Blue Mass Group

Reality-based commentary on politics.

Ill. Gov. suspends business with Bank of America

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Gov. Rod. Blagojevich from Illinois has ordered all state government agencies to suspend business with Bank of America after receiving a $25 billion bailout yet failing to restore the credit to the Republic Window and Doors company in Chicago, and the like. (Click on link to hear what Gov. has to say.)

With the support of Sen. Durbin and others, workers staged a sit in at the front doors of company, after being laid off. The credit- which was canceled last week- is needed so the company can pay severance and vacation time owed to workers.  

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  2. From my experience they are the first to raise fees, jump credit card tates to 29% and beyond, and reduce real services.

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    p>Besides, that “bailout” money was to be used to free up credit and keep commerce moving, not to enrich executives and gobble up other banks.

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    p>Good for Illinois, and in my view, shame on Bank of America.

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    p>In our household we call that company “BOA constrictor” because of the way it wraps itself around its prey and sqeezes out every last penny.

  3. Have we heard enough about Republic Window and Doors company to know that they would be a responsible debtor?

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    p>However, we also know that shortly after receiving the $25B “loan” from the US Treasury, BOA invested a good amount outside of the USA.

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    p>http://www.chinapost.com.tw/ch…

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    p>Of course, BOA claims that it was not “that money” they used.

  4. Why would BoA lend to a company that is nevertheless going to out of business?  How is the loan supposed to pay this back?

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    p>I was under the impression that pissing away the bailout funds was something that was to be frowned upon.

    • From The New York Times:

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      …the company released a statement that indicated that it had known since at least mid-October that it intended to close the factory by January. The statement suggested that it had gone back and forth with Bank of America for more than a month, but that the bank had rejected several of its “wind down” plans as well as the company’s request for financing to pay workers’ owed vacation…The workers here also blamed Bank of America for preventing the owners from paying its workers for already-earned vacation time and severance. Workers here said the owners told them last week that Bank of America had cut off the company’s credit line and would not allow payments.

      Federal law from the late 1980s requires employers to give workers 60 days’ notice (or 60 days of pay) in cases of plant closings or large layoffs. Still, that federal law, known as the Worker Adjustment and Retraining Notification Act, or WARN, provides exceptions in cases when a “faltering company” is actively seeking capital to save itself and has reason to believe announcing a possible closing might prevent it from getting that capital or in “unforeseeable business circumstances,” like unexpected conditions outside an employer’s control.

      • Looks like the workers took one for the team.
        In any event, it doesn’t look like the bailout of BofA was necessary, helpful, or appropriate (what are they doing with the money?) Maybe we should recall that $25 billion- we’ll need it for food stamps for the workers’ families.

        • They were looking to finance a wind-down.  That is to say, borrow the costs of closing the business.  How is that supposed to be repaid?

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          p>I would like to file bankruptcy, but there is a court filing fee of $150. Would you like to lend me the money to pay the fee?

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          p>Based on the article, it sure sounds like the owners of that business are trying to paper over a clear WARN Act violation (they have already begun to set up a new window company) by making this silly allegation against BoA.

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          p>Again, making BoA lend money that cannot be repaid is not an effective tactic to improve the situation in the credit markets.

          • but it certainly is possible that the company had enough liquidable equity to pay back the loan — the property, equipment, unused raw materials, etc.

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            p>I agree that it’s not obvious that lending money to a company shutting its doors is a good idea… but it’s not obvious that it’s a bad idea either.  Since we aren’t privy to the balance sheet, we simply don’t know.

  6. Blagojevich has a long history of supporting workers, and in spite of any illegal activity he’s engaged in, this move should be supported.  

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    p>These workers are entitled to their money, Bank of America, as a creditor should lend the money, and then get in line in bankruptcy to get their money back when the assets are sold off, they can afford to wait, these workers can’t.  

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    p>Also, they’re not trespassing, they’re engaging in a plant takeover.  Both technically “illegal” but one is totally justified.  

    • Since when are creditors required to lend money?  BoA didn’t employ these people, and doesn’t owe them anything.

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      p>If the bailout was designed to convert the credit markets into a charitable organization, then it truly was a waste of taxpayer money.

      • Since when are creditors required to lend money?

        They’re not, I just think they should.  Like I said, it’s a whole lot easier for BoA to afford to wait to get this money than it is these workers.  I’d think they should regardless of whether they got any taxpayer money.    

        • since when are taxpayers required to bail out banks? This whole bailout was nothing but a big scam, in my opinion.
          Or perhaps the scam really dates back to the time of Shay’s Rebellion and Alexander Hamilton- I don’t know.

          • We bailed out banks because they are the big players in the credit market, which was (is?) near failure.  A failure of the credit markets would, necessarily, lead to the rapid failure of a great many businesses worldwide, and a huge contraction in the economy.  It would have been, in short, utterly catastrophic.  We therefore bit the bullet and “bailed out” the banks in an attempt to encourage the lending of money, in order to save the rest of the economy.

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            p>If the banks then lend the money to people or businesses who cannot repay it, or if they give it away as suggested by dhammer, then the goal, the life support of the credit market, will not have been met.

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            p>That is why we bail out the financial sector, but not the auto industry, and not every Sam or Suzy Sub Story.

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            p>With respect to dhammer, why should this company be different?  Hundreds of thousands of people are losing their jobs on a monthly basis.  Many more are badly squeezed right now.  Why should BoA give money away to some but not all of these?  Hell, I bet BoA is already a creditor of many of these people as well, through credit cards or home mortgages.

            • Let’s be clear on what these folks are asking of BoA.  Republic Windows and Doors failed to notify these workers of a mass layoff, which they are required to do under WARN.  These workers are looking for what every worker in the country is entitled to when there is a mass layoff: 60 days notice (or 60 days pay if no notice is given) and payouts of already accrued vacation.  

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              p>There are two ways to get this money, they can file a WARN lawsuit, win, and get in line as creditor, assuming the company declares bankruptcy.  Or the company can pay it out as they are required to by law.  The only problem is, the company doesn’t have the cash to pay it out because BoA has called it’s revolving credit line, which is why they’re asking BoA to extend the credit.  

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              p>I understand that BoA as a creditor has certain rights and they were fully within those rights to cancel the line of credit.    The bank can afford to wait, however, because they are a multi-billion dollar bank, while these workers are victims of a terrible employer.  

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              If the banks then lend the money to people or businesses who cannot repay it, or if they give it away…

              This isn’t about giving away money; either way, all or most of this money will be paid out, but it will take time.  BoA, as a secured creditor will be first in line.  The UE, as an unsecured creditor, will be farther down the line and more likely to get less per dollar than BoA.

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