on FNC: Chicago plant closing & BoA bailout

Fox News | 12/08/2008 | FNC

[Zeddicus]

Just heard on FNC an update on the Chicago plant closing where union workers are protesting.

The main complaint is that the plant's bank, Bank of America, received federal bailout money but did not extend the company's credit line, resulting in the plant closing.

Now we have the Governor of Illinois saying that the State is going to suspend all business with BoA, essentially blackmailing the bank into lending to the company with the expectation that the plant will reopen and reemploy the protestors.

My question is this: do we know that BoA did not have a legitimate financial reason for closing the company's credit line? I have to assume the bank made the decision because the company was a bad credit risk. It's entirely possible that BoA is simply being responsible with taxpayers funds.

Think about this. Didn't we get into this whole mess in the first place because banks were taking bad credit risks? Are we now going to force banks to continue bad lending practices with taxpayer money?

What if the company simply has no business to sustain operation? They are a construction-related business - it's not suprising they are broke, and I would not be suprised if BoA had good reason to shut them off.

This is not going anywhere good. The government is now in a position to force banks to lend taxpayer money to insolvent companies, and to force said insolvent companies to remain open solely to keep people employed, gainfully or not.

Free enterprise in this country is dead. I think it's pretty safe to say we're now living in a communist country, no?

[thecabal]

No way that would ever happen in the USA. Your tinfoil hat is showing.

[sarasota]

Welcome to Chicago politics. You ain’t seen nothin’ yet.

[thecabal]

Large industry is now clearly seen as an arm of government, handing out checks and benefits to loyal voters and implementing Federal regulations in return for political protection against competition.

Ding ding ding, we have a winner! The old progressive socialist idea of "state capitalism" is being reborn right before your eyes. Certain mid-20th century European dictators would be jealous of us.

[Sir_Ed]

I agree with you about the vanity police. It gets so irritating to read a thread I’m interested in, that many people respond to, and then read some whiner going on about how he doesn’t like that particular thread.

Well...if he doesn’t like it, don’t read it!

Ed

[Zeddicus]

First banks were pressured to make loans for residential mortgages to people who could not pay them back. Now they are being pressured to make loans to businesses who can’t pay them back. Guess who is going to end up paying for all these bad loans. The taxpayers are going to be forced to pay for them. Exactly. We're not fixing the problem, we're perpetuating it.

I do not believe that the politicians in control are simply unaware of this self-evident truth. Which can only mean that they are consciously and willfully acting against the interests of the citizens they are supposed to be serving.

Scary.

[thecabal]

I’m with you, don’t sweat the FR thread police.

[KarlInOhio]

Many companies set up their finances so they have very little cash on hand (spent on capital equipment, paying off long term debt, dividends, etc) and rely on lines of credit for day to day operations. With the collapse of lines of credit, companies will start seeing cash on hand and in short term accounts as a sign of good health rather than a bookkeeping error.

I know that I personally did the same thing. I replaced my regular mortgage with a home equity line, paid off most or all of that with my savings knowing that I could always get the money back out by writing a check from the line of credit. The interest I saved paying off the house was a lot more than I could ever earn by having that money in savings or CDs. However with credit lines being reduced, I took a lot of that money back out and put it into savings. It is a lot easier for the bank to reduce an unused line of credit than to demand repayment on a used line of credit. If I hadn't done that I could have easily be put in a situation where I had no debt, but little or no cash on hand and no easy way to get it if I needed it.

[Soliton]

I heard the story earlier on Fox news. And it centered on the issue that the company gave 3 days warning of its closing, and hasn’t paid the employees for all their earnings or what’s owed them under the law. That’s a whole other issue.

The company will declare bankruptcy and none of that will matter. They had no money and no credit. What were they supposed to do, let them work for nothing?<.p>

[bcsco]

What were they supposed to do, let them work for nothing?

Never said that. I only said they should pay for hours worked.

[SeaHawkFan]

I heard the story earlier on Fox news. And it centered on the issue that the company gave 3 days warning of its closing, and hasn’t paid the employees for all their earnings or what’s owed them under the law. That’s a whole other issue.

Welcome to the world of bankruptcy. Sad as it may be, the employees probably should have been laid off months ago so they could have started looking for other work having received all their pay up to that time.

[Soliton]

Never said that. I only said they should pay for hours worked.

They are demanding benefits and vacation pay

[bcsco]

the employees probably should have been laid off months ago so they could have started looking for other work having received all their pay up to that time.

I agree. The company is remiss in handling it the way it did. That's my point.

[detective]

“Politicians...are consciously and willfully acting against the interests of the citizens they are supposed to be serving.”

That is the conclusion I have come to. If politicians were just stupid, you would think their idiotic decisions would be random. Instead, all their policies are aimed at targeting hardworking, successful people, undermining individual freedom and establishing a totalitarian type government. I agree with you, it is truly scary.

[raybbr]

I heard the story earlier on Fox news. And it centered on the issue that the company gave 3 days warning of its closing, and hasn’t paid the employees for all their earnings or what’s owed them under the law. That’s a whole other issue.

There are exemptions to that law.

They are going after the bank not the company. That should tell you something.

[norton]

"(The employer)...hasn’t paid the employees for all their earnings or what’s owed them under the law. That’s a whole other issue."

You bet it's another issue, and one the bank has absolutely no responsibility in. BofA has no contract with the workers but it should have every obligation to use the bail out money responsibly and in its established line of business.

So, now that government has decided to save the market - we have at least two unions demanding a share in recognition of their role in trashing the system in the first place. Not to mention our savior-in-waiting and crooked state politicians blackmailing the bank to get it for them.

Boy, am I surprised!

[norton]

Glad you posted, I’ve been steaming since I saw the TV coverage.

[kidd]

This is deeply upsetting.

BoA was forced to take bailout money
Now they’re being pushed to make more bad loans.

I heard on Fox last night an interview with a local politician. He was pushing to keep the factory open because it made energy-efficient windows. He said that this function was necessary for the coming Obama administration plans.

We are rapidly becoming a communist economy.

[Zeddicus]

I heard on Fox last night an interview with a local politician. He was pushing to keep the factory open because it made energy-efficient windows. He said that this function was necessary for the coming Obama administration plans.

Yeah I heard that too. You know what comes next, right?

You and I are going to be forced to buy these new windows and doors.

[JamesP81]

I'm telling you, this constant whining about "vanities" is really starting to turn me off to FR.

If only we could get rid of the Vanity and Already Been Posted Police, it'd be a better forum.

[Rutles4Ever]

I have mixed emotions on this.

B of A was only “forced” to take the bailout money because, without the bailout money, they were on the verge of failure. They took the bailout money and have decided, with the rest of the banks, to just hoard it or spend it on advertising and operations. So, I have little or no sympathy for them.

ON THE OTHER HAND, I’m more appalled by the state thinking it can strong-arm its way into the B of A’s boardroom and dictate what business decisions they make. This kind of power will be abused everywhere if it gets the desired result. Will the state of Michigan go after the banks for not extending their bailout money in loans to the auto industry? There’s really no limit to what depths the gov’t can sink, given a little slack here.