Senator John Kerry (D-Mass.) wants to prevent companies that have received funds from the government’s Troubled Asset Relief Program from hosting, sponsoring, or paying for conferences, holiday parties, and entertainment events during the year in which they receive funds.
In a letter to Secretary of the Treasury Timothy F. Geithner, Kerry urges the Obama Administration to support his proposed legislation, saying he believes that the American Recovery and Reinvestment Act’s guidelines for executive compensation and luxury expenditures at TARP-funded companies does not go far enough to control spending. He cites recent reports that Northern Trust Bank, which received $1.6 billion in bailout assistance and recently laid off 450 workers, hosted employees and clients at parties and other events connected to its sponsorship of a professional golf.
An outline of Kerry’s proposed TARP Taxpayer Protection and Corporate Responsibility Act, posted on the Senator’s Web site, includes the following:
- Any recipient of TARP funds shall not be allowed to host, sponsor, [or] pay for conferences and events [nor] pay for holiday or entertainment events for the year in which they receive TARP funds.
- A recipient may seek a waiver from the Secretary of Treasury for any event which the recipient believes is directly related to the operation of the business. The Secretary has 30 days to respond to a waiver request.
- Any violation will require the federal government to be reimbursed by the company’s CEO for the cost of the event, and there will a fine of $100,000 per violation. A recipient will have 30 days to reimburse the government and pay the fine. The fine increases $10,000 a day for each day after 30 days.
- The date of enactment is March 1, 2009.
Responding to related comments from House Financial Services Committee Chairman Barney Frank, and 17 other democrats on the committee, calling for Northern Trust to repay the government for the amount spent on its controversial golf sponsorship events, Roger Dow, president and CEO of the U.S. Travel Association, defended meetings and events. "We agree that companies receiving federal assistance must be accountable to taxpayers for responsibly using public funds. But, we are perilously close to falling into a witch-hunt mentality in which working Americans are unfairly punished,” said Dow in a press release. “For every case of wasteful spending, we are seeing scores of instances in which the game of 'gotcha' has forced businesses to cancel legitimate activities that would have grown their bottom lines and generated jobs and economic growth for local communities.
"Policymakers must realize that meetings and events are the lifeblood of local communities across the country. It is critical to protect legitimate travel spending and the millions of American jobs it creates.”