* Today’s press conference by Gov. Rod Blagojevich is getting a lot of media play. From the Tribune…
Gov. Rod Blagojevich said this morning the state of Illinois “will suspend doing any business with Bank of America” until the company restores credit to the shuttered Republic Windows & Doors company on the North Side.
Blagojevich made the announcement after meeting with former workers who have been staging a sit-in on the factory floor since Friday to protest abruptly losing their jobs. The governor said the state has “hundreds of millions of dollars” in dealings with the bank. [emphasis added]
* OK, but I wondered what business the State of Illinois actually does with Bank of America. So, I posed that question to the guv’s press office, and they didn’t have a ready response.
Bank of America owns LaSalle Bank, a storied Chicago institution. So, there is probably quite a bit of business there, particularly with bonding. But are we going to cancel those bonds? No. Can we disqualify the bank from future bonding without facing bigtime lawsuits? You got me. Is this bridge loan program for state vendors also in jeopardy?
It would be nice if we knew exactly what sort of pressure this threat will actually put on the bank itself, or whether this is just an empty gesture designed for maximum press exposure.
I’ll update with any new information.
* CNN’s coverage…
The CNN guy gushed at the end of the piece: “Wow! You wanna talk about some news!”
* Raw video…
* A bit of background…
The story of Republic Window and Doors started quietly last week, when Bank of America informed the company, located on Chicago’s Goose Island, that it had canceled their $5 million line of credit. Then came the rumble. Republic’s executives, in turn, announced that the company would be shutting down and gave its 250-plus workers 72 hours to leave their jobs. In the days since, the story has built to a roar, with employees deciding on Friday to stage an ongoing sit-in in the factory. Local officials, members of Congress, and the national news media have all taken notice and you can be sure to hear more about the situation over the course of the next week.
* More…
Leah Fried, an organizer for the United Electrical Workers union that represents the workers, said the company told the union that Bank of America has canceled its financing. The bank had said in a statement that it wasn’t responsible for Republic’s financial obligations to its employees.
- Captain Flume - Monday, Dec 8, 08 @ 12:04 pm:
the answer, my friend, is Blago-ing in the wind
- Pat collins - Monday, Dec 8, 08 @ 12:04 pm:
just an empty gesture designed for maximum press exposure.
Surely not. But as for the bank cancelling the credit - bank money comes with a lot of caveats and things you need to do. So much cash on hand, balance sheet and income in good shape.
Maybe the company violated one of those covenants?
I mean, if you have customers paying, why close in 72 hours?
- Anon - Monday, Dec 8, 08 @ 12:16 pm:
Assuming for a moment that the Gov’s threat has some teeth - what sort of legal trouble is Blagojevich getting the State into by “suspending” business with the Bank of America? Does he mean that the bank won’t get any new business or that the State will “suspend” from performing its current obligations to the bank? The latter seems a bit odd to me (not suprising, coming from the Gov, but odd).
- 2ConfusedCrew - Monday, Dec 8, 08 @ 12:17 pm:
Maybe Blagood could get Durbin to earmark some of the G’s bailout cash for BofA to pay these folks?
- fed up - Monday, Dec 8, 08 @ 12:18 pm:
The company was not able to meet it’s obligations. Bank of America new that any further borrowing by Republic would not be paid back so they canceled the line of credit. Bank of America has a responsibility to its shareholders to not just throw good money after bad. Republic is trying to blame the bank for its own mismanagment. Any further loans by BofA to Republic would have been lossed in the bankruptcy filing.
- Levois - Monday, Dec 8, 08 @ 12:18 pm:
Is he grandstanding again?
- DuPage Dave - Monday, Dec 8, 08 @ 12:19 pm:
Empty gestures? Blagojevich? No way!!!
Nothing impromptu, half-baked, or impulsive for our Gov. No sir. Just well-reasoned, thoughtful, deliberative action based on the best interests of the People of Illinois. We are surely blessed to have him at the helm of the Ship of State.
- Speaking at Will - Monday, Dec 8, 08 @ 12:20 pm:
Yes, yes, he is….Grandstanding again.
- wordslinger - Monday, Dec 8, 08 @ 12:21 pm:
The anchordude has a serious man-crush on Rod. Did you catch the smile on Fightin’ Rod LaFollette’s face when he was talking about the Trib’s possible bankruptcy?
