Another TARP Sports Spending Spree Or Rational Spending?
Executives with Wachovia and Buick better start scaling back now because this much is now clear: If you or your parent company are receiving federal funds as part of the bailout, having big bashes and spending big money at sporting events is no longer acceptable.
TMZ did some pretty intrepid reporting by capturing what appears to be a pretty substantial spending spree by the folks at Northern Trust, which sponsored last week's PGA Tour event in Pacific Palisades, Calif. The Web site reported this morning that Northern Trust , which received $1.6 billion in TARP funds, hosted parties that featured live performances by Sheryl Crow, Earth, Wind & Fire and Chicago. The site also reported that Northern Trust put their employees and their clients up in the most fancy hotels in Los Angeles.
Barney Frank, chairman of the house committee on financial services, said that he expects Northern Trust to reimburse the government for the amount that they spent on the events.
We've spent a long time debating the merits of Citigroup's deal with the Mets, but it's now clear that every company taking TARP is going to be scrutinized. So the bigger question is where do we draw the line for any company getting government funds?
What do officials with Wachovia, which sponsors a PGA Tour stop in two months, have to know about how much they can spend? Their parent, Wells Fargo , took $25 billion in funds. The same goes for Morgan Stanley , presenting sponsor of The Memorial in June, which took $10 billion in funds. And watch out Buick, whose parent General Motors received billions and is asking for billions more. How many people are they allowed to send to the Buick Open in July and can they eat anything but a bagged lunch?
It doesn't seem like the market is too concerned. As of 12:56 p.m. ET, the stock is up 4.3 percent on the day.
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