High-Flying Citigroup Grounds Plans for $50M Jet

The high-flying execs at Citigroup caved under pressure from President Obama and decided today to abandon plans for a luxurious new $50 million corporate jet from France.

The decision came 24 hours after the banking giant, which was rescued by a $45 billion taxpayer lifeline, defended buying the state-of-the-art Dassault Falcon 7X -- one of nine to be flying in U.S. skies -- as a smart business deal.

The jet, the epitome of corporate prestige and privilege, can carry 12 passengers in elegant comfort.

VIDEO: The bank used TARP funds to purchase a new corporate jet for executives.
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ABC News has learned that on Monday officials of the Obama administration called Citigroup about the company's new $50 million corporate jet and told execs to "fix it."

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Earlier on Monday, White House spokesman Robert Gibbs said made it clear ABC News asked him about the jet that the president disapproved of the deal.

"The president said this during the transition, as it related to the auto companies using private jets: [He] doesn't believe that's the best use of money at this point," Gibbs said.

The company today issued a statement saying, "We have no intent to take delivery of any new aircraft."

Citigroup had argued it was selling two of its four other planes to pay for this one, that the new jet would be more efficient and, besides, it had already signed a contract for the jet. Breaking that deal would cost the bank millions in penalties.

The Citigroup air fleet will now shrink from four jets and a helicopter to two planes.

Citigroup was apparently not deterred from shopping for a new jet despite the outrage that erupted when Detroit's auto barons used private jets to fly into Washington to plead for handouts. The giant carmakers later got rid of their jets after being granted a $17 billion financial lifeline in taxpayer cash.

And this week, ousted Merrill Lynch CEO John Thain said he would personally cough up the $1 million he spent on remodeling his office after his brokerage was rescued with billions in taxpayer cash.

Citigroup Reverses Plans for Corporate Jet Purchase

Citigroup grounded its plans to buy the jet on the day that Obama is heading to Capitol Hill hoping to win Republican support for his economic stimulus plan.

Obama has already won $350 billion in corporate bailout funds from Congress but is asking for another $825 billion for his economic stimulus plan.

Debate over the massive combination of public spending and tax cuts begins today in the House and could be voted on as early as Wednesday. The measure is getting so little love from Republicans that Obama will meet separately with GOP members of the House and Senate.

It doesn't help to win votes when corporations appear to use taxpayer cash on luxury perks and outsize bonuses for Wall Street titans.

To bolster support for the stimulus plan, Treasury Secretary Timothy Geithner is announcing new guidelines for the spending aimed at limiting the influence of lobbyists and elected officials in who gets the money and how it is spent.

The new rules would clarify who is eligible to receive federal help to reduce political influence in deciding which banks get taxpayer money.

The Obama administration is also armed with a new study by the Congressional Budget Office that concludes that much of the stimulus money would be spent in the next several years.

Republicans had cited an earlier CBO report that concluded that it would take several years for the country to begin spending just a small portion of the billions set aside in the stimulus plan for public works projects.

ABC News Charles Herman contributed to this report

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