January 27th, 2009
12:56 PM ET

Financial Dispatch: Citigroup’s first-class flight canceled

Andrew Torgan
CNN Financial News Producer

Citigroup is changing its tune on taking delivery of a new $45 million corporate jet under pressure from the White House. According to a senior administration official, the Obama Administration pressured Citigroup to reverse course after a Treasury Department official called the company Monday and "told them it was unacceptable" to accept delivery of the new aircraft.

The New York Post reported Monday that Citi was set to take possession of the jet it decided to acquire two years ago - even after it received billions of dollars in support from the government amid the ongoing credit crisis and recession. But a Citigroup spokesman told CNN this morning, "We have no intent to take delivery of any new aircraft."

The move comes as new Treasury Secretary Timothy Geithner tries to quickly bring more accountability and oversight to the much-maligned TARP program he now oversees. Under that program, Citigroup has already received some $45 billion in government bailout funds.

The cuts keep coming… high-tech glass and ceramics maker Corning says it’s cutting 3,500 jobs, or 13% of the company's workforce, by the end of 2009. Oil field services company Baker Hughes is cutting 1,500 jobs. And forest products company Weyerhaeuser is closing two mills in Washington State and cutting 220 jobs.

The news comes one day after a half-dozen companies such as General Motors, Home Depot and Caterpillar issued a steady flow of announcements totaling more than 71,400 layoffs. In January alone, companies have announced more than 210,000 job cuts. So shocking are the numbers that President Obama mentioned many of the companies cutting jobs by name on Monday while ticking off a list of economic woes.

And more bad news on the housing front… an index of home prices in 20 major metropolitan areas fell at a record annual pace in November to levels not seen since 2004. The S&P Case-Shiller Home Price Index dropped a record 18.2% over the 12 months ended Nov. 30. That brought the index to its lowest point since February 2004. From its peak in mid-2006, the index has plunged more than 25%.

We also received the latest a reading on consumer confidence for January, which fell to an all-time low, and the Fed kicks off a two-day meeting today. A decision on interest rates, which are now set at a “target range” of between zero and 0.25%, is expected at around 2:15 p.m. on Wednesday.

Finally… gas prices dropped 0.2 cents overnight at $1.840 a gallon. That’s the fourth consecutive decline 5 states have regular unleaded gas prices of $2 and higher. The highest gas prices are in Alaska ($2.536). 45 states and the District of Columbia have regular unleaded gas prices below $2. The cheapest gas prices are in Wyoming ($1.503).

Filed under: Andrew Torgan • Economy • Finance • Gas Prices • Oil • Wall St.
soundoff (17 Responses)
  1. Mike, Zephyrhills, FL

    Why do we have to spend all our money for things we dont need.

    Like if we dont go to Walmart, Big Lots, Sears, Macy's ,Dollar tree, Dollar General stores, etc... we are terrible Americans.

    Why do we have to buy a new car all the time?

    Why do we have to have car insurance, for what Lawsuits? they never pay you what the car is worth anyway.

    Why do I have to pay income taxes on the little wages i make anyway and then wait to get them back and let loan sharks take advantage of me by EZ and Fast return scams.

    Whats up with buy here pay here, rent to own, talk about stealing from the poor to give to the rich. Those really do that!!

    Gambling, wow , now thats a great thing, create jobs in order to help others spend money they cant afford and/or wont use to help others, and my inheritance.

    Illegal Labor, pay no taxes, get food stamps, free subsidized housing and they drive new SUV's all decked out to, I know: I follow them all the time out of Grocery store and see them load their groceries in a better vehicle than I have.

    You want reform , these things above need to be stopped!

    Make it fair again!!

    January 27, 2009 at 9:56 pm |
  2. Mike, Zephyrhills, FL

    Someone Please tell me whats wrong with Protectionism?

    I dont know about the rest of fellow Americans, but right about now Id like to feel some of that protectionism. Bring jobs back here, produce and buy our own products again.

    They always say cheaper labor over there in China, guess that means no labor here. Glad Wal-mart Execs sleep good at night.

    January 27, 2009 at 9:44 pm |
  3. Mike, Zephyrhills, FL

    America does not produce the goods we need and use, few exceptions, no Manufacturing Base left , not like we had in the 30’s and up till 1983, after that it has been taken out to the rest of the world.

    January 27, 2009 at 9:40 pm |
  4. Mike, Zephyrhills, FL

    Wow, Bailout for the banks , and they say we cant have National Healthcare for all.

    Banks need 100% Nationalized and these cronies all fired with no golden parachutes to jump out of that plane with.

