Northern Trust Corp. Chief Executive Rick Waddell said last week that during the early days of the 2008 financial crisis, his Chicago-based company’s main bank branch alone took in $90 million a day in deposits, up from an average of $2 million a day.
Insight into Northern Trust’s role during the financial crisis can be found in the recently released Financial Crisis Inquiry Report, which outlines the source of some of those deposit inflows at Northern.
The 663-document is the “final report” by the U.S. Financial Crisis Inquiry Commission on the causes of the nation’s financial and economic crisis. As the “official” supposed last word, Chicago’s biggest locally-headquartered bank comes off well.
Page 353 notes that the day of Sept. 15, 2008, marked “the beginning of the worst market disruption in postwar American history and an extraordinary rush to the safest possible investments.”
On page 360, the report says that hedge funds “pulled billions of dollars in cash and other assets out of Morgan Stanley, Merrill and Goldman in favor” of such players as big foreign banks, as well as “custodian banks, such as BNY Mellon and Northern Trust, which they believed were safer and more transparent.”
As of Dec. 31, 2008, Northern’s interest- and non-interest bearing deposits had grown by 22 percent, to $62.4 billion, up from $51.2 billion at the end of 2007. Last week, while speaking to the CFA Society of Chicago, Waddell recalled “lines in the lobby” at his LaSalle Street branch.
Others mentioned in the government report include Illinois Attorney General Lisa Madigan and the University of Chicago’s Raghuram Rajan.
To read the report, click here.
