Morgan Stanley said Wednesday it would eliminate events for entertaining clients that had been scheduled to run in conjunction with a professional golf tournament it sponsors in June.
Morgan Stanley's announcement comes a day after protests erupted in Congress over parties and concerts hosted by Northern Trust at a golf tournament it sponsored last week. Other banks that received bailout funds from the government have also come under fire recently for spending money on lavish events.
Morgan Stanley, which received $10 billion in bailout funds, will still be the main sponsor for the Memorial Tournament but will have little other presence at the tournament. It is the ninth year the bank has sponsored the tournament, which takes places in Dublin, Ohio in June.
The bank declined to provide details about the canceled events. Asked why the cancellations occurred, spokeswoman Mary Claire Delaney said: "We are not participating this year due to the environment." She declined to elaborate.
Morgan Stanley changed its status to a bank holding company last fall, amid the mushrooming credit crisis, as investors worried the stand-alone investment bank model would not survive. Two other investment banks had toppled in September, when Lehman Brothers filed for bankruptcy and Merrill Lynch arranged a hurried sale to Bank of America.
Northern Trust, which received $1.6 billion as part of the government's bank rescue program, had hosted events throughout the week as it sponsored the PGA Tour's event in Los Angeles — the Northern Trust Open played at Riviera Country Club.
Northern Trust, a Chicago-based bank, noted it did not use any government funds for the events. Last week's tournament was the second year Northern Trust was the title sponsor of the event. It signed a five-year contract to sponsor the tournament in 2007, a year before the government's bank bailout program began.
Democratic lawmakers on Tuesday pressed Northern Trust to return the money spent on the events, and Sen. John Kerry, D-Mass., proposed legislation restricting banks that received government funds from hosting, sponsoring or paying for conferences or entertainment events. The legislation would require a company's chief executive to reimburse the government for the cost of any events hosted and pay a $100,000 fine.
Two other banks that received government funds are title sponsors of PGA tournaments later in the year — Wachovia, which is now owned by Wells Fargo, and U.S. Bancorp. Wells Fargo received $25 billion as part of the program, while U.S. Bancorp received about $6.6 billion.
The Wachovia Championship is scheduled to begin April 30 and run through May 3 in Charlotte, N.C., while the U.S. Bank Championship will be played in Milwaukee from July 16 through July 19.
Wachovia said it is reviewing its spending for the tournament, which it is under contract to sponsor through 2014.
"This event helps us drive significant revenue for our businesses by building client relationships, but we are carefully evaluating all of our expenses given the economic environment," the company said in a statement. "We plan to reduce expenses as much as possible, while meeting our contract obligations."
Wachovia's new parent Wells Fargo is also reviewing all of the banks sponsorship deals, a spokesman said.
Minneapolis-based U.S. Bank is in the sixth and final year of sponsoring the tournament. A U.S. Bank spokesman said the bank will not renew its contract.
Contributing: AP Business Writer Ieva M. Augstums in Charlotte