by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
It’s deja vu, all over again.
Republic Window and Door announced it would be closing its doors next month. Republic lost over $5 million YTD and $12 million in 2006 and 2007. Bank of America suspended its line of credit. Faced with the prospect of going it without any money, Republic rolled over and died.
Workers at the soon to be defunct Republic Windows and Door are staging a 60’s-style sit in to recoup some of their lost vacation and severance pay. The union demands that the Company make good on its promise to its workers. Remember, the Company wasn’t bailed out; it lost close to $18 million in the past three years and light isn’t appearing at the end of the tunnel. President-Elect Obama supports the union’s effort.
Federally-detained Illinois Governor Rod Blagojevich and State Treasurer Alexi Giannoulias fired a shot across BofA’s bow, threatening to suspend State business with the Bank.
Illinois Governor Rod Blagojevich said the state will suspend business with Bank of America Corp. until the lender restores credit to the shuttered Republic Windows & Doors company in Chicago where workers are staging a sit-in.
Blagojevich, a Democrat, spoke at a news conference today after meeting with employees who remained at the factory since Dec. 5, when it closed following the bank’s cancellation of its credit line. Illinois does “hundreds of millions of dollars” in business with the bank, he said. The Illinois Department of Labor will sue the manufacturer if Republic doesn’t respond to employee requests for vacation and severance pay, the governor said in a press release.
Cook County Commmissioner Mike Quigley follows suit:
Cook County Commissioner Mike Quigley will introduce an ordinance to block the state’s biggest county from doing business with Bank of America, he said in an interview.
“I’m usually cautious, but this is an extraordinary example at an extraordinary time,” Quigley said. “When you talk theory, they nod and wink, but when you put in an ordinance, they know you are serious.”
Should the Bank be able to cut its losses and focus on less risky lending practices? Not if it receives TARP funds figure the Cook County political machine. Why pay Merrill CEO $10 million if you can keep the doors open for three more months? :
Bank of America has received $15 billion from the U.S. Treasury as part of its effort to boost capital, while Merrill Lynch & Co. is receiving $10 billion. Bank of America is buying the world’s largest securities brokerage in a transaction likely to be completed later this month.
Those funds were intended to extend credit to Republic Windows and other companies, thereby retaining jobs, Blagojevich said at the news conference. “Bank of America has yet to stand up and keep these workers working,” he said.
That’s a lot of tough talk and a risky proposition from the Chicago bosses. If Bank of America were to pull out of Illinois completely, the effects may be devastating to its economy. Imagine the farmers Down State having their mortgages called. Northwestern alumni might lose their MBNA credit cards. No more Countrywide home loans for Cicero.
This is an Obamanation. The pols are holding a gun to the bankers’ heads, demanding that government assistance to the failed banking cabal be distributed to pursue their political agenda.
You gotta love Chicago; it’s never boring there.
Todd Tarson says:
The Governor of Illinois was taken into federal custody this morning.
December 9, 2008 — 8:33 am
Tom Vanderwell says:
Brian,
You should do an interview with Geno for a local perspective on the mess that’s happening. I’d love to hear his perspective on it.
What a mess!
Tom
December 9, 2008 — 9:00 am
Charleston real estate blog says:
darn, I’m late with the comment that the Governor of Illinois was taken into custody on corruption charges. That’s what happens when the fox is guarding the henhouse.
December 9, 2008 — 9:04 am
Thomas Johnson says:
Oh for the good old days, when the Union family and the B of A family and the police chief could have a sit down over a nice meal of veal and cannoli and work things out. I am surprised that this reached such public mess in Crook County, IL., home of the Office of the President Elect!
December 9, 2008 — 9:22 am
Tom Hall says:
It was only a matter of time re: our fair governor. Bottomline, there should have been no bailout. Personally, I am going to do my own sit in. I want someone to guarantee my pipeline of prospects and revenue stream.
I listened to a facinating interview on NPR regarding the history and evolution of money with a Harvard professor. The most interesting part of the discussion was America’s misconception that we are not a welfare state.
We have some of the most costly and bloated entitlement programs relative to our European counterparts. While their tax rates are marginally higher, they have lower cost structures. My daughter was born in Belgium. The hospital was every bit as modern and advanced as here in Chiago.
After her birth. I received a bill apologetically asking that because I was not a Belgian citizen I needed to pay for her hospital charges – obgyn, Duma and 5 required days in hospital my bill was $2,500. My son’s cost was over $14k with 24 hour release.
December 9, 2008 — 11:05 am
Todd Tarson says:
Tom Hall… look into ‘medical tourism’. It is the future, although it should be the present.
December 9, 2008 — 12:24 pm
Jason says:
Congress has chosen members of an oversight committee specifically for the Troubled Asset Relief Program. The oversight committee members which lacks the ability to have proper oversight Which is defined as an oversight committee they should be looking for an omission or error due to carelessness, unintentional failure to notice or consider; lack of proper attention and supervision; watchful care. Supervision is a process that allows it to oversee a process during execution or performance; superintend needs to be replaced without regard to political affiliation.
http://nomedals.blogspot.com
December 10, 2008 — 10:57 am
Leon Belenky-One Bal Harbour Condo Expert says:
So, if Bank of America is forced to give more money to RWD to cover what the Union workers are demanding…who is paying THAT loan back? Is the bank just out of that money? Should they be forced to take on debt they know will never be paid? Are the tax payers paying for it? If so, I know a lot of people who have lost their jobs recently that would love to get some severance packages worked up…It seems to me that the union isn’t owed anything, since the company failed…but maybe I am just missing something.
December 10, 2008 — 10:25 pm
Harvy Warenwirtschaft Office says:
I’ve also heard about the Governor of Illinois was taken into federal custody…I didn’t expect that the Governor will face corruption charges but he did.
Oh well, as what you’ve said, “You gotta love Chicago; it’s never boring there.” — indeed.
December 13, 2008 — 11:07 pm