Mass Media Crashes Bank Parties
Recent stories from the press have been rash to criticize anything that might be construed as an extravagance on the part of financial institutions. Some banks are crying foul. BofA and Wells Fargo are two banks that have both publicly taken issue with the news media’s spin on certain marketing initiatives.
FOX Business anchor Greta Van Susteren was just one voice among the angry hordes taking BofA to task over its $10 million Superbowl party. The bank blasted back, saying that this kind of marketing generates revenue, and ultimately will help the bank pay the federal government back.
They defended the event, saying it directly generated 14,000 checking and credit card applications. “For every dollar we spend in these business relationships, we generate more than $10 in revenue for our shareholders,” a BofA spokesman said. Besides, BofA taxpayer money wasn’t used; the bank had made contractual commitments for the event prior to accepting bailout money.
Then there’s Wells Fargo’s party.
Wells Fargo announced last week that it would cancel a four-day employee recognition event in Las Vegas after the media labeled it “a pricey Las Vegas casino junket.” The bank was forced to deny allegations that the bank “used the government’s investment to pay for these events.”
The bank may have capitulated, but it isn’t laying down without a fight. On its new blog, Wells Fargo chastised the media’s coverage as “misleading.” The blog post also makes an admirable attempt to justify the importance of the bank’s recognition events.
Wells Fargo went one step further. They took out a defensive two-page ad in yesterday’s New York Times. In the ad, CEO John Stumph said, “The problem is many media stories on this subject have been deliberately misleading. These one-sided stories lead you to believe every employee recognition event is a junket, a boondoggle, a waste, or that it’s for highly-paid executives. Nonsense!”
Key Question: Why didn’t bank parties and other luxuries bother anyone during the boom times?
Bottom Line:
- The media doesn’t seem to care if there’s any direct correlation between bank expenses and TARP money — and the general public cares even less. They’re going on the attack if they spot any financial institution spending money in a way they deem reckless.
- Under TARP, the rules of the game can change — without notice. In fact, the government can change the name of the game if it chooses.
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I find WFC’s consternation about the laser like scrutiny they are under to be laughable.
I didn’t see the ad myself but this is from the Reuters article about the ad/flap: **But the cancellation of those events hurts those Wells Fargo employees who are “most deserving of recognition,” such as tellers, personal bankers, operations clerks and credit analysts, the ad says.**
How many tellers and operations clerks do you think were on the guest list for The Wynn Hotel in Fabulous Las Vegas?
I bet the # of tellers and back office clerks would be a grand total of zero. Heck, maybe I’m wrong, but that’s my guess.
Word on the street is that Kovacevich was the most adamant of the group-of-9 about not wanting the TARP $$’s…he should have stuck to his guns. But until WFC pays BarnCo back the rules have changed, and they’ll just have to deal with it.
I posted something on our blog about this last Thursday and then happened to meet a Wells Fargo employee at a Chamber of Commerce event that evening. Take a look at the response he left to my blog post. He too expressed his frustration that the media overlooked the news that Wells Fargo had just announced a quarterly dividend payment of $371.5 million back to the U.S. Treasury on the 25,000 shares of stock purchased by the Treasury through the TARP Capital Purchase Program.
It is my understanding that Wells Fargo was forced to take TARP money so as not to give them an unfair advantage in the marketplace, i.e. NOT being scrutinized for their parties.
This week will tell just how much the government will own the banks – I have a feeling we’re just seeing the tip of the iceberg……
Wells Fargo’s event was not planned for tellers and clerks. In fact, the “12-day event” was actually two separate events. The first was for the mortgage division’s top performers — the folks banging out millions of dollars of mortgages every month. For some reason, Wells decided to downplay this point, perhaps because the company’s top mortgage producers are pretty rich folks. Nevertheless, the point WF’s Stumph makes is the same: regardless of who the attendees are, employee recognition and rewards programs are the discretion of the company, and, quite frankly, really no one else’s business.
Thanks for your comments Lucas, Jim and Denise. And Jim, thanks for the link back to your story. It’s interesting to hear from top brass inside organization such as Wells Fargo.
A press article today reports that a new provision in the economic stimulus package will allow banks to pay back TARP immediately and cancel warrants the government owns.
Guess we’ll find out if Wells Fargo really did need the $$, or not.
I agree that any new programs booked and paid for should be reviewed but this may be a case that the amount of saving from canceling at this point is less than what they would gain from going forward with their employee recognition party and having happy employees that will spill over to their customer satisfaction.
Agreed.