Taking money from the federal government was bound to have unintended consequences, and that’s becoming evident in the case of a closed Midwestern factory.
Amid all the fear and uncertainty of recession, there is a growing populist sentiment that banks that received part of the federal bailout should act for the sole reason of saving jobs and contrary to sound business decisions. Democrat politicians, union leaders and some in the media agree.
Taking money from the federal government was bound to have unintended consequences, and that’s becoming evident in the case of a closed Midwestern factory.
Amid all the fear and uncertainty of recession, there is a growing populist sentiment that banks that received part of the federal bailout should act for the sole reason of saving jobs and contrary to sound business decisions. Democrat politicians, union leaders and some in the media agree.
Chicago-based Republic Windows and Doors was forced to close a plant after Bank of America (NYSE: [1]BAC) stopped lending to the company. Plant workers are staging a sit-in on the premises, demanding severance and vacation pay.
On he Dec. 8 “CBS Evening News” correspondent Dean Reynolds said the situation had attracted the attention of President-elect Obama and other politicians who “believe it exemplifies an imbalance between a Wall Street that gets government help and a Main Street that gets the shaft.”
“Aside from the company managers, who’ve essentially disappeared, the workers’ anger is directed at the Bank of America, which cut off Republic’s line of credit, preventing it from paying its employees,” Reynoldssaid. “So the state of
The CBS segment went on to play footage of Illinois Gov. Rod Blagojevich, who was [2]taken into custody on Dec. 9 on criminal charges involving President-elect Barack Obama’s vacated former U.S. Senate seat.
“The taxpayers who do all the work in our country have been already asked to bail out these big banks,” Blagojevich said. “Then we expect those banks to bail out businesses like this to keep them afloat and keep these workers working.”
Bank of America released a statement defending its decision not to cut Republic Windows and Doors credit line and the political anger surrounding the bank’s decision.
“When a company faces such a dire situation, its lender is not empowered to direct the company’s management how to manage its affairs and what obligations should be paid,” the bank’s statement said. “Such decisions belong to the management and owners of the company. Bank of America has worked with the company and shared our concerns about the company’s situation and its operations for the past several months. It is unfortunate that the company has been unable to reverse its declining circumstances.”
According to the New York Times, Bank of America has received [3]$25 billion of the $700 billion federal bailout. The Charlotte-based bank is [4]the second largest in the
“NBC Nightly News” expressed a similar sentiment in its Dec. 8 broadcast over whether Bank of America shared in the responsibility for the former Republic Windows and Doors losing their jobs.
“Republic assembled doors and windows for more than 40 years, but gave employees just three days' notice instead of the 60 generally required by the law,” NBC correspondent Kevin Tibbles. “[W]ith companies laying off tens of thousands, another 300 jobs may not seem significant, but the workers holed up inside this factory have become somewhat of a symbol.”
Both NBC and CBS failed to question the wisdom of banks – especially those using taxpayer funding -- lending to high risk credits. And neither network mentioned that the government had encouraged banks do just that for home-buyers with marginal or poor credit, writing what came to be known as sub-prime mortgages.