Northern Trust should return millions of dollars it spent sponsoring a professional golf tournament last week at the same time it was receiving $1.5 billion in federal bailout money, House Financial Services Committee Chairman Barney Frank said on Tuesday.
This behavior demonstrates extraordinary levels of irresponsibility and arrogance, Mr. Frank, D-Mass., and 17 other Democrats on the committee said in a letter today to Northern Trust Chief Executive Frederick Waddell. Federal taxpayers should not and will not stand for such abuses.
The tournament sponsorship is part of a business decision regarding an annual event to show appreciation for clients, Northern Trust spokesman John O'Connell said in an e-mail statement reported by Bloomberg News. The Northern Trust Open is an integral part of Northern Trusts global marketing activities, focusing on retaining and growing business with existing clients and attracting new clients.
Mr. O'Connell declined to say how much the bank spent on the events, Bloomberg reported. He did not immediately respond to a request for comment from Crain Financial Group.
The letter cited published reports in noting that the 120-year-old bank sponsored a Professional Golfers Association tournament called the Northern Trust Open in Pacific Palisades, Calif. Northern Trust had $82 billion in banking assets and $3 trillion under custody as of Dec. 31, according to its website.
The bank also hosted clients and employees at parties at the Beverly Wilshire and Ritz-Carlton hotels, and gave away Tiffany souvenirs, the congressional letter said.
We insist that you immediately return to the federal government the equivalent of what Northern Trust frittered away on these lavish events, the Democrats wrote.
They said that any future Treasury support would be conditioned on a thorough reform of your companys policies and practices.
The bank said in October that it was getting a federal injection of $1.5 billion in return for preferred stock under the $700 billion bailout aimed at stabilizing the financial system and unclogging credit channels.
Neil Roland is a reporter for Crain Financial Group