It certainly looked bad. Citi--an ailing bank that is operating under open-bank rules, a bank that has taken $45 billion in taxpayer money, a bank that has laid of 75,000--had decided to spend $50 million on a corporate jet. And not just any jet, according to some media reports, the Dassault Falcon 7X "seats 12 in leather seats and sofas and includes a custom entertainment center."

One politician urged newly approved Treasury chief Tim Geithner "to stop this abusurdity from occurring." The pressure worked. Citi subsequently announced it had no intent to take possession of the jet.

There's a lot going on here. For one thing, the New York Times notes that Rep. Barney Frank "took out a provision in his TARP bill last week that would have required the recipients to drop their corporate fleets. He apparently took out the measure after representatives from jet-making states cried foul." But the jet in question is French-made. Perhaps the language will be reinserted.

And then there's Citi's side to the story, at least until to bowed to the pressure (a wise move). According to Bloomberg, Citi argues that taking possession of the jet may actually reduce operating costs because the new jet will be more fuel efficient. Also, the bank signed the contract in 2005, part of an effort to reduce the number of Citi-owned aircraft. If it refused delivery, Citi would have had to pay millions in penalties.  

So what do you think? Please post a comment. Citi's government handlers will likely have a lot to say about this. Certainly, it's yet another PR black eye. - Jim