Special Report
Extortion in Chicago
Shaking down the Bank of America in the age of Obama, where the future is now.
(Page 2 of 2)
BoA presumably believes that it has bought off the shake-down artists. What, however, of Bank of America’s shareholders and workers? Shortly after announcing its pay-off to Republic, the bank announced plans to cut 35,000 jobs over the next three years, roughly a tenth of its entire workforce. Who is going to help them?
Even worse, the Republic case may trigger a new and dangerous campaign of financial extortion across the U.S. The Community Reinvestment Act pushed banks to make more bad home mortgages in poor neighborhoods for political purposes. With all of the major banks and many smaller ones receiving — in many cases over their protests — federal funds, political hacks and union activists now have a tool to demand that financial institutions give away money to failing companies around the nation. Nor can more federal bailouts be far behind. AFL-CIO President John Sweeney lauded the workers, saying that “Our nation cannot afford to bail out banks and investment firms while leaving workers behind,” including not just those at Republic but, he added, also the auto industry.
The were many good arguments against turning the Treasury and Federal Reserve into one vast corporate soup kitchen. Indeed, it has become sadly apparent that the administration had no idea what it was doing in tossing hundreds of billions of dollars hither and yon. But the Republic case demonstrates yet another danger: inviting the government to direct where banks should lend. If the federal bailout requires Bank of America to “lend” money to an insolvent company ready to close its doors, then we are descending to banana republic status. The economic ride is likely to become much bumpier.
About the Author
Doug Bandow is a senior fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is the author and editor of several books, including The Politics of Plunder: Misgovernment in Washington (Transaction).
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Common Sense| 12.15.08 @ 6:25AM
What an idiot. If Bank of America had bought Lehman, the economy would not have crashed. Time for Bank of America to pay for its ills on society!
Todd Showalter| 12.15.08 @ 9:02AM
Is your name supposed to be ironic Common Sense because what is said is sheer inane stupidity. Obviously you have no clue about financial matters or what really caused this crisis. If you had any common sense, you would know by now that making loans to people with bad credit is what has screwed up the financial system via sub-prime loans. Apparently your "common sense" is based on emotion and sticking it to the "rich", not actual knowledge or understanding. Get a clue
Tim| 12.15.08 @ 10:12AM
After the Rich are all gone and the Goverment's money printing machine over heats and breaks down then what?
saleboter| 12.15.08 @ 11:38AM
When economic decisions are made based on need rather than economic sense, everything breaks down. Why work hard, invest and save if all you need to do is cry to your politicals and they will hand over someone eleses (or newly printed) money?
Lobbying will be the new fastest growing employment.
Stan Redmond| 12.15.08 @ 12:18PM
This is a scary premonition of what is to come from the Obama administration. Obama is full speed ahead on the Employee "FREE CHOICE" act AND the largest infrastructure upgrade wince the '50s. And just where will all those lucrative gov't contract go? UNION SHOPS!!! Only 450,000 people are in unions anymore. So, if you're out of work, the union rolls in to town with huge government contracts, unionizes a small shop to produce widgets for the Obama windfarm, and tuh-duh, all the unemployed people are in town and required to join the union to work in the widget factory.
Scary stuff. To hell with the unions.
Tim| 12.15.08 @ 12:53PM
Stan,
what is really scary is that these newly minted union jobs and Billion Dollar infrastructure contracts will go to their closests political friends and associates and not the most qualified or the best equipped to cary out the jobs.
Hence, at the end of the day we will be stuck with so so infrastructure improvements a bloated Public Sector Union headed up by the biggest crook of all the SEIU's Stern.
Good news is that the free choice act wiill prove a bit more difficult to shove through the Senate do to the 42 seats the Reps will control and a few rather conservative Southern Democrat Senators that don't really like the idea of taking the employees right to "vote" away.
I see a major fight over the so called Free Choice issue with the mattering either taking a back seat for a while or dying because of the senate filibuster.
Either way, thank God for the Governor of Illinois. Good Ol Blago, he may have saved the day by making Machine "Union" Corruption a household name in late 2008.
John| 12.15.08 @ 2:42PM
Now the banks will just make sure the company has enough money to fund these benefits before taking them down, effectively restricting their credit and forcing them to shut their doors earlier.
Carner York| 12.15.08 @ 4:12PM
Isn't it ineteresting that most all of the areas in our country that are down and out are governed by liberals? Why aren't Detroit or New Orleans meccas of prosperity? Perhaps it is because they are run by people with economic and social ideas similar to Obama's. Ask the average American if they trust the government to do anything well and the overwhelming majority will say no. Yet the majority voted for Obama with his promise of an explosion in the size and scope of government. Folks, it call comes down to the media and our public school system. The American values that made this country great are severely lacking because, apparently, so few people even know what they are.
JeffT| 12.15.08 @ 5:58PM
AS much as I despise BoA, for their 5 million or more mortgages granted to illegal aliens, this is an ominous decision on their part. This is the same brainless action that got us where we are today:lending money to people who have no intention of ever paying it back. It's something I try never to do with MY money.
Common Sense| 12.15.08 @ 9:57PM
"In the age of Obama...."
Folks, sorry but it's still the age of Bush.
You're supposed to be the accountability party.
Well, accountability starts now.
sasas| 7.20.09 @ 11:27PM
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Trackback| 10.19.09 @ 10:17AM
Yedda: When Extortion and Stimuluses Fail? What's Next?, on MarineReconDad's questions on Yedda - People. Sharing. Knowledge., links to this page. Here’s an excerpt:
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