Yet Another Bank Behaving Badly

To be sure, banks, even those under financial pressure, need to pursue appropriate marketing and client development efforts if they expect to survive the crisis. It is just part of doing business. At the same time, firms under such intense public scrutiny should be cognizant of how such activities will be perceived. At a minimum, scale them back from Gatsbyesque enterprises. Apparently no one at Northern Trust (NTRS) got that memo. For those of you without time to waste at tmz.com:

Northern Trust, a Chicago-based bank, sponsored the Northern Trust Open at the Riviera Country Club in L.A. We're told Northern Trust paid millions to sponsor the PGA event which ended Sunday, but what happened off the golf course is even more shocking.

- 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.

- Wednesday, Northern Trust hosted a fancy dinner at the Ritz followed by a performance by the group Chicago.

- Thursday, Northern Trust rented a private hangar at the Santa Monica Airport for dinner, followed by a performance by Earth, Wind & Fire.

- Saturday, Northern Trust had the entire House of Blues in West Hollywood shut down for its private party. We got the menu -- guests dined on seared salmon and petite Angus filet. Dinner was followed by a performance by none other than Sheryl Crow.

There was also a fabulous cocktail party at the Loews. And how's this for a nice touch: Female guests at the Chicago concert all got trinkets from ... TIFFANY AND CO.

The expected Congressional response can be found here.

Not to worry; Northern Trust received only $1.6 billion in TARP money, but didn't ask for it. It was just taxpayer money anyway - you know, little people. They also laid off 450 people, but, again, little people, so also no worries.

More evidence that the US response to the financial crisis has degenerated into a sad joke.

Comments

[klarsolo:]

Why does anyone care what they do as long as the TARP money they didn't ask for will be paid back? Did they pay for these events with marked TARP dollars and then told the government that sorry, they won't be able to pay them back? Does anybody think Northern Trust might have to be nationalized and the TARP money will be forever lost? Sheesh.

Feb 25 09:03 AM

[klarsolo:]

Before I get thousands of "poor" ratings on my post above: I do understand the outrage over these lavish events. But not every single financial institution is on the edge of failure, and if one of them thinks that such an event is justified for whatever reason, why should they all be prohibited from doing so?

These events are not always a total waste of money, but can bring in clients that actually make the company more money. This is even more the case in times when all their major competitors refrain from doing anything comparable for their clients (because of TARP infusions and the public outrages over such events).

Furthermore, these events keep some of these resorts alive. If now everybody stops everything we'll have even more business failures on our hands.

I just happen to think that as long as it is assured that TARP money will be paid back, we don't have to have a public outcry over every single event out there. Am I alone with that?

Feb 25 09:14 AM

[Jolly_Rancher:]

Sounds like the money is being spent on U.S. goods. Isn't it better that the healthy banks just spend the money rather than loan. If they loan it, overall debt rises; and that's bad. Let them blow it!

Feb 25 10:02 AM

[lavalyn:]

Do you really think the TARP money will be repaid? Like how accounting "future tax liabilities" will ever really be paid?

Feb 25 10:05 AM

[klarsolo:]

lavalyn, what makes you think Northern Trust will default on its TARP debt? This is one financial that is actually still doing relatively well and had a record year in 2008.

What do people want? The economy to recover? Well, then maybe we should not ask every company out there to cancel every all their marketing events.

Feb 25 10:08 AM

[Seeking Advice:]

I think what's being lost int the comments here is the appearance of these activities and that really is important. Many people have lost their jobs, had hours cut back, are worried about losing their jobs, and lost a significant % of their retirement investments. A high percentage of people in this country are being forced to live more austerely. We should be able to expect a certain humility from the financial institutions that have received tax payer money to cover losses from what amounted to a series of poor risk management decisions by these very same companies. Few other type of industries have enjoyed that type of favorable treatment or expect to.

I find it hard to excuse their terrible sense of judgment and it just reminds everybody of a certain sense of entitlement and privalege not available to others. To consider it just a 'marketing event' misses the point or more importantly it shows that company misses the point of what's going on in the country (and world) right now.

Feb 25 11:12 AM

[klarsolo:]

Seeking Advice, I'm aware of the appereance problem, but to keep this economy going I don't think it is the right thing to tell companies "stop marketing, stop endorsements, be frugal". This just makes everything worse. I'd also complain if this event by Northern Trust was any more lavish or more extravagant than their usual stuff, but what if it is not. What if they already had cut back their budget for these things? Do you want them to all lower it to 0, even for banks that did a good job last year? Whenever you ask a bank to cancel these things you take money out of the pockets of whoever works at these resorts.

Feb 25 11:25 AM

[ejm200:]

northern trust repaid the first quarterly installment already. more to come.
northern did not ask the government for any bailout money.
i would like to see the members of the financial services oversight committee get audited by the irs and see if they are any better at paying their taxes than the treasury secretary et al.
On Feb 25 10:05 AM lavalyn wrote:

> Do you really think the TARP money will be repaid? Like how accounting
> "future tax liabilities" will ever really be paid?

Feb 25 11:45 AM

[Green Eyes:]

It's really no worse than what Obama did for his inauguration...... and those were CERTAINLY taxpayer funds. I'm not saying that what the bank did was ok by any means, we just need to keep things in scope.

Feb 27 02:18 PM

[Mr. Ed, Jr.:]

I don't see this as being out of line for a company. They are enetertaining top clients and employees. I have not seen anything that indicates it was corporate execs taking care of themselves.

tmz is the mudraking website wasteland that sent out a "reporter" to harass Cheryl Crow after the event ......""Did you know you were performing for a bank that took taxpayer bailout money ? How do you feel about that ? If you knew ahead of time that they took tax money, would you still have taken the gig ?"

Crow ignored the clown and just kept walking, but she had her head down, so it looked a bit like the guy had "shamed" her.

I guess citizens will be publicly "shamed" now if their work is deemed "incorrect" . And banks are not supposed to take care of their best customers-- as if there aren't any other banks trying to lure them away.

This is where we are headed as a nation, folks, and it ain't pretty.

Mar 03 01:46 AM