Political Blackmail
Let the games begin.
There is great wailing and gnashing of teeth amongst the taxpaying public regarding the recent $700 billion bailout of financial institutions and even more for the proposed automakers funding. Still whole market sectors and their lobbyists are lined up at Congresses doors like kids waiting to ride the tea cups at Disney. Everybody wants a piece if the tax payer pie. But if they pay close attention to what is beginning to transpire with those institutions foolish enough to sell their soul to for a bag of silver they may chose to reconsider their free money financing strategy.
In Illinois it began simply enough as a union organized sit in directed against a window and door company that informed its workers that they were closing. A company involved in the housing market closing up shop is not much of a surprise to anybody that has read a newspaper over the last 12 months. But now embattled Illinois Governor Rod Blagojevich has entered the fray with an old tried and true method of getting money from folks who would rather not shell it out. It’s called blackmail.
While explaining why he was not concerned about the recent discovery that he was secretly taped recorded by a long time advisor for a federal corruption probe, the Governor announced he had instructed all Illinois governmental agencies to suspend doing business with Bank of America. It was Bank of America’s decision to not extend a line of credit that was the final nail in this coffin for the Republic Window and Door Company and its 200 union employees. Republic gave no advanced notice of the closing and further offered no severance packages claiming that they had simply run out of money and could not convince the bank to extend them anymore. The company had already enjoyed tax breaks and incentives from the state, county and city of Chicago.
The Governor said “We’re going to do everything possible here in Illinois to side with these workers”. He further stated that he was willing to go to federal court to help get these workers the money they claim they are owed. Officials from Illinois’s Cook County are now also threatening to cut off Bank of America business dealings. The only person that loves a camera more than that little boy Paris Hilton, the Reverend Jesse Jackson got his mug on the news. U.S. Senator Dick Durbin showed up and said of the federal financial bailout “It was money to be invested back in America. Cutting off the loans to Republic and losing hundreds of jobs as a result of it is exactly the opposite of what we need to have in this economy”. Durbin said he plans to begin discussions to see if banks are properly using the money given them. U.S. Congressman Luis Gutierrez has now installed himself in the process as a non-impartial mediator between the bank, the union and the company. That’s an awful lot of attention for one little window and door company. But we need to keep in mind that it’s not just 200 jobs, it’s 200 union jobs.
Democrats are beholding to their union voters and will not pass an opportunity to make a scene on their behalf, even if it’s not in the greater public’s best interest. Bank of America’s decision seems rather simple. They evaluated the risk of extending credit to an already incentivized company that is losing money and market share as a unionized manufacturer in the housing market and decided it is not in their best business interest to do so. They are particularly disinterested in extending money to pay for severance packages to a company that is going out of business. Anybody with any common economic sense would likely reach the same decision. But nobody is talking common sense here.
As politicians begin roiling against banks claiming they are misusing the federal bailout money, a clear pattern of blackmail and intimidation is beginning to take shape. Never mind the fact that in large part the genesis for the credit collapse was due to government insistence on extending credit to recipients that couldn’t pay it back. Politicians, like Rod Blagojevich who has directed the state of Illinois to near bankruptcy, are going to be instructing financial institutions on how they should run their businesses, and having sold their souls the banks are now forced to listen. Even if it means the new loans will put them in worse financial positions as then the old loans did.
The Democrats will go to any length to use this bailout money to their own political advantage. It could make this bailout the costliest free money any business has ever received.
