After Northern Trust "Party," Kerry Introduces Legislation to End Lavish Spending by Bailed Out Bank

[Mass]

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Feb 25, 2009 (Congressional Documents and Publications/ContentWorks via COMTEX) -- NTRS | Quote | Chart | News | PowerRating -- February 24, 2009

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After Northern Trust "Party," Kerry Introduces Legislation to

End Lavish Spending by Bailed Out Banks

WASHINGTON, D.C. - Senator John Kerry (D-Mass.), a senior member of the Finance Committee, today announced plans to introduce legislation to end the extravagant spending practices of U.S. banks that received taxpayer dollars from the Troubled Asset Relief Program (TARP). The TARP legislation was passed by Congress last year to help failing financial institutions and improve our sluggish economy.

Kerry's TARP Taxpayer Protection and Corporate Responsibility Act would prevent any recipient of TARP funds from hosting, sponsoring, or paying for conferences, holiday parties and entertainment events. Any TARP recipient that misused the funds would be fined and required to reimburse the government.

Kerry's announcement follows reports that Northern Trust Bank, which received $1.6 billion in bailout assistance, hosted hundreds of employees and clients at expensive hotels in Beverly Hills and threw a series of extravagant parties in Hollywood last week that consisted of private dinners, cocktail parties, and performances by Chicago and Sheryl Crow. The bank recently laid off almost 450 workers.

"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," said Kerry. "Americans who play by the rules are losing their jobs and struggling to pay their mortgages. The companies that came to Congress in desperate need of help to stay afloat become their own worst enemies when they pull stunts like this. 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. Congress has zero tolerance for this kind of excess."

Though some people still have problems with details... (apparently, proofreaders are expensive or Finance and Banks are a nuance above the writer's understanding.
http://www.thedeal.com/dealscape/2009/02/congress_tees_off_against_nort.php

The bank also hosted a bunch of accompanying parties for clients and handed out souvenirs from Tiffany's. The lawmakers demanded that the institution, which received $1.6 billion from the Treasury Department's Troubled Asset Relief Program, "immediately return to the federal government the equivalent of what Northern Trust frittered away on these lavish events." In fact, John Kerry, a senior Democratic on the Senate Banking Committee, even vowed to introduce legislation outlawing "extravagant spending practices of U.S. banks."

Oh, and it made the local news this morning on 4 and 7 (probaby 5 as well, but I do not watch it), and an article in the Globe and the Herald. http://www.bostonherald.com/business/general/view/2009_02_24_Barney_Frank__John_Kerry_slam_bailed-out_bank_s_golf_extravaganza/

http://www.boston.com/news/nation/washington/articles/2009/02/25/solis_is_labor_secretary_after_several_weeks_delay/

[karynnj]

1. This seems to be a nice piece of legislation

As he said it is an embarrassment that it is needed, but there have been so many of these stories - where the companies have not seen that their new reality is not consistent with these extravaganzas. Having this as an amendment could take away a likely Republican talking point if more legislation is needed to approve more money for banks.

I like that he puts in the waiver as it makes it flexible enough to deal with reasonable expenditures.