I looked for a thread about this, but I couldn’t find one. I think I must be missing something, but as I understand it, Republic Windows of Chicago had their credit pulled by Bank of America. The workers, who, evidently, are owed severance and vacation pay staged a sit-in. They are, they claim, holding the goods in the warehouse hostage, in what they feel is their only recourse.
So far, so good.
But lawmakers and others then pressure B of A to give further loans to Republic—a company they just deemed unworthy of credit—so they can pay their employees the money they feel they are due.
WTF?!!!
Didn’t we just learn what happens when banks extend loans to people who are known to be poor credit risks? The government just gave B of A $25 billion of our money. Isn’t the idea that they’re supposed to be more careful with this money?
From where I sit, I see that the workers have a claim against Republic, but not against B of A. This seems like a completely ridiculous scenario: Bank A deems Company X a bad credit risk and refuses to extend them credit. Company X screws up and closes shop, owing workers money. Bank A is responsible for the actions of Company X.
Huh?
This makes no sense to me. I think the proper recourse is for the workers to go after Republic. The bank is not the bad actor here. In fact, they are trying to act prudently. Are we (the banks via the bailouts) now responsible for every worker of every failed company. can popular opinion make a bank extend what they think is a dumb loan?
I’m a little confused. Lawmakers et al. do something incredibly stupid and counterproductive. Private company decides to go along rather than get into trouble. It seems to answered the Why? question yourself…
I could certainly see it being possible that, assuming that Republic has outstanding loans from BofA currently, additional credit to basically bribe the employees to allow access to Republic’s assets would leave BofA in a position to recoup more when Republic gets around to defaulting. I don’t know the specifics, but the employees’ actions could have changed the calculus of what a Republic bankruptcy would look like and when it happens.
You’re missing the fact that Bank of America, which, as you pointed out just received a lot of money from the government, can’t afford more bad press right now, and don’t want to seem like the “bad guys” by putting these workers, who have gotten a lot of press for their stunt, out of work.
Some good points have been made. and maybe the PR angle is the answer. But this has GOT to stop. Companies must be allowed to fail. That HELPS the system. I’m sorry for the workers, but if their employer fails that is not my problem or yours, or B of A’s. Certainly not to the point that must act counter to what the numbers tell them.
Tis is getting absolutely ridiculous. It’s the corporate equivalent of younger kids today being taught “you’re all winners”. No. No, you’re not. Some of you will lose. They other team will have better fielders, faster receivers, better rebounders, smarter CEOs and COOs and managers. If this stupidity continues our future is absolutely fucked.
I don’t know if I’m more pissed at people like Jesse Jackson, the politicians pointing to B of A, or B of A themselves. They’re all a bunch of short-sighted unhelpful jack-offs.
The question is whether Republic was really such a bad risk. The little I have read from their side said that they had an agreement with BofA to shut down the factory over the next month or so, before BofA pulled the credit.
But more importantly, you might have heard of the current liquidity crisis. Banks have gone from being too free with their lending to being anal retentive. Plenty of good risks are not getting any money, and the banks are using the bailout money to improve their books, not to make loans and getting the economy going again which is what Congress (if not Paulson) intended. I don’t know if Republic is a bad risk or not, but these days BofA pulling the loan is not a good indicator.
I thought that Republic Windows relied on the BofA loans to pay the workers, so, when BofA stoped the loans, Republic Windows couldn’t afford to pay the workers. If my understanding is correct, then how else are the workers supposed to get paid the money that they are owed?
Not when Republic’s major lender is a bank that’s just received a USD$25 billion bail-out and can afford the few thousand dollars it will cost to ensure the staff get their owed wages and entitlements.
I agree that it’s a good thing for unprofitable, non-vital business to fail.
It’s not a good thing that workers- who have families to feed, bills to pay, and mortgages or rent to keep up with- should basically be told a fortnight before Christmas “Get out, you’re not getting any money, you’ve basically been working for free since your last pay, and don’t get ass prints on the doors when you leave- the Bank wants to sell them.”
So, we should do that for everyone? I know it sounds callous, but there are always victims when somebody fucks up. The best thing is for the people to sue the company, Republic. Republic is the responsible entity. If the company I work for doesn’t pay me, I can’t go to its bank. My recourse is with the company. Why is this the bank’s responsibility. In fact, they are being forced to act irresponsibly. This sets a very bad precedent.
I have not been able to find anything that refers to this, only that the company told its workers that they were shutting down operations as BOA had pulled the line of credit.
