Lawmakers Assail Chicago Bank for Golf Junket

Northern Trust came under sharp criticism from lawmakers on Capitol Hill on Tuesday following reports that the Chicago-based bank flew hundreds of employees and clients out to Los Angeles last week for a golf tournament that it sponsors and put them up in luxury hotels.

The bank, which received more than $1.5 billion in federal bailout money in October, also hired such musical performers as Chicago, Sheryl Crow and Earth, Wind & Fire to entertain the employees and clients during the tournament, paying them tens of thousands of dollars, the entertainment Web site TMZ.com reported.

Representative Barney Frank of Massachusetts, chairman of the House Financial Services Committee, along with 17 Democrats on the committee, sent a letter on Tuesday to Northern Trust's chief executive, Frederick H. Waddell, demanding that the bank repay what it spent on the entertainment during the golf tournament, which ended on Sunday.

"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" from the federal government, Mr. Frank's letter said.

"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."

And Senator John Kerry of Massachusetts, a senior Democratic member of the Finance Committee, sought tougher action, saying he planned to introduce legislation to end "the extravagant spending practices" of banks that received taxpayer dollars.

"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," Mr. Kerry said in a statement. "It's an embarrassment that this legislation is necessary, but some companies clearly need a reality check to get their priorities straight so taxpayer money is used to get their house in order and not to pay for lavish parties."

Northern Trust defended itself, saying the entertainment was part of its long-standing commitment to sponsor the golf tournament at the Riviera Country Club.

"Northern Trust signed a five-year commitment to sponsor the Northern Trust Open in the fall of 2007," a Northern spokesman told The Chicago Tribune, noting that this was signed a year before the government created the Troubled Asset Relief Program, or TARP, to provide billions of dollars of aid to banks.

"The reason Northern Trust sponsors the Open is it's an integral part of its marketing program," the spokesman said. "It's about client relationships and showing appreciation for clients."

He insisted that taxpayer money did not pay for the golf tournament or entertainment. "Northern Trust last year had net operating income of $641 million so these events were paid for by Northern Trust," the spokesman told The Tribune. "These were paid by normal operating revenues."

Northern Trust, of course, is not the only financial company to come under fire for spending money on junkets and entertainment. Most notably, the American International Group was widely criticized in October for holding a $440,000 junket for top-performing agents at the St. Regis resort in California shortly after the government stepped in with tens of billions of dollars to keep the company from collapsing.

A.I.G. was also embarrassed by a hunting trip in Britain for a handful of top executives and clients that reportedly cost $86,000. source>>>

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