- Secret Square - Monday, Dec 8, 08 @ 12:26 pm:
Pat, some months ago Bank of America threatened to foreclose on the Peoria public TV station, which had taken out a large loan to build a new studio, even though the station had never missed a payment and was not in imminent danger of doing so. The reason cited had something to do with the station having violated a loan covenant by not having attained its fundraising goals.
The action was roughly equivalent to a mortgage holder foreclosing on your home the minute they find out you’ve lost your job, even if you haven’t missed a payment, are actively looking for another source of income, and can keep making payments for the time being with some belt-tightening elsewhere, because your source of income was part of the “loan covenant.” The station did manage to stay open after some negotiations with B of A and a massive emergency fundraising effort.
I bring this up because I wonder if Bank of America might not have pulled something similar on this company? Maybe they hadn’t actually defaulted but were in “technical” default due to their income being down or something.
- anon - Monday, Dec 8, 08 @ 12:28 pm:
Bank of America must have missed Rod’s last fundraiser, maybe Wyma sent the invitation to the LaSalle bank and it wasn’t forwarded
- Ivote - Monday, Dec 8, 08 @ 12:43 pm:
I’d be a lot more interested to see with Treasurer Giannoulias has to say about this. Isn’t it the State Treasurer that decideds where state deposits go? Also, Alexi has a banking background, so has more of an understanding of the whole picture, whereas Rod has a background in. . . ah, . . . er,. . . hmmmmmmm. Well, he must have a background is SOMETHING? Ah, I know. . . Grandstanding! This is a serious problem, and deserves careful analysis and action. Alexi, help us out!
- 618er - Monday, Dec 8, 08 @ 12:48 pm:
Our esteemed governor seems to be running under the assumption that Bank of America wants to do any business, or at least any more, with the State of Illinois.
- little lady - Monday, Dec 8, 08 @ 12:49 pm:
The state travel cards are issued through Bank of America. They have the master contract.
- OneMan - Monday, Dec 8, 08 @ 1:10 pm:
So how many other loan/line of credit actions is the governor going to get us invovled with.
Would he have gone after a supplier?
- ANON - Monday, Dec 8, 08 @ 1:33 pm:
So if the state’s travel cards are through BOA and the Governor orders the cards cancelled, then every state employee will have to use cash or their personal credit cards when they travel. Which means they might get reimbursed sometime next July for travel done in December. Oh that is unbelievable!
- Commonsense in Illinois - Monday, Dec 8, 08 @ 1:40 pm:
Should be interesting…Governor threatens withholding business from an entity regulated by the federal government unless the entity does what he wants…sound a bit like blackmail to me, and certainly a question of Official Misconduct. It will be interesting to see how this plays out and if the G can do anything with it.
- Carl Nyberg - Monday, Dec 8, 08 @ 1:41 pm:
Bank of America wanted me to pay five dollars to cash a check drawn on B of A.
I have little use for B of A. I hope they lose a ton of business out of the bad publicity they get from this.
- DuPage Dave - Monday, Dec 8, 08 @ 1:42 pm:
FYI - State employees who use the state credit card (it was Diner’s Club for several years) are still on the hook for payment, even if they have not received their travel reimbursement. So any action by the Gov would not have much of an impact on ordinary travelling employees.
- Commonsense in Illinois - Monday, Dec 8, 08 @ 1:48 pm:
You sure about that Dave? I would say that paying money to BoA…particularly from a state-issued travel card constitutes doing business with the bank and if the Governor’s pronouncement is to be taken literally, its at least questionable whether state employees should pay that bill until (I’m sure) the press office decides to let everyone know what the governor actually meant and his morning gush.
- Johnny USA - Monday, Dec 8, 08 @ 1:49 pm:
Where’s Lisa “Pile-on” Madigan in this?
Isn’t it about time for her office to issue a press release stating her office is investigating BOA?
- Commonsense in Illinois - Monday, Dec 8, 08 @ 1:50 pm:
Let’s try that last clause again…it’s at least questionable whether state employees should pay that bill until (I’m sure) the press office decides to let everyone know what the governor actually meant at his morning gush.
Sorry.
- Greg - Monday, Dec 8, 08 @ 1:56 pm:
Carl, I’m sorry BoA wanted fees. fyi, however, it was also one of the few who didn’t need a bailout. In fact, it way overpaid for Merrill, which probably would have needed a bailout.
