Itâ€™s a good thing Iâ€™m fond of saying I told you so; way back in August when Fannie Mae and Freddie Mac were bailed out, I wrote that it was just the beginning taxpayer money being used to save big business. So of course it comes as no surprise that as I typed this on Monday, the House Democrats are negotiating with the White House over their draft of a bill that will save the collective tails of General Motors, Ford and Chrysler. I told you so.
The current draft gives the Big Three $15 billion in emergency loans in exchange for strict government oversight of the auto industry (because now weâ€™re interested in oversight). The plan is for Bush to appoint a â€œCar Czarâ€ to oversee the use of the funds and reorganize the companies to make them more nimble, and profitable, in our ever-changing economy. The automakers would be required to give the Czar unlimited access to their books and ask for permission for any transactions worth more than $25 million.
Iâ€™m happy that the plan includes safeguards that areâ€”in theory, and by â€œin theoryâ€ I mean if money were not an illusionâ€”meant to protect the investment taxpayers are being forced to make in these failing companies. To wit, we are to be the first to get their money back if/when the automakers turn a profit, executives are forbidden to own or lease private planes and no stockholder dividends are to be paid as long as the loans are outstanding. The same goes for bonuses, and they punched holes in the golden parachutes, too. Sounds good, but Iâ€™m not convinced we can turn around an industry that has been mismanaged for decades.
Now Iâ€™m not mad; my Uncle Sonny will be one of the 3.3 million folks in the Midwest whose jobs will be saved this Christmas. But while lawmakers are working hard to make this happen, employers nationwide whose revenue is not seen as integral to the U.S. economy are making it rain with pink slips.
There we go with that self-interest again, only helping companies whose bottom lines directly impact those who are running the show. What are we doing for people like the former employees of Republic Windows and Doors in Chicago, Illinois? They were laid off with just three days notice when the company closed its doors on Friday after Bank of America refused to grant them a lifesaving loan. That money could have been used to pay the 300 workers (who are sitting in at the factory until they get their funds) their severance, or even just compensation for outstanding benefits or vacation.
But get this: Bank of America recently got $25 billion in bailout funds when it bought Merrill Lynch (which lost $11 billion and cut 30,000 jobs this year)! And Merrill Lynch CEO John Thain just had the nerve to say that he deserves a $10 million bonus. Seriously, Bank of America? You feel good about taking bailout funds with your right hand, while punching the workers at Republic with the left? Nevermind that they made energy efficient windows and doors, exactly the kind of products we need as we work to lower energy costs.
At least someone cares; Illinois governor Rod Blagojevich has suspended all the stateâ€™s business with Bank of America until it grants Republic the loan. Even President-Elect Obama expressed his support for the laid off workers: â€œWhen it comes to the situation here in Chi with the workers who are asking for the benefits and payments that they have earned, I think theyâ€™re absolutely rightâ€¦these companies need to follow through on those commitments.â€
The union is meeting with the bank this afternoon to work on a solution, so weâ€™ll have to wait and see what happens, but this is just one case of the very companies weâ€™re saving turning on the people who were supposed to feel the trickledown affects of their salvation, or at least abusing the hell out of the privilege. Case in point Citibank, which received a $306 billion bailout, is not only spending $400 million to name the Metâ€™s new stadium Citi Field, but it is also footing the bill for the Rose Bowl on New Years Day. Yeah.
On that note, I think Iâ€™m done for the day. This clearly is not over; so I can only ask: Whoâ€™s got next?
P.S. Yes, faithful readers, I know I put the word â€œbailoutâ€ on punishment earlier this year, but what am I supposed to say instead? Got any suggestions?
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