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This Newstip edited by Curtis Black
Contact: 312-344-7783 | fax [phone] | [e-mail]

Credit Crunch Threatens Local Plant
Newstip Date: 11-26-2008

The credit crunch -- and the failure of big banks to use federal bailout funds to free up credit -- could hit a local manufacturer, where workers were told denial of routine credit by Bank of America could force them to close down.

Clergy and community supporters joined workers from Republic Windows and Doors, 1333 N. Hickory, who picketed Bank of America on LaSalle Street yesterday, demanding that bailout money be used to keep Republic's credit line open.

On Monday morning Republic managers told the plant's union committee that they would be unable to continue operations unless they could get credit needed to buy materials and make payroll, said Mark Meinster of United Electrical Workers, which represents most of the plant's 300 workers.

"This is really what the bailout money should be going to," Meinster said. "If the bailout was to free up the credit market, Republic should be getting financing."

Bank of America received $15 billion in bailout funds, and a few weeks later invested $7 billion in the China Construction Bank. Federal agencies gave banks $125 billion last month, saying they "expect all banking organizations to fulfill their fundamental role in the economy as intermediaries of credit to businesses, consumers, and other creditworthy borrowers" -- but setting no actual requirements, according to the New York Times.

Republic Windows, in existence since 1965 and a longtime Bank of America customer, "is a company that under normal circumstances would be able to continue their operation," Meinster said.

He said workers were concerned because the company moved some equipment out of the plant last weekend -- they were told it was being returned to leasing companies -- and managers were removing computers and files.

"They told us everything hinges on financing from Bank of America," Meinster said. "They said they hope to keep operating but it's day-to-day."

He said the union got "no firm commitment" that legal requirements for 60-day notice or 60 days of pay, along with all owed benefits, would be met.

Republic told union officials a meeting with the bank is scheduled for next Tuesday, Meinster said.

[MercutioATC]

1. To be clear, Republic has the primary responsibility here, not BoA.

Republic has the responsibility to assure that it has the necessary money to abide by the 60-day notice rule. Sure, BoA may not be abiding by the spirit of the bailout terms, but they have no direct responsibility to make sure that Republic can meet its obligations to its workers.

[elleng]

4. So you're saying what?

Republic can't get its necessary money 'cause boa refuses to provide it (when it otherwise would), but spends what it SHOULD elsewhere, even tho govt thought it would do the right thing? SO Republic should do what?

SOrry, gotta study up on the facts.

edit

OK, facts (story) says repubic needed 'routine' credit, which boa has refused. Heard similar story recently about auto dealer, in business MANY years; before 'bailout,' bank it had done business with for years was unable to provide routine credit, and dealer went out of business.

HERE we all learn things about businesses: MANY use 'routine' credit to pay for every day things (supplies, cars for auto dealers, etc) and in order for U.S. to keep moving, banks MUST continue to do business as usual.

'Bailout' funds should not be used for OTHER THAN 'routine' matters, but it appears the terms of the bailout did not so provide. We'll see what if anything is done about this.

[MercutioATC]

6. I'm "saying" exactly what I posted. This is Republic's issue.

BoA may not be abiding by the spirit of the bailout, but that's a completely separate issue.

Republic is required to give 60 days' notice and is failing to do so. That's Republic's responsibility (and problem), not BoA's.

[elleng]

7. There are no 'completely separate' issues these days;

this is business, which we're learning relies on MANY things to work smoothly and as planned.

As you can see, in these circumstances a 60 day notice, or any other, would likely be impossible, as few businesses can have 60-days' worth of cash around.

Its boa ANDS republic's responsibility; its the EMPLOYEES' (and supplier's) problem.

[MercutioATC]

8. It's the blurring of the lines of responsibility that concerns me.

Legally (and realistically) BoA has and has always had the option to discontinue credit to any of its clients.

If a given client, knowing this, especially in this economic climate, fails to ensure that it is able to fulfill its contractual and legal obligations, that is simply the fault of the client (Republic, in this case).

Look at it this way: I have repeatedly loaned you money to pay your gas bill. I fall on hard times because I gamble. I go to "Frank" for cash. Frank says he'll lend me the money, but he expects me to keep lending you money for your gas bill. I take Frank's money, but stop lending you money. I've broken my agreement with Frank, but I have no responsibility for your gas getting turned off.

[elleng]

10. Quite right.

But do I know about your hard times, their nature and extent?

JUMPING back, its at this point that businesses should look for other arrangements for their 'routine' needs. In my car dealer story, the dealer's regular bank went so far as to seek other banks that would cover dealer's routine needs, but could find none. We're all 'screwed,' as is said.

[MercutioATC]

11. Assume my gambling debts were featured on all of the major networks.

That's essentially the situation here.


Yes, I agree that lenders like BoA were irresponsible and, as a result, we're all screwed. Yes, I'm upset at them for that.

...but I can't logically assign any direct blame to them for a scenario like this.

[Usrename]

14. Then why did B of A receive taxpayer dollars?

From the OP:

"Bank of America received $15 billion in bailout funds, and a few weeks later invested $7 billion in the China Construction Bank."

How do you explain that? Aren't they thieves and fraudsters? If not, why not?

What do YOU think they told the US government in order to get that money? You think they said what? "We are going to screw everybody once we get the money!"

Yeah, right.

[xchrom]

2. recommend

[rosesaylavee]

3. In support of the workers

K & R

[ColbertWatcher]

5. k+r, n/t

[bleever]

9. K&R.

[formercia]

12. It's a Unionized Plant. That explains a lot.

"Mark Meinster of United Electrical Workers, which represents most of the plant's 300 workers."

[malaise]

13. K & R

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