5 ms·

Geithner forces Citi to cancel jet order

19 points by condor 18y ago

paulgb 18y ago
If it prompts you to log in, use this link: http://www.ft.com/cms/s/0/e4093646-eca6-11dd-a534-0000779fd2ac.html http://www.ft.com/cms/s/0/e4093646-eca6-11dd-a534-0000779fd2...
gojomo 18y ago
Don't jet companies deserve 'stimulus' too?
- amobilebiz 18y ago
  While the theory of your comment makes complete sense to me, I do have a problem with French (and no offense to the French people here) companies getting my tax dollars. Last I checked (and I could be wrong) Aerospatiale-Dassault was a French company. If U.S. companies are going to be buying corporate jets with my tax dollars I would much rather they buy them from U.S. companies.
  - gojomo 18y ago
    What a fine recipe for recovery: every nation for itself, make companies buy only what's politically-favored, reduce competition, reduce world trade. (Those were all popular-but-misguided mistakes that made the 1930's depression deeper and longer.)
    - lg 18y ago
      I think the misguided mistake was giving Citigroup too many tax dollars.
    - kragen 18y ago
      While I'm not in favor of the reducing-world-trade argument, I have a hard time with the idea that using tax dollars to buy expensive executive perqs and pay hefty year-end bonuses is going to help the economy recover.
  - gaius 18y ago
    The French could equally well object to Dassault buying any components from American companies (such as engines from GE).
ckinnan 18y ago
It is far more offensive that Citi is still using tax dollars to pay its shareholder dividend.
- aaronblohowiak 18y ago
  Can you please provide some documentation for that? I'd be really interested in learning more!
  - Hexstream 18y ago
    I think it goes something like this: The People paid taxes to the government for the bailout, Citi got some of that money, which allowed them to survive, which allowed them to pay dividends to its shareholders. Therefore, Citi is using tax dollars to pay its shareholder dividend.
    - anewaccountname 18y ago
      http://www.forbes.com/feeds/ap/2009/01/20/ap5943395.html http://www.forbes.com/feeds/ap/2009/01/20/ap5943395.html Since the government didn't insist on stricter terms, Citi is paying a 1 cent dividend. Blame the government for not negotiating stricter terms. If Citi didn't pay the max dividend it could under the terms, its shareholders could sue the board in a shareholder class-action suit for violating their fiduciary duty to maximize shareholder returns.
      - jcdreads 18y ago
        No, that bit about dividends can't possibly be right. Relatively few public companies pay a dividend, and basically none of the other companies face shareholder lawsuits about the absence of a dividend. And if Citi were a poorly programmed automaton then it might make sense to avoid blaming its board for politically boneheaded moves; but its board is made up of directors who _ought_ to be spending some energy not pointlessly offending a public on whose dole they now find themselves. The shareholders will be (rightly) for more offended if the board so pisses off Treasury that the public assistance dries up. I agree, however, that the (then-) government should have negotiated (decreed?) better terms for the bailout money.
mhb 18y ago
The car companies that had to give up their jets aren't too happy about it either. And so goes nationalization. http://www.freep.com/article/20090126/NEWS15/90126063/1001/NEWS/Levin+livid+over+reported+Citigroup+jet+purchase http://www.freep.com/article/20090126/NEWS15/90126063/1001/N...
mhb 18y ago
More accessible article: http://www.foxnews.com/politics/2009/01/27/citigroup-nixes-plan-m-corporate-jet/ http://www.foxnews.com/politics/2009/01/27/citigroup-nixes-p...
Gibbon 18y ago
Looks like they were going to buy a Dassault Falcon. I wonder how these kinds of decisions will affect Aerospatiale/Dassault? It's not like they make a lot of them.. last year they made eight Falcons per month. They've already fired all their temps and cut back on subcontractors hours. It just goes to show, you can't win for losing. One more notch in the economic death spiral.
cabalamat 18y ago
While they're at it, make them fly economy class.
- deleted 18y ago
  [deleted]
DanielBMarkham 18y ago
As a taxpayer, I'm glad they canceled the order -- if it made business sense to do so. If it was just to look good (and they end up spending more money without the jet) then double bad on them. As a pilot? A Falcon 6X? 5950 nautical mile range? 3 engines? Complete glass cockpit with lots of standby gear? Have you seen that cabin size? The possible configurations? Anybody like to have a private ride you could pick up in DC and get off in, say, Milan? What were we talking about again?
gcheong 18y ago
"That money should be used to lend to consumers to get the economy moving again" Maybe the problem was they didn't write that on the back of the check when they made the deposit.
- gills 18y ago
  Maybe the problem is that Americans are already bursting at the seams from too much debt and no matter how far you stuff that firehose down the pig's throat it just can't hold any more. So no matter how much CONgress wants the banks to lend, it just doesn't help.
deleted 18y ago
[deleted]
pragmatic 18y ago
Anybody else see a problem with 1) the government propping up companies that should be reorganized by bankruptcy 2) taking over these zombie corporations like head crabs 3) and then interfering in all kinds of business decisions? Air travel post 9-11 is ridiculous in this country. How Citi spends Citi's money is between Citi and Citi's shareholders. Except when the government intervenes. Now we have a giant mess. Now every interference can be made in the "public interest." Why do employees get free coffee? Why do employees get gym memberships. What about education reimbursement? What is in the "public interest" now?
- jfornear 18y ago
  I agree 100%, but supposedly the sky would have fallen if these companies would have gone bankrupt? (I have yet to be convinced of this)
  - hardik 18y ago
    From my understanding, there certainly would have been huge crack in the system had some of the big ones gone down just like that. This is because of the incest-like inter-connection between the major players; if one fails, it reneges on its derivative obligations, leaving several others' "naked" to risk. Those affected by this would have either lower credit rating or may not be able to fulfill their derivative obligations and so on.. domino effect. So, agreed, some of these biggies just had to be stopped from failing (AIG was the king of them) But what I fail to understand is that why is the government supporting these on an on-going basis? I would expect the government to strictly save them on the terms that they eventually wind down the operations or at least break up and sell to interested parties. It is very important for companies to fail every once in a while; in this special case the govt. should have helped soft-land their failure not prevented it!

