Exactly how much are bailed out banks and corporations still spending on private jets, ritzy conferences, and sports sponsorships? Most have declined to provide figures, but they'll soon have no choice if one politician has his way.
Congressman Elijah Cummings, (D-MD), said it is this type of wasteful spending that prompted him to introduce new legislation today that would require corporations receiving TARP funds to publicly report their expenditures, on a monthly basis, on their websites.
"These bonuses…and trips and sponsorships," Cummings said, "we want them to be in a very visible place…so the public can easily see what they're doing with the money."
The Accountability from Corporations for Outlays Under TARP Act would require bailed-out firms to publish all expenditures on corporate sponsorships, corporate jet trips and ownership, lobbying, furniture and office equipment, employee compensation, events (including retreats and conferences), travel (including plane fares, rental cars, hotel and food expenses), club and corporate memberships, and employee cars.
This information, he said, would also help the treasury department decide where additional TARP funding should go and assist Congress in deciding whether or not additional bailout money is necessary.
"There are no requirements for transparency, no standard for accountability," Cummings said, adding, "It basically is a slap in the faces of hardworking Americans who have given up their tax dollars."
Bailed-Out Banks Stand Firm on Sponsorships
Following news reports yesterday that said Citibank was considering pulling out of its $20 million a year sponsorship of the New York Mets stadium stadium, the bank said the sponsorship was a "legally binding agreement" with the baseball franchise and would not be paid out of TARP funds.
And after Bank of America took flack this week for its sponsorship of a Super Bowl fan festival, the company said some media reports were exaggerated and defended its partnership with the NFL. Sports sponsorships are valuable, the bank said, because for every dollar invested, the bank gets $3 in actual profits.
Sponsorships Long Established and Bring in Money, Firms Say
Other bailout-funded banks and embattled companies are also standing firm.
It's not, they say, that they aren't tightening their spending. But spokespeople for several banks say that their contracts were set long ago and don't involve government money.
JP Morgan Chase is one of them. Spokesman Tom Kelly said the company's $2 million year sponsorship of the Arizona Diamondbacks wasn't as pricey. "It's not even in the same league," he said. "It's part of a marketing program that's been going on for 12 years."
PNC Bank echoed that. The bank continues to have a 20-year, $30 million contract sponsoring the Pittsburgh Pirates. Spokesman Brian Goerke defended the contract, noting not only was it a deal sealed more than 10 years ago, but that PNC Bank had still posted profits through 2008, unlike many other TARP recipients.
"If banks are now going to have their hands tied in marketing endeavors -- and that's what this is -- then you're going to have some less successful banks," he said.
But, he said, going forward, the bank, which first received TARP money at the end of December, would be more cautious. "We have to think through what is appropriate in today's environment and what's not, and we're prepared to do that when it comes to sponsorship," he said.
That's not good enough, said Congressman Cummings, who thinks pre-existing sponsorships and deals should be renegotiated because of a "different climate."
"I'm sure that there would be other viable companies that have not received a dime from the government that would be glad to put their name on the Mets stadium," he said of the Citibank sponsorship.
Regarding the assertion that no TARP funds are being used for these sponsorships, an argument Citigroup and Bank of America have made, Cummings said "they can play that game forever."
"If they are spending anything, the only way they're able to spend it is because of U.S. taxpayers," said Cummings. "If they really cared about their appearance with regard to the American people and the Congress, they wouldn't even put that argument out there."
Companies Cutting Back
Others companies do say that they plan to cut back. American Insurance Group's four-year sponsorship of Manchester United won't be renewed when the contract -- worth approximately $125 million -- ends in May 2010, spokesperson Joe Norton said.
He said the company had looked into cutting it earlier but would have lost more money. So until then, the company will only invite marketing officials for events "specifically designed to increase revenue." But under its new internal financial rules from October, company employees will not be able to use tickets to the games as rewards.
And, Norton noted, the company has already ended shorter term sponsorships of more than a dozen other sports teams, including the New York Mets, the Houston Astros and the Japan Open.