Northern Trust flayed for lavish party

Source: Agencies | February 26, 2009, Thursday |

Print Edition

NORTHERN Trust Corp took a pounding from US lawmakers who said the bank must repay millions of taxpayer bailout dollars spent on "lavish parties" during a Southern California golf tournament.

The Chicago-based bank's sponsorship of the expensive bash prompted Senator John Kerry, a Massachusetts Democrat, to say he will introduce a bill this week to end "extravagant spending practices of US banks" that receive taxpayer bailouts. "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," he said.

Kerry plans to introduce legislation targeting banks that got taxpayer assistance under the government's US$700 billion Troubled Asset Relief Program (TARP). Chicago-based Northern Trust received US$1.6 billion under TARP.

Democratic lawmakers in the House of Representatives, led by Barney Frank, chairman of the Financial Services Committee, demanded Northern Trust repay the cost of festivities that surrounded last week's Northern Trust Open at the Riviera Country Club in Pacific Palisades, California.

"This behavior demonstrates extraordinary levels of irresponsibility and arrogance," wrote Frank and 17 other Democrats in a letter to Northern Trust CEO Frederick Waddell.

TMZ, a website for celebrity news, reported that hundreds of Northern Trust clients and employees were flown in and put up in luxury hotels for the tournament, won by American golfer Phil Mickelson. Besides golf, there were concerts by Sheryl Crow, Chicago, and Earth, Wind & Fire, TMZ reported.

Northern Trust said in a statement that the tournament and related events are "part of a business decision regarding an annual event to show appreciation for clients."

The bank said it is healthy and did not seek TARP aid, but entered the program at the government's request. That prompted Frank to quip: "If they didn't want the money, and didn't need the money ... then pay the money back."

Northern Trust announced plans to cut 450 jobs in December.

Meanwhile, the PGA Tour will lose another tournament sponsor after the 2010 season.

Commissioner Tim Finchem announced that organizers of the Phoenix Open would seek a new title sponsor for the 2011 edition after investment bank FBR declined to renew its backing after next year.

The tournament in Scottsdale, Arizona, is one of the best attended and last year generated a Tour record US$8.6 million for local charities.

As things stand, two-thirds of the PGA Tour's title sponsors are contracted until at least 2012 but Finchem accepts there will be more disappointments in the deteriorating economic landscape. "From the PGA Tour perspective, obviously we are impacted," he said.

Golf

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Northern Trust flayed for lavish party

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