Banks mea culpa at taxpayers’ expense?
The U.S. government has frowned upon banks using TARP money for things such as corporate jet travel, junkets to Las Vegas, and out-sized salaries.
But it hasn’t said anything about using the money to buy full page ads in major newspapers to try to win back some love from the American public.
For example, Bank of America, which this week said it was selling most of its corporate jet fleet, has been peppering the Wall Street Journal, New York Times and Financial Times with ads extollings its virtues for several days now.
On Thursday, for example, one of its ads proclaimed that “the foundation of this nation is its communities” before going on to brag about its ten-year $1.5 trillion community development initiative, and commitment to its goal of $2 billion in philanthropy over ten years, saying, “the renewed strength of this nation will come from deep within.”
The ad’s tag-line: “This is America. We keep moving forward.”
Other TARP recipients are also running advertisements.
JP Morgan, for example, has a recurring ad boasting it has lent $100 billion in the last quarter alone, apparently in response to criticism from the government banks are sitting on TARP money.
But it will only lend to quality borrowers. The JP Morgan ad’s copy includes the nugget, “it’s bad for the economy for banks to make loans customers cannot repay.” Life’s lessons learned.
Wells Fargo, and its recently acquired Wachovia Securities, have also been running ads. “You can depend on our sound investment principles,” goes the ad.
Citi has an ad bragging how it has provided capital for risk management to General Electric, which last quarter saw profits fall 44 percent.
Of course, advertising is part of any company’s arsenal for drumming up business.
But according to the Wall Street Journal’s web site, a full page ad with color can run anywhere between $175,304 and $264,426. So place an ad in the Journal, the Financial Times and the New York Times, and others, over multiple days, and a bank’s charm offensive can quickly run a bill in the millions.
Of course the banks’ advertising blitz is a rare piece of good news for another venerable industry some have suggested could one day come begging for taxpayer help: newspapers.
UPDATE: Wells Fargo over the weekend took the ad blitz up a notch with a signed letter by CEO John Stumpf that took a decidely sharper tone than some of the other full-page ads that have sought to soothe the public’s bailout-related anger. In the letter, which begins “Okay, time out,” Stumpf bemoans the fact that public outrage forced the bank not only to cancel a Las Vegas trip (Stumpf insists “junket” is the wrong word) to reward top employees, but also that the bank now feels compelled to cancel all other employee “recognition events” for the rest of the year.
Questions for Mr. Stumpf: 1. If the bank feels so strongly about employee recognition, why not stick to its guns and spend to reward the deserving few, explaining the rationale to second-guessing politicians? 2. How many employee bonuses (or recognition payments) would the two ads that ran in the NY Times and Wall Street Journal (Dealzone is unaware of whether the ads ran in other publications) pay for?
Stumpf, who is one of 8 bank CEOs due to testify before the House Financial Services Committee on Wednesday, will have plenty of time to sound off to politicians about the themes of recognition, taxpayer bailouts and advertising. But a little advice from Dealzone: Given the chilly reception given in Washington to the likes of former Lehman CEO Dick Fuld and the automaker CEOs he might want to tone it down just a smidgen.