    Greed and Arrogance!! No Shame!! Rewarding failure and crime, fraud!! Sad Sad!!

    Go have a beer and step on sidewalk your arrested for public intox!

    What have we let our fellow countrymen do to us??

    January 27, 2009 at 9:35 pm |
  5. Annie Kate

    The economic news is so staggeringly bad that it makes one breathless. I've lived through several recessions but nothing like this. My mother who lived through the Great Depression thinks this feels worse that that one did – of course that may be because she was about 3 years old when the Great Depression started and would not have understood it all. With one son laid off and another on reduced hours it certainly feels like hard times to our family. If we have it so bad then places like Citicorp should not be buying their own airplane – that is like rubbing salt into the wounds of their customers.

    January 27, 2009 at 9:14 pm |
  6. Maureen - NC

    Citi needed to up a large percentage of their customers APR's due to the "current economic climate" according to their customer service center. Now I know why!!! The millions in taxpayer money was not enough to keep them in the lifestyle to which they have been accostomed. Too bad for us that we are and will continue to suffer.

    January 27, 2009 at 6:30 pm |
  7. Daniel

    Obama needs to make perfectly clear that TARP money is not for corporate vacations, jets, decorations, etc. Such gross mishandling of American tax dollars is against the spirit of the 'bailout' and should be treated as criminal. Why is it not a federal crime to mishandle this money as big buisness has done since day one?

    January 27, 2009 at 6:18 pm |
  8. Aaron Spindler

    They should quit giving our money away to these crooks. How about giving stimulus to people that actually own homes and not the banks. 500 billion dollars would give 50 million title holders $10,000 per person. Which is definetly a more effective way of spending our money.

    January 27, 2009 at 5:39 pm |
  9. Jim M

    Of course Citigroup will not take possession of any new aircraft. Watch for a new wholly owned subsidiary C-Trans to take possession. Then they can rent or lease-back the plane and won't have to show the item as an asset on their books. They could then buy the fleet of aircraft from Ford, Chrysler, GM and any other large corporation or bank and do the same thing.

    January 27, 2009 at 4:19 pm |
  10. deybis

    Sadly this is the culture of the corporate world. The've gotting away with it for years. now it give me a sense of relieve that now we have a president that looking out for all us of not just the fortunate 5%.

    January 27, 2009 at 3:48 pm |
  11. Mary Hernandez

    If Citigroup can afford a $50M plane, then they need to return the $50M plus in TARP funds with interest and a 50% penalty.

    January 27, 2009 at 3:47 pm |
  12. Michael "C" Lorton, Virginia

    You can touch the spots of a lepoard, but you can't move them-–and as Donald Trump once quoted, "One can never be too greedy." So much for transparency and accountability of the taxpayers dollars. The taxpayers will pay for it, but will never be able to schedule a flight on it. Oh well, stupid is as stupid does.

    January 27, 2009 at 2:59 pm |

    Sir, Under Clinton I "thought" I was middle class, under Bush, the "thought" was not even there. Now under Obama, we "At Last" have a leader. Citi and others have to know, we now have a
    L E A D E R call PRESIDENT OBAMA. The congress, the governers, mayors etc should all get behind him, support his economic plan.

    January 27, 2009 at 2:32 pm |
  14. GF, Los Angeles

    It doesn't matter that Citigroup won't take delivery of this plane – the taxpayers will still be paying for it in penalty fees for having the order in the first place. I can't believe the cost is $45 million – no wonder this country is in so much trouble – uncontrollable spending from top to bottom.

    January 27, 2009 at 1:56 pm |
  15. Pastor Deborah Satterwhite

    Make Citi-Group give the money Back!!! You keep the Plane...No Money!!!!! Double Standards. It's got to stop!!! The Auto Industry couldn't even own a Ten Speed Bike.. Note to the Congress.: You let them get away with this. Be prepared to start collecting your Own Umemployment Checks!!!!!!!!!!!!!!!!

    Pastor D.

    Dearborn/Detroit, Michigan

    January 27, 2009 at 1:31 pm |
  16. Fay - California

    These big corporations such as Citigroup still don't get it – the country's economic outlook continues to worsen (the examples of job cuts cited in this article are frightening) and yet they have to be "pressured" into not accepting an airplane that they shouldn't have in the first place – they are arrogant and out of touch.

    January 27, 2009 at 1:29 pm |
  17. Cindy

    This just shows how ridiculous and inept that Citicorp is when they are still planning to buy a new jet even when they can't stay afloat without our help. All of the top people in that company need to be fired!!


    January 27, 2009 at 1:13 pm |