Chicago's Northern Trust Bank, which received $1.6 billion in federal bailout money, spent millions of dollars last week hosting a series of lavish parties and concerts in Los Angeles. That's prompted a senior Democratic lawmaker to introduce a bill to end the "extravagant spending practices of U.S. banks" that receive taxpayer bailouts, and other lawmakers to demand the money back.
"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," said Senator John Kerry, a Massachusetts Democrat, in a statement released to Reuters.
Kerry plans to introduce legislation this week targeting banks that got taxpayer assistance under the government's $700 billion Troubled Asset Relief Program (TARP).
House Financial Services Committee Chairman Barney Frank, along with 17 Democrats on the committee, sent a letter Tuesday to Northern Trust's CEO asking that the bank repay what it spent on the entertainment during the golf tournament, the Chicago Tribune reported.
"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."
TMZ reported Tuesday that the bank sponsored the Northern Trust Open at the Riviera Country Club in L.A, and that Northern Trust paid millions to sponsor the PGA event which ended Sunday.
What's "even more shocking," TMZ reported, is what happened off the golf course.
According to the TMZ Web site:
- "Northern Trust flew hundreds of clients and employees to L.A. and put many of them up at some of the fanciest and priciest hotels in the city. We're told more than a hundred people were put up at the Beverly Wilshire in Bev Hills, and another hundred stayed at the Loews Santa Monica Beach Hotel. Still more stayed at the Ritz Carlton in Marina Del Rey and others at Casa Del Mar in Santa Monica."
Additionally, TMZ reported guests enjoyed a gala dinners at the Ritz and the House of Blues, with music from Chicago, Earth, Wind and Fire and Sheryl Crow. There were reportedly gift bags from Tiffany's, to boot.
If all that makes your blood boil, imagine how the 450 workers who were laid off in December feel. With 4 percent of its workforce now out of work, the bank wouldn't give a bottom-line total for the LA golf junket, but in a written statement it confirmed that it had "participated in" the federal bailout as "a healthy bank."
"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," according to a statement (read fully) from the bank's Senior VP, Douglas Holt.
Holt goes on to explain that 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."
The bank assures a return on the taxpayer's investment, Holt said. Currently, his statement reads, "Northern Trust pays the government $78.8 million on an annual basis as a return on taxpayers’ investment – $19.7 million per quarter."
So, to the 450 laid off bank workers, don't misunderstand.
It's not that the money from the goverment paid for the fun in the Southern California sun. That money came from the bank's "normal cash flow," which the statement indicated included an earned operating net income of $641 million.
It seems the money for the California trip came, in part, from the money the bank saved by not paying your salary.