Tuesday, December 09, 2008

Thinking it through

Breaking News: Bank of America said this afternoon that it will provide a “limited amount of additional loans” to Republic Windows & Doors to pay employees who occupied the factory after the bank ended the company’s line of credit, Bloomberg.com reports. BoA made a point of insisting it wasn't in any way "obligated" to do so - but we know why it did.

Now to the original post:

I was going to praise Illinois Governor Rod Blagojevich for his announcement that
the state will suspend business with Bank of America Corp. until the lender restores credit to the shuttered Republic Windows & Doors company in Chicago where workers are staging a sit-in. ...

Illinois does “hundreds of millions of dollars” in business with the bank, he said.
But on second thought, maybe he's not the best symbol, since he
was arrested Tuesday on charges of conspiring to sell an appointment to president-elect Barack Obama's recently open US senate seat, prosecutors said.
But on third thought, screw that. Even if he's guilty as charged, that doesn't take away from the correctness and yes, morality of his decision regarding Bastards of America.

According to a Monday press release from Republic Windows & Doors, the company has been negotiating with BoA since October for an "orderly wind down" of the business. During those talks, the bank has repeatedly rejected company proposals (including when it said it had a buyer for the existing note) and demanded a more rapid shutdown. That included, the company claims, refusing permission to issue vacation pay to employees.

Now, the company may well not be the most impartial of sources, especially considering that by its own account it had been planning since October to shut its doors in January and still did not provide the legally-required notice to employees, but in my mind the weaselly response of Bank of America, which came down to a shrug and "nothin' to do with us," gave a good deal of credence to the company's assertions. For one, there was this bit:
Bank of America isn’t empowered to tell a company’s management how to manage its business, spokeswoman Julie Westermann said today.
Which is evasive bullshit, because what is being discussed here is not a management issue but a financing issue. BoA surely is "empowered" to determine what credit it will and will not extend under what conditions and circumstances and in the middle of a negotiation to "wind down" a company, it seems entirely reasonable to think it is "empowered" to make demands about what obligations take priority, what debts get paid first. And - as a result of Ms. Westermann's corporate spin, which didn't address the issue - we have an uncontested claim that meeting obligations to employees ranked low on that list if it was on the list at all. Low-lifes.

And then, laughably, there was this:
Bank of America, the recipient of $15 billion of federal bailout funds, said in a statement it had "provided the maximum amount of funding we can under the terms of our agreement" with Republic.
Then change the goddam agreement! What, do you think we're morons, that we think that some credit arrangement is a law of nature that can't be altered? Lying creeps.

Oh, but it's all okay, the bank just cares so much; in fact,
[t]he bank said it was "reaching out to the management and ownership of the company to see what they can do to help resolve the issue."
I'll tell you how you can help: Instead of using your bailout to buy Merrill Lynch, use it to enable Republic to pay its obligations to its employees! With a credit line! That's what the bucks are for, you twits! Scumbags.

Oh, and by the way, remember how I said on Sunday "the louder the pigs squeal, the better a grip you know you have?" Well, in the face of a state government making a business decision to support average working people, the pigs sure are squealing now.
[John] Douglas, an attorney with Paul Hastings Janofsky & Walker in Atlanta, said Blagojevich and Senator Christopher Dodd - who called on General Motors Corp. to fire Chief Executive Rick Wagoner - can’t tell companies how to run their business.

“This is a very dangerous thing,” said Douglas, who was at the FDIC from 1987 to 1989 and has since represented financial institutions including Bank of America. “There becomes an expectation that these government officials have some say over what the institution does,” he said in an interview. ...

Robert Topel, a labor and economics professor at the University of Chicago, said it’s “just silly” that a governor or member of Congress would seek to “micro-manage” a business.

“What does Chris Dodd know about running an auto company?” Topel asked. “Is Bank of America supposed to pick and choose which line of credit they want to keep open based on political pressure? It’s not Bank of America’s obligation to make sure the employer has funds to pay its employees.” [Emphasis added.]
Yeah, what do they know - in comparison to the corporations that have done so incredibly well, such as Bank of America and the rest of the bailout-beggars ponying up for tens of billions of dollars in taxpayer money to save them from their own greed-driven stupidity? What right has government got to do anything beyond just fork over the cash? Lord knows BoA doesn't place any conditions on the money it advances!

Yeah, I know. An obvious line. But still relevant.

Footnote One: It turns out that it's not just the state that may take a stand.
Cook County Commissioner Mike Quigley will introduce an ordinance to block the state’s biggest county from doing business with Bank of America, he said in an interview.

“I’m usually cautious, but this is an extraordinary example at an extraordinary time,” Quigley said. “When you talk theory, they nod and wink, but when you put in an ordinance, they know you are serious.”
I don't know how much business Cook County does with BoA but it's the biggest county in Illinois, with a population exceeding five million, so I doubt it's lunch money. And it raises the possibility of this sort of boycott spreading further.

Footnote Two: I have to wonder if there was an alternative to Republic closing: According to a market analysis from November,
US demand for windows and doors is forecast to rise 2.8 percent annually to $40 billion in 2012. Advances will be driven by the increasingly [sic] popularity of plastic windows and doors.
I don't know about the exact nature of the products Republic makes/made, but if it's not plastics, I wonder if the idea of re-tooling was considered. This is not a criticism of anyone because, again, I don't know. But I do have to wonder.

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