House Democrats Demand TARP Funds Back
House Committee on Financial Services Democrats, including Barney Frank, issued a letter Tuesday to the CEO of Chicago-based Northern Trust Corp. (NTRS), asking for a return of some of the $1,576,000,000 in TARP funds granted to the bank on Nov. 14. "We are dismayed and angered to learn that Northern Trust recently spent millions of dollars on a PGA golf tournament sponsorship and associated parties at the same time it has taken over $1.5 billion in federal stabilization funding under the Troubled Asset Relief Program," the letter read, in part. The Committee's statements call into question Northern Trust's sponsorship of the tournament at the Riviera Country Club, the hosting of its clients and employees at hotels like Beverly Wilshire and Ritz Carlton, and its giving away of Tiffany souvenirs. "At a time when millions of homeowners are facing foreclosure, businesses and consumers are in dire need of credit, and the government is trying to keep financial institutions -- including yours -- alive with billions in taxpayer funds, this behavior demonstrates extraordinary levels of irresponsibility and arrogance," the letter read. "We insist that you immediately return to the federal government the equivalent of what Northern Trust frittered away on these lavish events. Federal taxpayers should not and will not stand for such abuses, and we will insist that any future Treasury support for Northern Trust be conditioned on a thorough reform of your company’s policies and practices." The Committee's letter did not acknowledge former Treasury Department secretary Henry Paulson's frequent statements that TARP funds through the Capital Purchase Program were intended for health banks, not just ones that needed to be kept "alive with...taxpayer funds." And Northern Trust, in its official statement on the letter, was quick to reiterate its health as a financial institution apart from TARP funds and stated that no taxpayer money was used for the tournament or any other marketing or operating expenses. "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," and also agreed to pay the government $78.8 million on an annual basis as a return on taxpayers' investment, officials at the company said. "Sponsoring the Northern Trust Open and related events is part of a business decision regarding an annual event to show appreciation for clients," officials said. "...This is the second year Northern Trust is sponsoring the Open as part of a five-year contract. The contract was signed in the fall of 2007 -- a year before the U.S. government's Capital Purchase Program existed." Write to Diana Golobay at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.