19 points by condor 18y ago

If it prompts you to log in, use this link: http://www.ft.com/cms/s/0/e4093646-eca6-11dd-a534-0000779fd2ac.html http://www.ft.com/cms/s/0/e4093646-eca6-11dd-a534-0000779fd2...

gojomo 18y ago

Don't jet companies deserve 'stimulus' too?

amobilebiz 18y ago
While the theory of your comment makes complete sense to me, I do have a problem with French (and no offense to the French people here) companies getting my tax dollars. Last I checked (and I could be wrong) Aerospatiale-Dassault was a French company. If U.S. companies are going to be buying corporate jets with my tax dollars I would much rather they buy them from U.S. companies.
- gojomo 18y ago
  What a fine recipe for recovery: every nation for itself, make companies buy only what's politically-favored, reduce competition, reduce world trade. (Those were all popular-but-misguided mistakes that made the 1930's depression deeper and longer.)
  - lg 18y ago
    I think the misguided mistake was giving Citigroup too many tax dollars.
  - kragen 18y ago
    While I'm not in favor of the reducing-world-trade argument, I have a hard time with the idea that using tax dollars to buy expensive executive perqs and pay hefty year-end bonuses is going to help the economy recover.
- gaius 18y ago
  The French could equally well object to Dassault buying any components from American companies (such as engines from GE).

ckinnan 18y ago

It is far more offensive that Citi is still using tax dollars to pay its shareholder dividend.

