[I was just in the process of sending this post out when news crossed the screen that the Illinois governor has been arrested on federal charges. More at the end of the post.]
You may have heard about the laid-off factory workers in Chicago who are staging a sit-in. I don't know all of the details about the claims of the workers or the circumstances surrounding the closing of the company, but the latest twist is disturbing. Illinois governor Rod Blagojevich has ordered all state agencies to stop doing business with Bank of America due to the shuttering of this business and the resulting sit-in.
According to news reports, the workers are simply asking for severance and the vacation pay they're owed. The governor's action, however, seems to have a "loftier" goal. Governor Prod made a cameo appearance at the plant and said, "We hope that this kind of leverage and pressure will encourage Bank of America to do the right thing for this business. Take some of that federal tax money that they've received and invest it by providing the necessary credit to this company so these workers can keep their jobs."
Nobody has claimed that Bank of America did anything wrong or illegal. They apparently canceled their financing of the company, but that's hardly surprising in the current environment. Let's keep in mind here what this company does (did). The name of the company is Republic Windows and Doors. They make windows and doors! Is anybody really surprised that this company didn't make it? We're in the midst of a national housing bear market, new and existing home sales are plummeting, residential construction is grinding to a halt, and foreclosures are skyrocketing. I'm impressed that the company stayed afloat this long.
Now the governor is threatening Bank of America with the loss of state business in order to try and force the bank to lend to a door and window company during the worst housing crisis since the Great Depression. You can't make this stuff up. Furthermore, he claims that the bank should use the Federal bailout money, which is another way of saying that the bank should use funding from all Americans throughout the country to keep this clearly defunct business on life support so its 200 employees can keep their jobs in Illinois.
This is a shameless publicity stunt on the part of the governor. The workers aren't asking for a loan for the company. They just want severance and vacation pay. Let's hope that Bank of America doesn't bite. The last thing we need are politicians throughout the country threatening banks with lost business (or other sanctions) for failing to lend to failing businesses. Good viable businesses will hopefully soon have more ready access to reasonably priced funding. Failing businesses should be allowed to fail.
UPDATE:
In light of the governor's actions in the above instance, I can't say I'm shocked at the following news that just crossed the tape. Another "reformer" bites the dust. From USA Today:
Illinois Gov. Rod Blagojevich was arrested Tuesday on charges of conspiring to get financial benefits through his authority to appoint a U.S. senator to fill the vacancy left by Barack Obama's election as president.According to a federal criminal complaint, Blagojevich also was charged with illegally threatening to withhold state assistance to Tribune Co., the owner of the Chicago Tribune, in the sale of Wrigley Field. In return for state assistance, Blagojevich allegedly wanted members of the paper's editorial board who had been critical of him fired.
Blagojevich also was charged with using his authority as governor in an attempt to squeeze out campaign contributions.
Blagojevich's chief of staff, John Harris, also was arrested.
Federal agents were in Blagojevich's office in the Thompson Center in downtown Chicago on Tuesday morning.
Corruption in the Blagojevich administration has been the focus of a federal Operation Board Games involving an alleged $7 million scheme aimed at squeezing kickbacks out of companies seeking business from the state. Federal prosecutors have acknowledged they're also investigating "serious allegations of endemic hiring fraud" under Blagojevich.
The Chicago Tribune reported Tuesday morning that the federal investigation had spread to Blagojevich's efforts to fill the U.S. Senate vacancy left by the election of Barack Obama as president.
Political fundraiser Antoin "Tony" Rezko who raised money for the campaigns of both Blagojevich and Obama is awaiting sentencing after being convicted of fraud and other charges. Blagojevich's chief fundraiser, Christopher G. Kelly, is due to stand trial early next year on charges of obstructing the Internal Revenue Service.
Blagojevich, a Democrat, took the chief executive's office in 2003 as a reformer promising to clean up former Gov. George Ryan's mess.
Ryan, a Republican, is serving a 6-year prison sentence after being convicted on racketeering and fraud charges. The decade-long investigation began with the sale of driver's licenses for bribes and led to the conviction of dozens of people who worked for Ryan when he was secretary of state and governor.
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