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Feb. 25 (Bloomberg) -- U.S. lawmakers are asking companies to repay taxpayer money spent on private jets and other perks <span style="font-weight: bold">after Northern Trust Corp., the Chicago-based custody bank that got $1.6 billion, hosted a golf tournament this month. </span>
Representative Barney Frank, the chairman of the House Financial Services Committee, <span style="font-weight: bold">yesterday co-signed a letter with 17 colleagues demanding that Northern Trust return money spent on the event.</span> Senator John Kerry said he would introduce a bill banning firms getting U.S. aid from paying for conferences and parties.
“I’m sick and tired of picking up the newspaper and reading about another idiotic abuse of taxpayer money while our country is on the brink,” Kerry said in a statement yesterday. He and Frank are both Massachusetts Democrats.
Members of Congress have scolded companies getting funds through the Treasury’s $700 billion Troubled Asset Relief Program for spending on corporate jets, conferences and employee bonuses after accepting taxpayer dollars meant to help them weather the financial crisis. <span style="font-weight: bold">At the Northern Trust Open, a PGA Tour event outside Los Angeles from Feb. 19 through Feb. 22, the bank hosted parties and concerts including performances by Sheryl Crow and Chicago, according to the Web site TMZ.com. </span>
“We came to the conclusion that no public purpose would be served by canceling the Northern Trust Open and related events,” Northern Trust Chief Executive Officer Frederick Waddell said in a statement on the company’s Web site. He didn’t say whether the company would return any government money.
<span style="font-weight: bold">Waddell said no TARP funds had been used for operating expenses, including marketing, advertising or corporate sponsorship</span>.
He said government funds had supported “high-quality loan growth,” helping to increase Northern Trust’s loans and leases by 21 percent in 2008 to more than $30 billion.
Frank and the Democrats who wrote to Waddell said they were <span style="font-weight: bold">“dismayed and angered” by reports the bank “hosted clients and employees at places like the Beverly Wilshire and Ritz Carlton hotels and gave away Tiffany souvenirs.” </span>
“We insist that you immediately return to the federal government the equivalent of what Northern Trust frittered away on these lavish events,” the lawmakers wrote in a letter released yesterday.
John O’Connell, a spokesman for Northern Trust, said in an e-mailed statement <span style="font-weight: bold">that sponsoring the golf tournament and related events “is part of a business decision regarding an annual event to show appreciation for clients.”</span> <span style="font-style: italic">He declined to provide details of what the company spent on the events. </span>
Kerry said his legislation would impose a $100,000 fine on any TARP recipients misusing the funds and require them to reimburse the government. It would ban the companies from hosting or sponsoring conferences and events and paying for holiday or entertainment events for the year they receive TARP funds.
President Barack Obama this month announced new conditions on TARP recipients that would force companies to disclose more about expenses such as corporate jets, office renovations, entertainment and holiday parties. Obama also said the government would require companies getting future aid to cap compensation for top officials at $500,000 a year.
‘New Landscape’
Some recipients have responded to lawmakers’ criticism by scaling back. <span style="font-weight: bold">American International Group Inc., Wells Fargo & Co. and Citigroup Inc.’s Primerica unit have canceled corporate events set for resort locations. Goldman Sachs Group Inc., which received $10 billion in TARP funds, this month moved a technology conference to San Francisco from Las Vegas, citing the “new landscape for our industry.” </span>
Citigroup Chief Executive Officer Vikram Pandit told lawmakers at a Feb. 11 congressional hearing that he canceled an order for a $50 million corporate jet after a Treasury official called the company to question the purchase.
The bank agreed in 2007 to sponsor the annual tournament, held at Riviera Country Club in Pacific Palisades, California, for five years beginning in 2008. The event, one of the oldest stops on the PGA Tour, drew 29 of the top 50 ranked golfers in the world. Phil Mickelson won the tournament last weekend, taking $1.13 million of the $6.3 million purse.
“The Northern Trust Open is an integral part of Northern Trust’s global marketing activities, focusing on retaining and growing business with existing clients, and attracting new clients,” O’Connell said.
Under TARP, Northern Trust sold the U.S. Treasury $1.6 billion in preferred stock and warrants.
Dividend
“<span style="font-weight: bold">Northern Trust did not seek the government’s investment, but agreed to the government’s goal of gaining the participation of all major banks in the United States</span>,” O’Connell said.
The company pays the Treasury $19.7 million in dividends each quarter.
“It’s the controllable part of the event, the royal treatment of employees and clients, that shows once again that banks aren’t fully aware of how taxpayers feel about events like this,” Thomas Schatz, president of Washington-based Citizens Against Government Waste, said yesterday in an interview.
The taxpayer group criticized Bank of America Corp., another TARP recipient, for sponsoring events at the Super Bowl in Tampa, Florida, earlier this month.
The group was founded in 1984 by the late industrialist J. Peter Grace and syndicated columnist Jack Anderson, according to its Web site.
