport security, so if your company wants to spend $15,000 per flight to make sure they can seal the deal that makes $30 Million, there really isn’t much of a decision. How many of you that travel for business have to schedule “travel days?” Chartered jet service means you have five days in a work week when the competition might only have three. When that business decision affects hundreds of thousands of employees, securing their jobs, securing their futures, you bet you rear end I want my CEO to make that deal before our competition gets a chance. I fly upwards of six times a week, and I spend more time getting to the airports and getting on the plane than I do in the air. Two days of every work week are wasted on traveling, and time is money. Losing two days of business for a Fortune 500 company costs a great deal more than what it costs to charter a jet across the globe ten times over. A luxury to you, a necessity for others. This is not that foreign a concept for the average joe to grasp. The environmentalists would have me walk or bike to work, but instead, I drive, save two hours a day, and after four days, the time saved is the equivalent of another 8 hour day of work.

Medicated on January 26, 2009 at 4:26 PM

Multi-million dollar deals don’t get made when you’re sitting in airport security, so if your company wants to spend $15,000 per flight to make sure they can seal the deal that makes $30 Million, there really isn’t much of a decision.
Medicated on January 26, 2009 at 4:26 PM

The problem has been that the faster the Citi guys worked the more money they lost. They didn’t understand the deals or the products involved. Ordering in some pizzas and working weekends in the office with their risk management team would have been better.

dedalus on January 26, 2009 at 4:40 PM

Ordering in some pizzas and working weekends in the office with their risk management team would have been better.

dedalus on January 26, 2009 at 4:40 PM

Or maybe letting them sell their jets or fail would have. I’m finding it hard to care.

Esthier on January 26, 2009 at 5:17 PM

Too big to fail?

Nah, too dumb to succeed.

spmat on January 26, 2009 at 5:21 PM

Or maybe letting them sell their jets or fail would have. I’m finding it hard to care.

Esthier on January 26, 2009 at 5:17 PM

Letting Citi fail back in November would likely have led to large systemic problems in the financial markets. The government had to step in, if only to let them fail later in a more orderly fashion. Once Citi is relying on government money–I think $45B at this point–they have to realize that politics matter, especially since Citi will likely need more help. It is in Citi’s best interest to not put the government in a position where additional aid comes with harsh conditionss that wipe out the shareholders.

dedalus on January 26, 2009 at 5:29 PM

It is in Citi’s best interest to not put the government in a position where additional aid comes with harsh conditionss that wipe out the shareholders.

dedalus on January 26, 2009 at 5:29 PM

Assuming they’re not in bed with enough politicians that they have no legitimate fear of political backlash.

The government had to step in, if only to let them fail later in a more orderly fashion.

I see your point, but I still find this a little hilarious.

Esthier on January 26, 2009 at 5:42 PM

I see your point, but I still find this a little hilarious.

Esthier on January 26, 2009 at 5:42 PM

Yes, management looks inept. Though, after loosing a quarter trillion in market cap maybe the good ship ridiculous has already sailed with the Citi management, principally Sandy Weill, all aboard.

dedalus on January 26, 2009 at 6:12 PM

I really don’t understand what the fuck the government is doing.

Citi orders a new jet? Fine.

They pay for it with our money? Fine.

They still owe us that fucking money, so it’s our jet.

What would Citi do if somebody couldn’t pay the loan on a jet? They would repossess it. BANK OWNED. That’s how they get their money back.

I have absolutely no understanding why the Government doesn’t apply the same fucking rules to Citi as Citi does to everyone else. Take the fucking jet and sell it to the highest bidder and put our money back in the fucking pot. And keep doing that with every building and fancy furnishing Citi has until they pay back their god damned loan.

What, is it fucking brain surgery?

Summer on January 26, 2009 at 6:51 PM

It’s none of our freakin’ business how they use their money, or for us to judge and say they’re not being prudent. It’s only a matter to the shareholders, and the MARKET will judge whether it’s prudent or not.

iamse7en on January 26, 2009 at 6:54 PM

iamse7en on January 26, 2009 at 6:54 PM

Bullshit. It’s our money, so it’s our business.

If Citi loaned you money to build a house, and you take that money and use it some other way, you sure as fuck would be hearing from them.

So why are they any different? They’re not. They’re just a damned borrower and we should treat them as such.

Summer on January 26, 2009 at 6:58 PM

I really don’t understand what the fuck the government is doing.

Citi orders a new jet? Fine.

They pay for it with our money? Fine.

They still owe us that fucking money, so it’s our jet.

What would Citi do if somebody couldn’t pay the loan on a jet? They would repossess it. BANK OWNED. That’s how they get their money back.

I have absolutely no understanding why the Government doesn’t apply the same fucking rules to Citi as Citi does to everyone else. Take the fucking jet and sell it to the highest bidder and put our money back in the fucking pot. And keep doing that with every building and fancy furnishing Citi has until they pay back their god damned loan.

What, is it fucking brain surgery?

Summer on January 26, 2009 at 6:51 PM

yeah

johnnyU on January 26, 2009 at 7:24 PM

Exit question: How long before they have a change of heart on the jet?

Not long ago Rush Limbaugh pointed out that there’s a long waiting list for these types of “corporate” private jets. He’s convinced that anyone committed to buying these yets could easily turn around and resell it before its even delivered to anyone way down on the waiting list, and at a tidy profit.

Someone call Citi! They might actually be able to bail themselves out a bit by their own initiative!

KendraWilder on January 26, 2009 at 10:27 PM

Exit question: How long before they have a change of heart on the jet? Over/under is a week.

Give me the under.

Jaibones on January 27, 2009 at 1:52 AM

The really sad part of this story is that CitiGroup is a victim just like the rest of us. They were, after all, the bank specifically forced by an ACORN lawsuit (with Obama as an attorney on the team) to write toxic loans.

I sort of feel sorry for them. After all, Obama got his jet, why can’t they get theirs?

unclesmrgol on January 27, 2009 at 9:45 AM

Rush is calling this one dead on.

The jet is insignificant. It means nothing compared to the bigger picture of the private sector selling and the Socialists in the Democratic Party buying their souls. They aim to rule our lives in even the most minute detail.

The class envy, the divide and conquer; a page from Saul Alinsky’s book. We’re screwed because we’re falling for it.

hawkdriver on January 27, 2009 at 12:34 PM

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