A story breaking here in Milwaukee is how Wisconsin's second largest bank received half a billion in TARP funds and then planned its annual Puerto Rican winter luxury vacation, a pretty nice perk!
Just three months ago, the state's second-largest bank joined scores of other troubled lenders when it cashed a check for $525 million from the federal government to prop up its bottom line.
Today, Associated is preparing to drop tens of thousands of dollars - and maybe more - to send about 100 employees to a posh Puerto Rican resort as a reward for a job well done.
Making the trip will be everyone from backroom workers to the CEO, Paul Beideman.
On Wednesday, Beideman stood by his decision to send scores of employees on a midwinter junket, despite the bad economy and taxpayer bailout funds.
"How are our associates going to react to it if we willy-nilly cancel the trip because of some issues people are having with other companies," he said. "Given the set of facts that we have, canceling the trip and disappointing these high performers really just wasn't warranted."
Hmmm, sounds pretty nice. I wonder what's included
The resort, with rooms that run up to $450 per night, touts its 100-acre private island; 18-hole golf course, complete with waterfall; private marina; Parisian day spa; children's water park; and 10,000-square-foot Caribbean casino.
And there's more.
"Members of the Star Performers will be treated to an adventuresome getaway that includes ATV adventures, tours of Old and New San Juan, coastal kayaking, golf and an awards ceremony in the El Yunque Rainforest," said an internal Associated Bank memo. "Congratulations to all of our winners for their dedication to Achieving Excellence in sales and services."
The memo says the trip will include employees from the divisions ranging from mortgage to wealth management.
You know, this sounds kind of lavish, especially in these times. I wonder how they're justifying this
Beideman said the trip is standard operating procedure for his bank.
"We have a pay-for-performance philosophy in the company," he said. "It's part of that performance, and really it's the people that have done the best in each of our businesses that are going."
Such trips also are SOP for many other lending institutions.
Other banks have gotten into trouble for this type of thing. How is this different?
Beideman said his bank is different from those other banks.
Specifically, he noted, Associated is still turning a profit. In the fourth quarter of 2008, the bank reported net income of $13.6 million, down from $64.8 million for the same quarter the previous year.
"We took the capital, and let me say this very clearly, we didn't have to," Beideman said. "We took it as an abundance of caution in what is a challenging environment."
But the bottom line is this: Associated cashed the federal check.
Executives at other banks have said they can't say exactly how they are spending their tax dollars because they co-mingle their various funds. Beideman, however, said he knows exactly where his bailout bucks are.
Those dollars are being used exclusively on "lending initiatives," he said. No federal funds are going toward executive compensation or trips to San Juan.
"There's a huge difference between Citibank losing $18.7 billion and buying a plane - or AIG flying its executives someplace after losing $42 billion - and us making money, funding all of our expenses, contributing our capital and rewarding our good people," he said.
Even so, it sounds like others might talk
"Should we ask you or anybody else each individual thing we do to see if it's politically correct?" he asked. What he cares about, he said, is the opinion of his employees, and they overwhelmingly support the Puerto Rico trip: "I think it's coming across very positively."
I hope nobody gets sunburned or food poisoning down there. I don't know if TARP funds medical care on these junkets.
Update: I just saw in today's paper the trip was just cancelled