I thought I had heard it all after banks that took TARP billions paid themselves $18 billion in bonuses after sinking the global financial system. But every time I think banks can't do more to shock me, they go and top themselves. That's what happened with Northern Trust (NASDAQ: NTRS), which took $1.6 billion in bailout money. To its credit, Northern Trust did not blow it all on bonuses -- instead it spent $6.3 million on a big LA party last week.
Why didn't I get my invitation? After all, I paid part of the tab. And so did you. What did our money go to? Here's a partial list:
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Luxury hotels. A hundred people were put up at the Beverly Wilshire in Beverly Hills, and another hundred stayed at the Loews Santa Monica Beach Hotel with more at the Ritz Carlton Marina Del Rey and others at Casa Del Mar in Santa Monica.
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Dinners with top stars performing. The guests had sumptuous dinners at these luxury hotels, accompanied by performances by top performers such as Chicago; Earth, Wind & Fire and Sheryl Crow.
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Golf tournament. The bank hosted the Northern Trust Open at the Riviera Country Club -- shuttling guests in a special Mercedes to and from the hotels. But for those who weren't into golfing, they could spend a few hours at the Northern Trust seminar on the credit crunch. What a downer!
I just feel sorry for Northern Trust's 450 workers who lost their jobs in December, 4% of its workforce. And did I mention the biggest suckers of all? You and me are on the hook for this LA blowout. And unless the government steps in, there seems to be nothing to stop them from partying again -- they sure must think we're fools.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
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Reader Comments (Page 1 of 1)
2-25-2009 @ 1:09PM
Rob F said...
Peter:
You need to get some facts corrected in this entry:
1) Most importantly the $1.6B is kept totally separate from the operating dollars. Northern is actually doing what few banks are right now... loaning that money and getting it into communities. The money used for the tournament and marketing events is from their profits. Yes... their profits. $641M last year. Northern Trust has never had a losing year since they were founded in the late 1800s.
2) The preferred stock purchase by the government was money Northern Trust was relieved to not have been asked to take the first pass. When they were asked later to take some money to make the TARP thing more equitable to banks that were actually failing, they did so.
3) Northern Trust announced that in December that it will be laying off about 450 workers throughout 2009. Mostly to downsize the securities area... an industry that we all know has totally collapsed. Sad for the 450? Sure. But necessary to stay profitable.... which NTRS has done since around 1890? You bet.
We should be looking at frugal and profitable banks like Northern Trust and saying, "What are they doing right to be profitable now and to get the TARP money back into communities?"
Step away from the mob. Read a little about companies before you trash them, please.
2-25-2009 @ 9:10AM
Sandy said...
If I were a customer of Northern Trust, I would call up their CEO, Frederick Waddell, or his Director of Communications, Doug Holt at 312-557-1571 and ask them to explain such outrage behavior in the midst of such a deep, difficult recession. How much value has your Northern Trust account lost and how much will your fees go up to support the $6 million party?
2-25-2009 @ 10:22AM
Frank said...
email Northern trust executives here:
Frederick_Waddell@ntrs.com
William_Osborn@ntrs.com
Kelly_Welsh@ntrs.com
Aileen_Blake@ntrs.com
Jana_Schreuder@ntrs.com
William_Morrison@ntrs.com
Sherry_Barrat@ntrs.com
Timothy_Theriault@ntrs.com
Stephen_Potter@ntrs.com
Timothy_Moen@ntrs.com
Peter_Cherecwich@ntrs.com
Jennifer_Driscoll@ntrs.com
Peter_Gloyne@ntrs.com
Kelly_Mannard@ntrs.com
James_Rauh@ntrs.com
John_Skjervem@ntrs.com
Susan_Crown@ntrs.com
Arthur_Kelly@ntrs.com
Edward_Mooney@ntrs.com
Harold_Smith@ntrs.com
William_Smithburg@ntrs.com
Robert_McCormack@ntrs.com
John_Rowe@ntrs.com
Dipak_Jain@ntrs.com
Charles_Tribbett@ntrs.com
Nicholas_Chabraja@ntrs.com
Linda_Bynoe@ntrs.com
Enrique_Sosa@ntrs.com
Robert_Browne@ntrs.com
Steven_Fradkin@ntrs.com
2-25-2009 @ 1:18PM
RC said...
Yeah. Email those execs and congratulate them on record 4th Q profits, just reported.
New business the best since 2000.
Take 'em down, or ask what they are doing right?