Also, convenants are standard in these loans. (rough example: you have a credit line and a value of X; a judgment of X+1 is entered against you; you are now no longer allowed to draw on it.)
I don’t get how this move is at all controversial.
- Anon - Monday, Dec 8, 08 @ 2:09 pm:
Bank of America PAC supported JBT over Blago last time around. That wouldn’t have anything to do with it, would it?
- Arthur Andersen - Monday, Dec 8, 08 @ 2:11 pm:
Rich, here’s some “State business” for you.
With the recent acquisition of Merrill Lynch by Bank of America, POA is also ordering “the State” to stop doing business with one of the top three brokerage firms in the world. Merrill Lynch affiliates also perform clearing broker services for many of Illinois’ minority-owned brokers doing business with “the State”, including Obama pal Jim Reynolds’ Loop Capital.
AA would guess, based on past history, that TRS would tell POA to go pound sand, but Rod’s loyal servant Bill Atwood at ISBI (if Blago’s peeps can reach him at the Treasurer’s Office) would be hard-pressed to refuse this order. Loop was ISBI’s highest-paid broker last year, but that’s probably another co-inky-dink; certainly will make that phone call cutting them off harder to make.
Don’t know about SURS; they’re awfully busy fighting the political onslaught aimed at forcing Atwood’s partner in crime and fellow Big Ed Smith cabana boy Mike Goetz into the Director job over there.
- Boscobud - Monday, Dec 8, 08 @ 2:24 pm:
I feel like I am out of the loop with all of the POA’s, TRS’s, ISBI’s, and SURS’s. I have no idea what they stand for. I feel like I am in a different country listening to a different language.
- steve schnorf - Monday, Dec 8, 08 @ 2:30 pm:
You know, this is an odd thing for me, but I kinda like it. State business is low-hanging fruit for a bank-virtually zero risk. I can’t remember the last time there was a state default anywhere in the country. So maybe getting some of that low hanging fruit should impose some obligations to the greater good. This may not be the perfect case, but I like the style.
- Boscobud - Monday, Dec 8, 08 @ 2:34 pm:
Did Blago fly to Chicago from his house or did he drive?
- Ron Burgundy - Monday, Dec 8, 08 @ 2:36 pm:
“I can’t remember the last time there was a state default anywhere in the country.”
Don’t give Rod any ideas.
- taanstafl - Monday, Dec 8, 08 @ 2:41 pm:
Commonsense in Illinois - As a former holder of a state credit card, I know for a fact the card holder is responsible for all charges on that card with the state guarnteeing the card. The state employee is required to make the payments on time. BOA used to give a 1 month grace period to make the payments.
- trafficmatt - Monday, Dec 8, 08 @ 3:00 pm:
Question of the Day:
Will Rod’s threats to Bank of America be any more effective than his threats towards Mike Madigan?
- Anon - Monday, Dec 8, 08 @ 3:06 pm:
The comment about Lisa “pile-on” Madigan is absolutely classic. Where is Pat “pile-on” Quinn on this asking for more openness and transparency in BoA’s decision making? Where is the Chicago “pile-on” Tribune in addressing the statement made by Wyma’s attorney rebuffing their front page article?
- Bill - Monday, Dec 8, 08 @ 3:09 pm:
Way to go, Rod!!!
you are a true champion of working men and women everywhere!
- OneMan - Monday, Dec 8, 08 @ 3:29 pm:
Bill,
As much as I want you to be my US Senator you are wrong…
Because a lender removed a line of credit the governor should take state business away from them?
The story has some stuff about how they were moving equipment out of the plant, what if that was a requirement of the line of credit? Should BOA be required to keep every line of credit with every company in Illinois intact?
How about home equity lines?
- wordslinger - Monday, Dec 8, 08 @ 3:47 pm:
Regardless of substance or merit, the gov struck a populist nerve with the national press, who are eating it up with a spoon. In doing so, he might actually help some workers who got hosed. Credit where credit is due.
- Commonsense in Illinois - Monday, Dec 8, 08 @ 4:01 pm:
The only hope these workers have is if Republic can find a new bank willing to loan it operating funds on a cash flow of 50 percent of last year’s revenues. Pretty tall order. BoA is not going to bend on this, they don’t have to…its the risk Republic presents and nothing more. I just don’t see how BoA is at fault here for sound banking policy…you don’t give money to people who have no means to pay you back.
