Friday, February 06, 2009
Banks find TARP changes rules of game Valley
Banks that took taxpayer bailout money are coming under intense government scrutiny about how they are spending their money.
Now executives of beneficiary companies have had their salaries capped by presidential order, sales reward trips have been scrubbed and sports sponsorships are imperiled.
This has many in the banking industry, including many of the biggest banks in Silicon Valley, trying to figure out what is acceptable business practice when participating in the Treasury Department’s Troubled Asset Relief Program, or TARP.
Some are even being advised by their legal counsel not to participate at all.
Ed Goines, former general counsel for the San Francisco 49ers who negotiated sponsorship deals on behalf of the team, said he has heard that banks are being more careful about what some may view as objectionable spending in the harsh new light of government supervision.
If deals are in place, it’s unlikely banks or other corporate sponsors would back out due to contractual obligations, said Goines, sole practitioner of the Sui Generis PC law firm, which represents businesses on deals involving sponsorships, promotions or marketing in connection with sports or entertainment brands.
“They still have to go through with it or else they’d have a lawsuit on their hands,” Goines said. “What I’ve heard is that they’re being less visible about it, say if they had an option of a luxury box or on-field presence. Some banks are doing the less ostentatious stuff. They’re saying, ‘We’ll honor our obligations, but we’re not going to throw it in peoples’ faces that we have these grandiose deals.’ ”
Geoff Roach, executive director of the San Jose Jazz Society, said organizers of its annual San Jose Jazz Festival have been approaching local banks for this year’s event, including past sponsor Well Fargo, but have yet to garner sponsorships from them or local credit unions.
“I think part of it is that they’re trying to figure out their budgets,” Roach said. “The way we typically get money from banks or any company is it would come out of their community philanthropic budget or the advertising-marketing budget. If a sponsor comes out, they get booths, signage, access to customers, sometimes media coverage. It’s an advertising expense like any other expense.”
Greg Jamison, president and CEO of the San Jose Sharks, said the franchise is monitoring the issue closely, but the team hasn’t encountered any difficulty with the banks or other corporate sponsors yet.
The Sharks won’t be offering season ticket sales for the 2009-10 campaign until spring, he said, “but we’re very aware that it’s a tough time nationally and internationally. We’re having discussions internally about the future. But from the snapshot right now, it hasn’t been a problem as of yet.”
Charlotte-based Bank of America Corp., which signed a $7.5 million per year naming rights deal for the Carolina Panthers football stadium in 2004, has come under the government microscope.
The bank, which took an initial $25 billion injection in December and another $20 billion in January, has been considering a major sponsorship deal for the New York Yankees ‘ stadium.
BofA was blasted for spending an estimated $10 million on a Feb. 1 Super Bowl corporate sponsorship, but bank spokesman Joe Goode refuted the report last week, saying that dollar figure was reflective of the bank’s overall relationship with the National Football League. Goode said BofA was one of many sponsors of a Super Bowl fan festival called the NFL Experience, in which the bank operated a consumer display offering services to game patrons. Sponsorship cost in the “low six figures,” Goode said.
Goode said the event netted about 14,000 applications for NFL-themed checking accounts and credit card services.
“It was a very successful and revenue-generating event for us,” he said. “We recognize that government and taxpayer investment in our company comes with an obligation to pay it back with a premium, and the way we’re able to do that is by exercising profitable business activities that allow us to generate the earnings and fulfill our obligations to shareholders, including the U.S. taxpayer.”
Citigroup, recipients of a $50 billion swap for preferred stock, and the New York Mets have both denied a Feb. 3 Wall Street Journal report that the troubled bank might reverse course on a stadium marketing deal worth $400 million. Citi, which announced last year that it planned 53,000 job cuts worldwide, released a statement saying it would honor the legally binding deal agreed in 2006 and that none of its bailout money would be used for Citi Field.
On Feb. 3, Wells Fargo & Co., which traded equity for a $25 billion injection, canceled what was reported by the Associated Press as a 12-night employee junket at two of Las Vegas’s priciest hotels.
The previous day, Wells Fargo announced a total quarterly dividend of $371.5 million payable to the U.S. Treasury, the only holder of record for 25,000 shares of Series D preferred stock purchased under Treasury’s Capital Purchase.
In the fourth quarter of 2008, Wells Fargo reported $22 billion in loan commitments and $50 billion in mortgage originations.
“That’s nearly three times the capital purchase program investment into Wells Fargo,” said Wells Fargo spokesman Chris Hammond.
Hammond said the Vegas trip was mischaracterized as a junket, calling it a “four-day business meeting and
recognition event for hardworking team members who made homeownership achievable and sustainable for borrowers across the nation.”
“It’s clearly been sensationalized,” Hammond said. “Wells Fargo does not need to use capital purchase program funds for recognition events.”
