Lawmakers shouldn't interfere with the private sector for the good of we, the people.
CHICAGO — Responding to lawmakers who chastised the company for its lavish sponsorship of parties and concerts at a professional golf tournament, Northern Trust Corp. said Friday it will pay back a $1.6 billion federal bailout loan as quickly as possible.
Northern Trust acted within government guidelines by sponsoring the PGA Tour's Northern Trust Open at Riviera Country Club in suburban Los Angeles, President and CEO Frederick H. Waddell said in a letter to members of the U.S. House Financial Services Committee.
"We deeply regret that some of the events associated with the Northern Trust Open have distracted from the positive nature of an event that has raised more than $50 million for charity since its inception," Waddell wrote, adding, "we will redouble our efforts to ensure that these activities are appropriate given the current environment."
Northern Trust has set a goal of repaying government funds "as quickly as prudently possible," Waddell said.
The Chicago-based custody bank came under criticism last week after news that it lodged hundreds of clients and employees at upscale hotels and hosted them at concerts and dinners associated with the weeklong tournament. A report by entertainment Web site TMZ said Northern Trust flew in hundreds of employees and clients for the event.
Many banks that received money as part of the government's $700 billion government package passed last fall have been criticized by politicians in Washington in recent weeks about their spending habits _ from hosting conferences to buying corporate jets _ after obtaining the funds.
The events were part of the bank's global marketing activities and were focused on showing appreciation for clients and attracting new business, Douglas Holt, a spokesman for Northern Trust, said earlier this week.
No government funds were used to fund the golf events, Holt said.
Earlier this week, eighteen Democrats on the financial services panel, led by Chairman Barney Frank, D-Mass., told Waddell in a scathing letter, "We insist that you immediately return to the federal government the equivalent of what Northern Trust frittered away on these lavish events."
"At a time when millions of homeowners are facing foreclosure, businesses and consumers are in dire need of credit, and the government is trying to keep financial institutions _ including yours _ alive with billions in taxpayer funds, this behavior demonstrates extraordinary levels of irresponsibility and arrogance," they wrote.
Throughout the ongoing credit crisis and recession, Northern Trust has remained profitable, unlike some large commercial banks that have received larger sums from the government. Northern Trust earned $794.8 million, or $3.47 per share, in 2008.
Despite remaining profitable, Northern Trust announced in December it would cut 4 percent of its staff, or about 450 jobs.