Northern Trust defends spending on PGA event, parties: Rep. Barney Frank said he's going to ask for the money back.
(Chicago Tribune Via Acquire Media NewsEdge) Feb. 24--Northern Trust Corp., which in November received about $1.5 billion as part of the U.S. Treasury Department's Troubled Asset Relief Program, defended Tuesday its wining and dining of clients during the recent Northern Trust Open in California.
Entertainment Web site TMZ.com on Tuesday reported that Northern flew hundreds of clients and workers to California and put some of them up at ritzy hotels, including the Ritz Carlton in the Los Angeles area, and entertained them with such groups as Chicago, Earth Wind & Fire and Sheryl Crow.
House Financial Services Committee Chairman Barney Frank, along with 17 Democrats on the committee, sent a letter today to Northern Trust's CEO asking that the bank repay what it spent on the entertainment during the golf tournament.
"This behavior demonstrates extraordinary levels of irresponsibility and arrogance," the 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 Chicago-based institution said the entertainment is part of a long-standing commitment to sponsor the golf tournament.
"Northern Trust signed a five-year commitment to sponsor the Northern Trust Open in the fall of 2007, which is a year before" the government invested in the nation's biggest banks, including Northern, a Northern spokesman said. "The reason Northern Trust sponsors the Open is it's an integral part of its marketing program. It's about client relationships and showing appreciation for clients." The government investment in Northern preferred stock came about a year after Northern Trust, which caters to the wealthy and to individuals, made the commitment to sponsor the golf tournament. The Chicago-based financial services firm had already sponsored the previous year, the spokesman said.
"Northern Trust last year had net operating income of $641 million so these events were paid for by Northern Trust. These were paid by normal operating revenues," the spokesman said. "It's not that they were made possible because of the" government's program to inject capital into banks through the purchase of preferred shares.
"There are several client conferences that happen at the same time as the Open and there is entertainment for the clients and that's part of the event," he said.
Northern Trust, which in December laid off about 450 workers, or 4 percent of its work force, also points out that it received less than many other large institutions in the TARP program and hasn't returned to ask for more money from the government.
He added that Northern Trust pays $78.8 million on an annual basis as a return on taxpayers investment.
"The word many use is bailout, but the analogy might be, if you get capital for a home and pay that principal back with interest in the form of a mortgage, is that a bailout? I'm not sure," the Northern spokesman said.
The spokesman didn't immediately confirm or deny many of the details in the TMZ story.
Northern had the entire House of Blues in West Hollywood shut down for its private party, TMZ reported.
Female guests got trinkets from Tiffany. In February 2008, the Tribune reported that, because the opening round that year was on Valentine's Day, the bank gave Tiffany & Co. leather photo envelopes, retailing for $90 apiece, to golfers' significant others.
TMZ reported that Northern paid Chicago about $100,000. A House of Blues source told TMZ that it cost more than $50,000 to rent out the HOB. TMZ couldn't determine how much Crow or Earth Wind & Fire were paid. Mercedes shuttled the workers and guests from hotels to the tournament.
[email protected] To see more of the Chicago Tribune, or to subscribe to the newspaper, go to http://www.chicagotribune.com.
Copyright (c) 2009, Chicago Tribune Distributed by McClatchy-Tribune Information Services.
For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
Interview with Bridgewater Systems
Security in IP Telephony - Part 2