- Commonsense in Illinois - Monday, Dec 8, 08 @ 4:07 pm:
taanstafl wrote///As a former holder of a state credit card, I know for a fact the card holder is responsible for all charges on that card with the state guarnteeing the card.///
All I’m pointing out is that state employee incurs expenses traveling on business and puts those expenses on his state-issued BoA credit card…bill comes…governor has ordered state agencies (and thereby state employees) not to do any business with BoA. If employee pays card bill, has he/she violated governor’s order? Just asking…
- steve schnorf - Monday, Dec 8, 08 @ 4:07 pm:
Commonsense Oh, Jesus Christ, haven’t you opened a paper or watched the news in the past several decades? Lending money to people who can’t pay it back in order to advance some good of some kind somewhere is what this country is all about. I refer you back to our unrepaid WWII loans, and 70 years of history since.
- wordslinger - Monday, Dec 8, 08 @ 4:11 pm:
Steve Schnorf, awesome, daddio.
All the talk of “prudent lending practices” and “not their responsibility” given the current situation sticks in my craw.
- Larry Mullholland - Monday, Dec 8, 08 @ 4:16 pm:
Bank of America Stock TODAY $17.84 +2.60 (17.06%)
BoA Stock rose 17% Today …I think this shows what impact our esteemed Governor and yet another one of his press releases can do. zzzzzzzz
After the Gov has fired & has laid off his own workforce …well Gov put your action where your press releases are ..Pay the Illinois’ overdue bills and protect your own (state) workforce before you mug for the cameras AGAIN
- Commonsense in Illinois - Monday, Dec 8, 08 @ 4:17 pm:
Steve I’m not saying there shouldn’t be a loan, there should be. But if you or I were advising the governor (and we’ve both been down this road in past lives), wouldn’t we be at least suggesting we (the governor’s office) contact some other banks to ride to the rescue? BTW if you want to bring lend-lease into the picture, it’s pretty clear from history Roosevelt used lend-lease to pre-position equipment for the US entry into WWII.
- anonymous - Monday, Dec 8, 08 @ 4:19 pm:
This is the edict from on high:
Per the Office of the Governor, please suspend use of the Bank of America Travel Cards immediately until further notice. Any transactions made after this time today, will be considered unauthorized and may not be reimbursed by the the State.
- anonymous II - Monday, Dec 8, 08 @ 4:33 pm:
More of the edict:
“It is the responsibility of the Travel Card Program Administrators to
disseminate this information to employees who may be out of the office
or on travel status.
State Travel Coordinator
Governor’s Travel Control Board
405 Stratton Office Building
(NOTE): If you know of anyone taveling that uses the Bank of America card issued in connection with the State, please contact them and tell them NOT to use it any more until further notice.”
- steve schnorf - Monday, Dec 8, 08 @ 4:59 pm:
Commonsense, absolutely, but that was us and this is now. BTW, I can’t help but think they are surely working on just that. That’s how you ride to the rescue. Or, maybe with one of the Treasure’s targeted loans.
- Arthur Andersen - Monday, Dec 8, 08 @ 5:03 pm:
Boy, BOA is going to feel the pain on those State credit cards.
Rod, show some TV and cut ‘em out of the bonds and brokerage. Then you deserve some respect.
- some former legislative intern - Monday, Dec 8, 08 @ 5:21 pm:
this is such a joke. The governor got a C in constitutional law? Well, clearly he received a F in finance.
Bank of America did not hire the workers, nor did they reach any agreements concerning a severance package with them. Now, believe me, I am no BofA fan. I deal with them in my job with a rather large unit of local government in Northern Illinois, and they are very difficult to work with.
In any event, the bank did the right thing, Republic is responsible, and this is yet ANOTHER shameless, stupid attempt by the Governor to distract attention from his own problems.
(Can I get the $250 I gave to Friends of Blago back now?)
- Emily Booth - Monday, Dec 8, 08 @ 5:58 pm:
Blagojevich could’ve used the Republic appearance to talk about his steelmill experience to show solidarity w/ the working man and support for unions. But, he instead chose to make light(again) about his current investigation.
I’ve worked for the state many years and I’ve never known anyone who has a state issued credit card.
- wordslinger - Monday, Dec 8, 08 @ 6:53 pm:
Commonsense, this is way off topic, but the Lend Lease materials that went to Stalin and Chiang certainly weren’t pre-positioned for any use by the United States.
