Citi to deploy $36.5 billion, stick with Mets

By Dan Wilchins and Ben Klayman

NEW YORK/CHICAGO (Reuters) - Citigroup Inc said it will use $36.5 billion in taxpayer bailout money to boost lending, while a source told Reuters the bank was not backing out of a controversial $400 million baseball stadium sponsorship deal with the New York Mets.

Both the bank's announcement on its capital deployment plan and the political pressure it faces over the baseball deal reflect the U.S. government's increasing sway over Citigroup, which has been weakened by more than $80 billion in writedowns and credit losses.

"The government is the invisible hand at Citigroup now. You have to believe that on big strategic decisions, they are having an influence," said Walter Todd, portfolio manager at Greenwood Capital Associates.

Citigroup said in a report on Tuesday it will use much of the bailout money to make government-backed loans, including $10 billion of home loans supported by Fannie Mae and Freddie Mac, the quasi-governmental mortgage companies that were essentially nationalized last summer.

The U.S. government has injected $45 billion of capital into Citigroup since October through the Troubled Asset Relief Program (TARP).

The extensive government support has added a new political dimension to decisions of Citigroup and other U.S. companies which have accepted public rescue money.

U.S. Rep. Dennis Kucinich and Rep. Ted Poe sent a letter to U.S. Treasury Secretary Tim Geithner last week, suggesting the government press Citigroup to end the contract with the Mets.

Kucinich sent another letter Tuesday to Citigroup Chief Executive Vikram Pandit seeking documents about Citigroup's use of bailout funds. Kucinich, chairman of the House Oversight and Government Reform Subcommittee, said he needed the documents to evaluate Citigroup's contention that the Mets deal was not drawing on TARP money.

The Wall Street Journal reported Tuesday that Citigroup was considering backing out of a marketing agreement signed in 2006 with the Mets. The deal includes naming rights for a new stadium.

But a source on Tuesday told Reuters the bank did not plan to pull out of that deal.

The Mets said in separate statement Tuesday: "In conversations this morning, Citi reinforced that they will honor our legally binding agreement."

Citigroup said earlier the bank had signed a legally binding agreement with the Mets, and added TARP money would not be used.

The impact of the deal on Citi's bottom line would be minimal. The roughly $20 million in annual expenses from the Mets deal would be a fraction of a percent of the bank's $61.2 billion in operating expenses in 2008.

The bank's U.S. media spending in the first three quarters of last year was about $250 million, according to TNS Media Intelligence.

"Congress seems to be spending all their time on small issues that play well in the press, like executive jets and sports deals," said James Ellman, president at hedge fund Seacliff Capital in San Francisco. "I don't understand why they're not focusing on setting up a program to resolve the banking crisis."