Are you kidding me? I'm as fiscally responsible as the next guy (if the next guy happens to be penny-pinching Scrooge McDuck), but the U.S. government's recent demands to Northern Trust
The brouhaha surrounds Northern Trust's sponsorship of a PGA tour event in California -- appropriately called the Northern Trust Open. In order to court its ultra-high-net-worth clientele, the custody bank forked out (millions, some say) for luxury hotels, parties and other promotional events, including concerts.
It probably won't surprise you to hear that the company actually has to develop its business. These wealthy clients -- who include some 20% of the Forbes 400 wealthiest families -- don't just swing by the office and offer you their cash to invest. You have to build a relationship.
Unfortunately, the banker also received $1.6 billion in TARP money. Now legislators such as John Kerry and Barney Frank are fuming "about another idiotic abuse of taxpayer money," to use Kerry's words. A letter from Congressional Democratic leaders to Northern Trust's CEO Frederick Waddell chastised him for "behavior [that] demonstrates extraordinary levels of irresponsibility and arrogance." Even The New York Times' Maureen Dowd piled on the vitriol. Ow!
Irresponsibility? Arrogance? We could only be so lucky if the rest of the banking sector -- indeed, the rest of the federal government -- were as "irresponsible" as Northern Trust has been.
We're not talking about a bank that has borrowed tens of billions -- I'm looking at you Bank of America
Confronted by Congressional scorn, Northern Trust protested its innocence, noting that the government asked banks to take funds whether they needed to the money or not. The Feds did so to alleviate bad banks' stigma of taking money from Uncle Sam, the lender of last resort. Besides, it's not like Northern is getting the money for free; it's already paying interest, and it's considering repaying the whole amount, as are JPMorgan and Goldman Sachs.
At worst, Northern Trust's action is a faux pas. How dare it try to develop its business while everyone else is suffering? At best, it's an attempt by a strong company to expand when the (blue) chips are down. Wouldn't Northern Trust like to show current and potential clients its stability vis-a-vis its custody-bank competitors, such as State Street
Of course, amid all this downturn and malaise, Congress must do something, anything. Uncle Sam must appear like Uncle Scrooge, reining in financial instituitons' profligacy. But where was Congress's responsibility and oversight while the real-estate party was still going on?
Fool contributor James Royal owns shares of Northern Trust and Bank of America. JPMorgan Chase is a former Motley Fool Income Investor recommendation. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.