Custody banks keep records, track performance and lend securities to institutional investors including mutual funds, pensions and hedge funds.
Representative Barney Frank, the chairman of the House Financial Services Committee, <span style="font-weight: bold">yesterday co-signed a letter with 17 colleagues demanding that Northern Trust return money spent on the event.</span> Senator John Kerry said he would introduce a bill banning firms getting U.S. aid from paying for conferences and parties.
“I’m sick and tired of picking up the newspaper and reading about another idiotic abuse of taxpayer money while our country is on the brink,” Kerry said in a statement yesterday. He and Frank are both Massachusetts Democrats.
Members of Congress have scolded companies getting funds through the Treasury’s $700 billion Troubled Asset Relief Program for spending on corporate jets, conferences and employee bonuses after accepting taxpayer dollars meant to help them weather the financial crisis. <span style="font-weight: bold">At the Northern Trust Open, a PGA Tour event outside Los Angeles from Feb. 19 through Feb. 22, the bank hosted parties and concerts including performances by Sheryl Crow and Chicago, according to the Web site TMZ.com. </span>
“We came to the conclusion that no public purpose would be served by canceling the Northern Trust Open and related events,” Northern Trust Chief Executive Officer Frederick Waddell said in a statement on the company’s Web site. He didn’t say whether the company would return any government money.
<span style="font-weight: bold">Waddell said no TARP funds had been used for operating expenses, including marketing, advertising or corporate sponsorship</span>.
He said government funds had supported “high-quality loan growth,” helping to increase Northern Trust’s loans and leases by 21 percent in 2008 to more than $30 billion.
Frank and the Democrats who wrote to Waddell said they were <span style="font-weight: bold">“dismayed and angered” by reports the bank “hosted clients and employees at places like the Beverly Wilshire and Ritz Carlton hotels and gave away Tiffany souvenirs.” </span>
“We insist that you immediately return to the federal government the equivalent of what Northern Trust frittered away on these lavish events,” the lawmakers wrote in a letter released yesterday.
John O’Connell, a spokesman for Northern Trust, said in an e-mailed statement <span style="font-weight: bold">that sponsoring the golf tournament and related events “is part of a business decision regarding an annual event to show appreciation for clients.”</span> <span style="font-style: italic">He declined to provide details of what the company spent on the events. </span>
Kerry said his legislation would impose a $100,000 fine on any TARP recipients misusing the funds and require them to reimburse the government. It would ban the companies from hosting or sponsoring conferences and events and paying for holiday or entertainment events for the year they receive TARP funds.
President Barack Obama this month announced new conditions on TARP recipients that would force companies to disclose more about expenses such as corporate jets, office renovations, entertainment and holiday parties. Obama also said the government would require companies getting future aid to cap compensation for top officials at $500,000 a year.
‘New Landscape’
Some recipients have responded to lawmakers’ criticism by scaling back. <span style="font-weight: bold">American International Group Inc., Wells Fargo & Co. and Citigroup Inc.’s Primerica unit have canceled corporate events set for resort locations. Goldman Sachs Group Inc., which received $10 billion in TARP funds, this month moved a technology conference to San Francisco from Las Vegas, citing the “new landscape for our industry.” </span>
Citigroup Chief Executive Officer Vikram Pandit told lawmakers at a Feb. 11 congressional hearing that he canceled an order for a $50 million corporate jet after a Treasury official called the company to question the purchase.
The bank agreed in 2007 to sponsor the annual tournament, held at Riviera Country Club in Pacific Palisades, California, for five years beginning in 2008. The event, one of the oldest stops on the PGA Tour, drew 29 of the top 50 ranked golfers in the world. Phil Mickelson won the tournament last weekend, taking $1.13 million of the $6.3 million purse.
“The Northern Trust Open is an integral part of Northern Trust’s global marketing activities, focusing on retaining and growing business with existing clients, and attracting new clients,” O’Connell said.
Under TARP, Northern Trust sold the U.S. Treasury $1.6 billion in preferred stock and warrants.
Dividend
“<span style="font-weight: bold">Northern Trust did not seek the government’s investment, but agreed to the government’s goal of gaining the participation of all major banks in the United States</span>,” O’Connell said.
The company pays the Treasury $19.7 million in dividends each quarter.
“It’s the controllable part of the event, the royal treatment of employees and clients, that shows once again that banks aren’t fully aware of how taxpayers feel about events like this,” Thomas Schatz, president of Washington-based Citizens Against Government Waste, said yesterday in an interview.
The taxpayer group criticized Bank of America Corp., another TARP recipient, for sponsoring events at the Super Bowl in Tampa, Florida, earlier this month.
The group was founded in 1984 by the late industrialist J. Peter Grace and syndicated columnist Jack Anderson, according to its Web site.
Custody banks keep records, track performance and lend securities to institutional investors including mutual funds, pensions and hedge funds.
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