One day after Governor Pat Quinn signed a taxpayer-funded subsidy of $77 million annually to the wildly profitable Chicago Mercantile Exchange Group -- and seven days before Christmas -- the CME Group's charitable arm pulled the plug on its charitable giving in Illinois.
And the move has left some Illinois lawmakers gobsmacked.
Despite profits of $826 million in 2010 and having $749 million of cash-on-hand as of June 30, 2011, the CME Group claimed the collapse of the MF Global Holdings required the Chicago-based exchange operator to pay MF customers $50 million and, thus, to suspend its charitable giving to local school groups, which totaled six million dollars last year.
"All new CME Group Foundation grant proposals will be put on hold until further notice," the foundation posted on its website. "We apologize for any inconvenience this may cause grant applicants."
In other words, Illinois, tough.
The exchange, which had profits of $316 million in the 3rd quarter of 2011, or an increase of 29 percent over 3rd quarter 2010, also expects to rake in an additional $30 or $40 million in 2012 from new co-location service fees according to Chief Financial Officer Jamie Parisi.
"We are extremely pleased with both our top- and bottom-line results, which highlight the operating leverage inherent in our business model," said CME Group Chief Executive Officer Craig Donohue.
The "operating leverage" in CME's prized business model used by CME Executive Chairman Terrence Duffy was powerful enough to bully the Illinois General Assembly into coughing up the $77 million annually under the threat of moving its operation outside of Illinois.
But when it came to charitable giving, the vaunted "operating leverage" of its model stalled. It can't manage $6 million -- a rounding error for CME -- for charity.
In lobbying Illinois lawmakers for tax breaks, CME cited its charitable giving to lawmakers as a talking point in their favor. It was clearly a misleading talking point.
"When I was getting pushed to support their tax break, they made a point of talking about how much they give locally. Unreal. As if I needed another reason to be proud of my NO vote," State Rep. Kelly Cassidy (D-Chicago) posted on her Facebook page.
"I heard the same from CME. And as for the timing of the announcement? I am at a loss for words... or at least words I would be willing to post on Facebook," State Rep. Ann Williams posted in Facebook in response to Cassidy's comments.
CME's elimination of its charitable giving to local school groups also provoked the ire of State Rep. Greg Harris (D-Chicago).
"...[F]urious that CME Group announced they are eliminating charitable giving, just one day after getting their $90 million per year tax breaks. I'm sure they hoped no one would notice their weekend release," Harris posted on his Facebook page.
"One day after their tax break is approved, CME wishes Joys of the Season to the People of Illinois," Harris added.
Yeah, a Bronx Holiday Cheer.
Merry Christmas from the 1 percent.
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