That fancy corporate jet Citi ordered a few years back for 2009 delivery? Cancelled. As we predicted to a certain Citi press officer on Monday, news of Citi’s alleged profligate excess made it all the way to the president’s desk. (We know how politicians love to demagogue populist issues.) In response to the news, President Barack Obama’s spokesman Robert Gibbs said Obama “doesn’t believe” business jets are the “best use of money,” according to a story in the New York Post. By “money” he might have been referring to the $45 billion in government bailout funds the bank got from the little guy (i.e., the American taxpayer) under TARP. (In glorious days past, Citi could have responded to the president, “None of yer biz!” Ah, how government bailouts invite government micromanagement.)
Citi initially claimed, of course, that no TARP money was used to buy the plane—and that cancelling the order for the jet would have cost it millions in penalties. Now, I guess, those penalties don’t matter? “It is important to note that TARP funds will not be used for these purchases. Citi will continue to comply with all TARP requirements," a spokesman for the firm wrote in an email—before the firm decided not to take delivery of the plane.
That’s nice. Maybe that’s because TARP requirements don’t require much. And anyway, it doesn’t matter, since, of course, cash is a fungible commodity. If you need government money to survive—to turn on the lights every day, to continue as a going concern—you can’t pretend the money you are spending to run your business isn’t TARP cash. It is—by definition.
A new bill proposed by House Financial Services Committee Chairman Barney Frank, to be considered by Congress this year, might make these kinds of goofs harder to pull off, in any case. TARP recipients would be required to make quarterly disclosures about their use of TARP funding. It would also be harder for recipients to use the money to buy other depositary institutions, and it would limit executive pay.