Banks that took taxpayer bailout money are coming under intense government scrutiny about how they are spending their money.
Now executives of beneficiary companies have had their salaries capped by presidential order, sales reward trips have been scrubbed and sports sponsorships are imperiled.
This has many in the banking industry, including many of the biggest banks in Silicon Valley, trying to figure out what is acceptable business practice when participating in the Treasury Department’s Troubled Asset Relief Program, or TARP.
Some are even being advised by their legal counsel not to participate at all.
Ed Goines, former general counsel for the San Francisco 49ers who negotiated sponsorship deals on behalf of the team, said he has heard that banks are being more careful about what some may view as objectionable spending in the harsh new light of government supervision.
If deals are in place, it’s unlikely banks or other corporate sponsors would back out due to contractual obligations, said Goines, sole practitioner of the Sui Generis PC law firm, which represents businesses on deals involving sponsorships, promotions or marketing in connection with sports or entertainment brands.
“They still have to go through with it or else they’d have a lawsuit on their hands,” Goines said. “What I’ve heard is that they’re being less visible about it, say if they had an option of a luxury box or on-field presence. Some banks are doing the less ostentatious stuff. They’re saying, ‘We’ll honor our obligations, but we’re not going to throw it in peoples’ faces that we have these grandiose deals.’ ”
Geoff Roach, executive director of the San Jose Jazz Society, said organizers of its annual San Jose Jazz Festival have been approaching local banks for this year’s event, including past sponsor Well Fargo, but have yet to garner sponsorships from them or local credit unions.
“I think part of it is that they’re trying to figure out their budgets,” Roach said. “The way we typically get money from banks or any company is it would come out of their community philanthropic budget or the advertising-marketing budget. If a sponsor comes out, they get booths, signage, access to customers, sometimes media coverage. It’s an advertising expense like any other expense.”
Greg Jamison, president and CEO of the San Jose Sharks, said the franchise is monitoring the issue closely, but the team hasn’t encountered any difficulty with the banks or other corporate sponsors yet.
The Sharks won’t be offering season ticket sales for the 2009-10 campaign until spring, he said, “but we’re very aware that it’s a tough time nationally and internationally. We’re having discussions internally about the future. But from the snapshot right now, it hasn’t been a problem as of yet.”
Charlotte-based Bank of America Corp., which signed a $7.5 million per year naming rights deal for the Carolina Panthers football stadium in 2004, has come under the government microscope.
The bank, which took an initial $25 billion injection in December and another $20 billion in January, has been considering a major sponsorship deal for the New York Yankees ‘ stadium.
BofA was blasted for spending an estimated $10 million on a Feb. 1 Super Bowl corporate sponsorship, but bank spokesman Joe Goode refuted the report last week, saying that dollar figure was reflective of the bank’s overall relationship with the National Football League. Goode said BofA was one of many sponsors of a Super Bowl fan festival called the NFL Experience, in which the bank operated a consumer display offering services to game patrons. Sponsorship cost in the “low six figures,” Goode said.
Goode said the event netted about 14,000 applications for NFL-themed checking accounts and credit card services.
“It was a very successful and revenue-generating event for us,” he said. “We recognize that government and taxpayer investment in our company comes with an obligation to pay it back with a premium, and the way we’re able to do that is by exercising profitable business activities that allow us to generate the earnings and fulfill our obligations to shareholders, including the U.S. taxpayer.”
Citigroup, recipients of a $50 billion swap for preferred stock, and the New York Mets have both denied a Feb. 3 Wall Street Journal report that the troubled bank might reverse course on a stadium marketing deal worth $400 million. Citi, which announced last year that it planned 53,000 job cuts worldwide, released a statement saying it would honor the legally binding deal agreed in 2006 and that none of its bailout money would be used for Citi Field.
On Feb. 3, Wells Fargo & Co., which traded equity for a $25 billion injection, canceled what was reported by the Associated Press as a 12-night employee junket at two of Las Vegas’s priciest hotels.
The previous day, Wells Fargo announced a total quarterly dividend of $371.5 million payable to the U.S. Treasury, the only holder of record for 25,000 shares of Series D preferred stock purchased under Treasury’s Capital Purchase.
In the fourth quarter of 2008, Wells Fargo reported $22 billion in loan commitments and $50 billion in mortgage originations.
“That’s nearly three times the capital purchase program investment into Wells Fargo,” said Wells Fargo spokesman Chris Hammond.
Hammond said the Vegas trip was mischaracterized as a junket, calling it a “four-day business meeting and
recognition event for hardworking team members who made homeownership achievable and sustainable for borrowers across the nation.”
“It’s clearly been sensationalized,” Hammond said. “Wells Fargo does not need to use capital purchase program funds for recognition events.”