aaronblohowiak 18y ago
Can you please provide some documentation for that? I'd be really interested in learning more!
- Hexstream 18y ago
  I think it goes something like this: The People paid taxes to the government for the bailout, Citi got some of that money, which allowed them to survive, which allowed them to pay dividends to its shareholders. Therefore, Citi is using tax dollars to pay its shareholder dividend.
  - anewaccountname 18y ago
    http://www.forbes.com/feeds/ap/2009/01/20/ap5943395.html http://www.forbes.com/feeds/ap/2009/01/20/ap5943395.html Since the government didn't insist on stricter terms, Citi is paying a 1 cent dividend. Blame the government for not negotiating stricter terms. If Citi didn't pay the max dividend it could under the terms, its shareholders could sue the board in a shareholder class-action suit for violating their fiduciary duty to maximize shareholder returns.
    - jcdreads 18y ago
      No, that bit about dividends can't possibly be right. Relatively few public companies pay a dividend, and basically none of the other companies face shareholder lawsuits about the absence of a dividend. And if Citi were a poorly programmed automaton then it might make sense to avoid blaming its board for politically boneheaded moves; but its board is made up of directors who _ought_ to be spending some energy not pointlessly offending a public on whose dole they now find themselves. The shareholders will be (rightly) for more offended if the board so pisses off Treasury that the public assistance dries up. I agree, however, that the (then-) government should have negotiated (decreed?) better terms for the bailout money.

mhb 18y ago

The car companies that had to give up their jets aren't too happy about it either. And so goes nationalization. http://www.freep.com/article/20090126/NEWS15/90126063/1001/NEWS/Levin+livid+over+reported+Citigroup+jet+purchase http://www.freep.com/article/20090126/NEWS15/90126063/1001/N...

mhb 18y ago

More accessible article: http://www.foxnews.com/politics/2009/01/27/citigroup-nixes-plan-m-corporate-jet/ http://www.foxnews.com/politics/2009/01/27/citigroup-nixes-p...

Gibbon 18y ago

Looks like they were going to buy a Dassault Falcon. I wonder how these kinds of decisions will affect Aerospatiale/Dassault? It's not like they make a lot of them.. last year they made eight Falcons per month. They've already fired all their temps and cut back on subcontractors hours. It just goes to show, you can't win for losing. One more notch in the economic death spiral.

cabalamat 18y ago

While they're at it, make them fly economy class.

deleted 18y ago
[deleted]

DanielBMarkham 18y ago

As a taxpayer, I'm glad they canceled the order -- if it made business sense to do so. If it was just to look good (and they end up spending more money without the jet) then double bad on them. As a pilot? A Falcon 6X? 5950 nautical mile range? 3 engines? Complete glass cockpit with lots of standby gear? Have you seen that cabin size? The possible configurations? Anybody like to have a private ride you could pick up in DC and get off in, say, Milan? What were we talking about again?

gcheong 18y ago

"That money should be used to lend to consumers to get the economy moving again" Maybe the problem was they didn't write that on the back of the check when they made the deposit.

gills 18y ago
Maybe the problem is that Americans are already bursting at the seams from too much debt and no matter how far you stuff that firehose down the pig's throat it just can't hold any more. So no matter how much CONgress wants the banks to lend, it just doesn't help.

deleted 18y ago

[deleted]

pragmatic 18y ago

Anybody else see a problem with 1) the government propping up companies that should be reorganized by bankruptcy 2) taking over these zombie corporations like head crabs 3) and then interfering in all kinds of business decisions? Air travel post 9-11 is ridiculous in this country. How Citi spends Citi's money is between Citi and Citi's shareholders. Except when the government intervenes. Now we have a giant mess. Now every interference can be made in the "public interest." Why do employees get free coffee? Why do employees get gym memberships. What about education reimbursement? What is in the "public interest" now?

jfornear 18y ago
I agree 100%, but supposedly the sky would have fallen if these companies would have gone bankrupt? (I have yet to be convinced of this)
- hardik 18y ago
  From my understanding, there certainly would have been huge crack in the system had some of the big ones gone down just like that. This is because of the incest-like inter-connection between the major players; if one fails, it reneges on its derivative obligations, leaving several others' "naked" to risk. Those affected by this would have either lower credit rating or may not be able to fulfill their derivative obligations and so on.. domino effect. So, agreed, some of these biggies just had to be stopped from failing (AIG was the king of them) But what I fail to understand is that why is the government supporting these on an on-going basis? I would expect the government to strictly save them on the terms that they eventually wind down the operations or at least break up and sell to interested parties. It is very important for companies to fail every once in a while; in this special case the govt. should have helped soft-land their failure not prevented it!