Do you have a link , the trib and chi-news have’nt mentioned this.
So do you think that the company was lying about not being able to afford paying the workers with its line of credit shut off, or that it could have come up with the money another way?
Or are you saying that, even if BofA giving more credit to the company was the only way to pay the workers, tough shit for them, the bank shouldn’t have done it?
The latter. And let them seek satisfaction in the courts. Now I actually feel for the workers, and they are in the right. But their problem is as much the bank’s responsibility as it is Warren Buffet’s, or anyone else who just happens to have the money.
Uhm, this doesn’t make sense to me. How will a judge ordering the company to pay the workers do any good if the company doesn’t have the money to comply with the order?
I don’t see why not. If the company’s going into liquidation then the bank can sell their assets and recover the cost of the loan used to pay the staff. The bank gets their money back, the employees get paid (and thus don’t starve or end up on the streets or whatever), and the company still goes out of business. It’s as close to a win-win as I can see in this situation.
As any first-year law student will tell you, the first rule of litigation is “Don’t sue people who haven’t got any money.” There’s no point the workers suing the company to get their entitled pay if the company A) Doesn’t have any money and is out of business as a result and B) Even if a lawsuit was successful, it could be years before they see their money; assuming there’s any left after legal fees and disbursements.
There don’t have to be victims because a company has fucked up gone out of business, you know. Why should the staff be punished because they had the misfortune to work for a company that’s gone belly-up?
If the company you were working for couldn’t pay you because the bank had cut off a loan which had been promisied with the express purpose of paying their staff so the company could wind up its affairs in some sort of order, I think you’d be entitled to go to their bank and kick up a fuss. Or do what the workers at Republic have done, which is exactly the right way to go about obtaining recourse in this situation, IMHO.
Then again, in Australia the Government usually steps in when this sort of thing happens and makes sure everyone gets paid. Its clearly different in the US, and I don’t think that’s a good thing in this case.
But that bank had already made the decision that the company was not worth any extra investment/risk. Maybe they calculated (at the time they cut off the funding) that if the company went under they’re assets were already shy of what was owed. Whatever their reason, they wanted to bow out, to cut their risk.
Then don’t sue. The point is that their gripe was with Republic. They have no relationship with B of A. If I’m an investor in B of A, I want them to be prudent and not throw good money after bad. Again, they had already arrived at a decision they felt was in their best interest. I’m assuming their assessment to be correct. And we should for the purposes of this discussion.
Life’s tough. Sorry. Why should the bank? And its shareholders?
I don’t see where you get that from. But regardless, Republic had an arrangement with B of A. For whatever reason, things changed on republic’s end so that the bank felt it wise to end their credit, which is both their right and responsibility. There is no relationship between a bank who extends credit to a company and the company’s workers. The bank has two relationships: one with their customers (Republic) and with their shareholders. period.
I wouldn’t even mind that as much. The government is a not a for-profit company with a responsibility to shareholders.
I’m not the one who took away the line of credit, causing the company to no longer be able to pay their employees.
I’m not the one who has the millions of dollars necessary to pay the employees.
I’m not the one who got billions of dollars from the federal government, and thus, can afford to pay.
I’m not the one who was funding the company’s payroll.
And as for a lawsuit. These things take time, time the former employees don’t really have, as their bills can’t be put on hold while the court case goes on.
There’s no guaranty that the assets will total what they’re owed.
If the assets do total what their owed, will there be enough after court and lawyer costs?
What about competing interests? BofA wants those assets too. And what about other companies who may want a piece of the pie?
Going to court would be too time consuming and have too much uncertainty.
In my opinion, BofA loaning the money was the best way to handle this. The workers get their money, the business is still shut down due to poor management decisions, and BofA is in a much better position to handle being owed money than the ex-workers are.
Whereas if I was an investor in a bank, I wouldn’t want them to be heartless bastards screwing up numerous people’s lives at Christmas. Then again, I’m usually less interested in the bottom line that making sure everyone has a fair go.
They’re not “Suffering”. They’re certainly not going to be unable to pay their bills or eat. In fact, I doubt that BoA paying out the loan would even register as a blip on their overall balance sheet and the shareholders wouldn’t notice if the whole thing wasn’t front-page news.
This is clearly where we differ; I feel that a company’s first responsibility (besides being profitable and staying in business) is to society and not to the shareholders. Sure, the shareholders have a right to expect a return on their investment, but people (as in, employees, the community, society) should come first, IMHO.