Like anything else government does, you hope it’s being done because it’s perceived in your interests.
- DuPage Dave - Monday, Dec 8, 08 @ 6:54 pm:
As of this afternoon, the Governor’s Office has ordered state employees to stop using the state BOA credit card, saying that employee expenses won’t be reimbursed if the card is used.
Pingback We once were red…. » Chicago Factory Workers Protest (VIDEO) - Monday, Dec 8, 08 @ 7:48 pm:
[…] Though the governor never explained the extent of the state’s dealings with BOA, other Chicago politicians and labor leaders quickly echoed the governor’s call. […]
- State worker w/ an MBA - Monday, Dec 8, 08 @ 9:18 pm:
State issued credit cards used to be Diners club but I am not sure who has the contract now. And yes they are issued based on the EMPLOYEES credit history and the employee is responsible for all payments and interest. The bank does not bill for the charges for the first 25 days and then the EMPLOYEE has 40 days to make the payment before interest begins. Therefore if you do not pay for travel charges with in 65 days there will be interst charged. As of today I am told they are reimbursing for travel submitted prior to 8/25/08 - which is well after the 65 days therefore any EMPLOYEES who have to use this option for travel must pay with their own money and wait for repayment or incur interest and or slow pay rating on the card if they wait until reimbused to make payment.
Beginning this year for my job I can only travel over night is the organization I am speaking to agree to pay my hotel cost.
I submitted a travel request for $42.00 and it was rejected. Found out the same day no State car was available and resubmitted the voucher the same day for $42.00 and $200 mileage expense for using personal vehicle and it was approved in less than 1 hour. Go figure.
- Anonymous - Monday, Dec 8, 08 @ 10:19 pm:
Haven’t had a chance to check out the updated releases, but this it’s going to be interesting to see the response to this. From what I recall, this AM we have Blago’s release, Lisa investigating, and Obama supporting the workers.
Three events that could be interpreted as a “call to action” in response to lay-offs. I hope they’re considering timing.
- steve schnorf - Monday, Dec 8, 08 @ 10:36 pm:
If I were still working for a Gov, I would be really tempted to get the company and employees together and offer a targeted loan from Alexi. Then, if it worked out, my boss brought the solution to the problem, and if it couldn’t get done, Alexi is the stumbling bureaucrat, unresponsive to the workers’ needs, who I would blame daily for a while
- Arthur Andersen - Monday, Dec 8, 08 @ 10:37 pm:
AA remembers a Lend-Lease program at CMS many years ago. (Not on Schnorf’s watch.) If a certain party “lent” the CMS Director his boat, his State lease got renewed.
Back to the post: Emily, AA agrees with you. We avoid those State credit cards like the plague at my current duty station because most folks have an er, uh, ah, “healthy skepticism” about the confidentiality of what is charged to the card.
Steve, AA feels rebellious on occasion, too, but I always come back to reality. Reality here is that those bank officers are not social workers, union officials, or the Government. They have a fiduciary duty to the shareholders of the bank to make sound lending decisions based on objective credit analysis. They did their job correctly.
The Goobernor should do his job for once and support the AG’s efforts to enforce the WARN Act, provide training and other assistance through DCEO et al, and lead other appropriate State efforts. His grandstanding today sent another nationwide signal that Illinois is not a good place to do business.
Meanwhile, as Don Quixote Blago is supporting this effort, the press release machine has not uttered word one about the huge impact of the US auto industry (and its suppliers) on the Illinois economy along with encouragement for Congress to take action.
C’mon, Fitz, C’mon. AA is gonna have a stroke and miss the big day.
- Ahem...The REAL Anonymous - Monday, Dec 8, 08 @ 11:15 pm:
===============
His grandstanding today sent another nationwide signal that Illinois is not a good place to do business.
===============
Yup and me thinks that there could be trouble afoot if the grandstanding and rebellion gets too out of control before the “vision” and new plans are in place.
Timing.
- Suzanne - Tuesday, Dec 9, 08 @ 1:27 am:
“Bank of America owns LaSalle Bank, a storied Chicago institution. So, there is probably quite a bit of business there, particularly with bonding.”
Ok, I’m off to slit my throat now . . . ur, eh, I mean bake cookies. Gingerbread. Come on by!
- Cal - Tuesday, Dec 9, 08 @ 7:11 am:
http://www.youtube.com/watch?v=DL08s5uH8as