Let the TARP wars begin.
The rapid spread of U.S. taxpayer rescue funds, or TARP money, into the coffers of large financial institutions — from AIG and Citigroup to Bank of America and, now, poor Northern Trust — has provoked a battle royal sure to grow more intense.
Congressional leaders are busy channeling populist outrage over banks throwing swank parties and elite sponsorships after taking federal funds. Officials charge the days of such fancy-pants marketing is over. On the flip side, businesses — especially "healthy" institutions that took TARP funds as a show of solidarity (and who's stupid enough to turn down "free" money?) — argue that corporate sponsorships and snazzy resort events generate sales and strengthen corporate brands.
Both sides are hardheaded. It will take time to find common ground.
Pity Chicago's mild-mannered Northern Trust, with local offices here, for landing in the latest TARP crosshairs. The company accepted $1.5 billion in TARP in the fall and now finds itself ridiculed this week for wining and dining clients during the recent Northern Trust Open, a golf tournament in California.
Memo to Northern Trust: Next time, try not to get your parties publicized on entertainment Web site TMZ.com.
It's proved a field day for some of the nation's more acerbic observers. Check out the scathing rebuke to "Northern No Trust" that New York Times columnist Maureen Dowd delivers today on this newspaper's opinion page. House Financial Services Committee Chairman Barney Frank wants Northern Trust to pay "back" the cost of its partying at the Beverly Wilshire and Ritz-Carlton hotels while giving away Tiffany souvenirs.
"This behavior demonstrates extraordinary levels of irresponsibility and arrogance," chastised Frank in a letter to Northern Trust CEO Frederick H. Waddell.
Waddell in turn penned an open letter suggesting the fed's questioning of the Northern Trust Open was legitimate but that the bank saw no public benefit by canceling the events.
There are shades of gray worth noting here, even though the country is in a black-and-white mood to bludgeon, like the old Whac-A-Mole arcade game, any wayward financial institution or overpaid executive.
Whack! Troubled insurance giant AIG — now neck deep in $130 billion of TARP funds — feted clients and some execs at the tony St. Regis resort in California in the fall after taking government rescue funds. The public backlash was well deserved.
Whack! Wells Fargo cancels an employee reward trip to Las Vegas, but also a training program for insurance agents scheduled at the TradeWinds Island Resorts in St. Pete Beach. Where do we draw the line?
Should giant Citigroup, already deep into TARP funds, cancel its naming rights and sponsorship of the new New York Mets' baseball stadium?
What about Raymond James Financial here in St. Petersburg? It's applied for TARP funds. If it takes the fed's money, should it still sponsor the Bucs' stadium?
Some banks aren't taking any chances. Morgan Stanley on Wednesday said it would eliminate events for entertaining clients scheduled to run during a pro golf tournament it sponsors in June.
For banks healthy enough to pay back its TARP funds, do it soon and go on your merry marketing way. For banks in need of TARP, you may have earned the wrath of fed-up taxpayers.
Robert Trigaux can be reached at firstname.lastname@example.org.