Northern Trust Co. to Congress: We don't want your money.
The Chicago bank, which got $1.6 billion of taxpayer funds under the government's financial-system rescue plan last year, said Friday that it was talking to its regulators "with the goal of repaying [the] funds as quickly and prudently as possible."
The bank has been pilloried over the last week for continuing its sponsorship of the annual Northern Trust Open golf tournament at the Riviera Country Club in Pacific Palisades, and for the related client parties it hosted around town.
President Obama and some members of Congress have helped to stoke public anger over banks' spending on anything deemed "inappropriate" in light of the government's $700-billion bank rescue program.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, wrote to Northern Trust this week demanding that the bank pay back what it spent on the golf tournament.
In a letter Friday to Frank and 17 other members of Congress, Northern Trust Chief Executive Frederick Waddell reiterated that the bank's activities with the golf outing "were in no way reliant" on federal funds. Northern Trust, unlike many of its peer big banks, has remained profitable so far in the recession.
The bank hasn't said so directly, but it most likely didn't need the capital infusion, and went along with it because the government wanted participation by healthy and unhealthy banks alike.
In his letter to Frank, Waddell said: "We understand this is a time of great anxiety and financial distress, and your question regarding our support of an event such as the Northern Trust Open is legitimate.
"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."
As for repaying the $1.6 billion, which now is earning a 5% annual dividend yield for the Treasury, it isn't clear how easy that will be.
One key question is whether the government will require the bank to raise the same amount in private capital to replace the federal money, a task that could take some time.