By Dan Wilchins and Ben Klayman

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."

Last week, Citigroup canceled an order for a $50 million executive jet it made in 2005 after politicians balked at the planned purchase.

Pandit is among CEOs scheduled to appear at a February 11 hearing of the U.S. House of Representatives Financial Services Committee. CEOs from Bank of America Corp, Wells Fargo & Co and Morgan Stanley are also slated to appear.

HARD TIMES

If Citigroup backed out of its deal, it would be more bad news for the Mets, whose owner Fred Wilpon lost money with investments in Bernard Madoff's alleged $50 billion Ponzi scheme.

"It's a $400 million deal and if they lose it, how do they replace it? In this economy, that's very tough," one sports banker said on condition of anonymity.

Some bankers have speculated that Wilpon's losses with Madoff could be big enough to force the Mets owner to sell a piece of the franchise. The Mets have repeatedly denied any such plans.

The U.S. government has provided trillions of dollars in support to banks over the last year, including at least $300 billion of direct capital injections from TARP.

The support has come with strings attached. Senior executives at major banks that received money from TARP declined bonuses for 2008 amid political pressure, but Wall Street bonuses still totaled more than $18 billion in 2008.

U.S. President Barack Obama has called such large bonuses "shameful."

In addition to the TARP money, Citigroup has also issued $7 billion of preferred stock to the Treasury and the U.S. Federal Deposit Insurance Corp in exchange for the government guaranteeing a $301 billion portfolio of assets.

The capital has helped support Citigroup, which has failed to turn a quarterly profit since 2007. Citigroup said last month it was separating its assets into a unit housing its main assets, and another to house assets it is looking to shed or wind down.

One of the assets that Citigroup is looking to sell, its Japanese brokerage unit Nikko Cordial, could be put on the block as soon as this month. Sources familiar with the matter said Tuesday the deal could be worth up to $3.4 billion.

Congress and Obama are scrambling to solve the financial crisis as banks drown in bad assets. Options being discussed include setting up a government-financed bank to buy bad assets, and guaranteeing banks' bad assets.

Citigroup shares fell 5.2 percent, or 19 cents, to $3.46 in New York on Tuesday. The stock has lost more than 90 percent of its value over the past year.

(Additional reporting by Karey Wutkowski and Susan Cornwell in Washington and Paul Thomasch in New York)

(Reporting by Dan Wilchins and Ben Klayman; Editing by Gerald E. McCormick, Lisa Von Ahn and Jeffrey Benkoe)