"Scratching and Surviving" Less Newsworthy Than Politicians at Labor Protests: Scant Media Coverage of Republic Windows Workers After Sit-In

During the recent protests at Republic Windows and Doors, politicians, the media, the company, and union leaders played political football with the laid-off workers. Their advocacy led Bank of America and J.P. Morgan Chase to pay the wages and benefits that Republic Windows and Doors owed its workers. The company, however, escaped scrutiny by convincing the public that Bank of America unfairly prevented it from paying its employees. Meanwhile, the company's owners moved to Iowa and restarted operations in a cheaper location with nonunionized workers.

Progressives and the Media Have Now Abandoned the Workers
Although progressive advocacy in this situation failed in many respects, perhaps most critically, the Left did not demand that governmental officials strengthen the economic safety net, which the recent economy has strained. Now that the politicians, activists and the workers themselves have vacated the scene, the workers' struggle no longer generates intense political or media attention. Progressives, liberal politicians and the media have now discarded the workers -- just like the bankrupt company did.

Must Strengthen Economic Safety Net Because "Sit-In" Will Not Succeed for Most Workers
But progressive advocacy and media analysis regarding the continued struggles of the laid-off workers could offer more to them and to other distressed workers nationwide than the passionate activity surrounding the sit-in. Contrary to the most enthusiastic progressive arguments, workers across the country will not have many opportunities to replicate the success of the Chicago sit-in.

The Chicago protest succeeded due to a rare confluence of numerous forces: (1) the nation needed to vent anger regarding the bailout and the declining economy, and Bank of America became the obvious target; (2) Bank of America cares about its image and ultimately capitulated to the negative attention, including Governor Blagojevich's decision to ban the bank from doing business with Illinois; (3) the company apparently had powerful political contacts in Chicago who helped keep public criticism on the bank, not the company's illegal actions; (4) local union leaders and the workers themselves had sufficient drive and organization to lobby for justice; and (5) the media found a ratings-generating story and pounced on it.

But in the future banks will respond more swiftly and creatively if companies attempt to shift the blame for their own violations of labor laws. The media will not hold vigils at each imperiled work site; this storyline is now dull. And the involvement of political actors and the stamina of workers will vary with each scenario.

Scattered news accounts have begun to do the necessary work to publicize the broader issues facing workers in the declining economy. Several media outlets, for example, have reported on the problems states are having keeping their unemployment benefits budgets solvent. The increased unemployment filings have depleted their funds, sending them to the federal government for assistance.

Other stories have analyzed the problems that typical workers face when their companies shut down. Although the Chicago workers received unpaid wages due to a rare political opportunity, in the average case, insolvent companies move into bankruptcy, where workers usually do not collect the full amount of money owed to them (if they collect anything at all). Also, many workers do not receive their unpaid wages due to limitations of shut-down legislation.

Where Are They Now?
Some news stories are beginning to detail the struggles of the former employees of Republic Windows and Doors. Here is a snippet from one of those stories:

Workers at Republic Windows beat their bosses to win payouts required by law when their plant shut down. But now, they're facing a reality millions of other Americans share: being unemployed at Christmas.

At Dagaberto Cervantes' home, it's a bittersweet Christmas with few presents under the tree. The former Republic Windows employee received $4,000 in hard-won shutdown benefits, but he doesn't know when he might work again. . . .

After a six day sit-in, the workers won, receiving severance, vacation pay and temporary health care. Still, like so many now, they're jobless. Cervantes is already looking for work. . . .

[But] [u]nemployment in Illinois now stands at 7.3 percent, the highest in 15 years. Since January alone, Illinois has lost 72,000 jobs. . . .

As more workers lose their jobs, perhaps progressives and the media will find their stories as equally (or even more) inspiring as watching self-interested politicians make cameo appearances at a labor sit-in.

[Note: Google services the outside links attached to this post (e.g., Digg, Email this, etc.). Someone hacked Google today, so some of these links take you to spam webpages. I apologize for any inconvenience. Google is on the case!]



Related Readings Around the Web:

What Comes After Factory Workers' Victory for Labor?

WARN Act Falls Short for Job Layoffs

Related Readings on Dissenting Justice:

MADE IN IOWA: Did Company in Chicago Sit-In Illegally Discard Its Workers and Quietly Relocate While Liberals Forced BOA to Pay for the Shady Scheme?

Republic Windows and Doors Received a Bailout from Chicago Before It Bailed Out of Chicago

Laid-Off Republic Windows and Doors Workers: Pawns in Political Football

Factory Closes in Chicago; Workers Invoke Bailout During Protest

What (I Think) Progressives Should Have Done for Workers of Republic Windows and Doors

New Chapter for Republic Windows: Bankruptcy

Out of Left Field: McCain Wants Feds to Purchase Individual Mortgages And Provide Relief for Homeowners!

Senator John Main surprised me during last night's debate, by sounding more Democratic than most Democrats at one point. McCain outlined a plan that would require the government to use 1/2 of the $700 billion bailout money to purchase individual mortgages -- rather than mortgage-backed securities -- and then reissue them to homeowners under more favorable terms. McCain even argued that the government should take into account the diminished market value of the homes when renegotiating the terms of the mortgages. Of course, to some extent, this idea would treat homeowners almost like the bailout treats the banks because it would allow them to escape the consequences of entering into a bad transaction.

Democrats Have Also Sought Homeowner Protection

Democrats have made similar suggestions in the past. During bailout negotiations, for example, Senator Obama said that Congress "should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities" and that he would "encourage Treasury to study the option of buying individual mortgages like we did successfully in the 1930s" (see this article ). Obama's statements, however, fall short of making an actual proposal.

One other influential Democrat, Senator Hillary Clinton, also argued for homeowner relief during bailout negotiations. In fact, Clinton was the only lawmaker who came up with a specific plan on this matter during the bailout discussions. Clinton, like McCain, outlined a plan for the formation of a specific governmental entity to buy mortgages from distressed homeowners to help them save their homes.

Bailout Legislation Contains Very Little For Homeowners

The bailout legislation allows the Secretary of the Treasury to buy "troubled assets," and the statutory definition of a troubled asset includes "residential mortgages." Presumably, the Secretary of the Treasury already has the power to provide some relief to homeowners under the legislation. But the legislation only requires the Secretary of the Treasury to come up with a plan "that seeks to maximize assistance for homeowners." The vast majority of the legislation outlines the specific parameters and procedures the government must use to assist banking and corporate entities, not individual homeowners.

Furthermore, the legislation does not allow judges in bankruptcy proceedings to renegotiate the terms of mortgage debt. Currently, bankruptcy judges can do this with all debt -- except for mortgages. Although labor and consumer groups favored including bankruptcy relief in the plan, the banking lobby and Republicans strongly resisted this idea. Key Democrats, including Obama, refused to fight for inclusion of such a provision, which would potentially have alleviated the burdens faced by some distressed homeowners.

Also, most experts expect that the bailout funds will finance the purchase of mortgaged-backed securities, not individual mortgages. Because many other investors, in addition to the government, will likely have a contractual stake in the securities, it is difficult to imagine how the government will be able to alter the terms of the underlying mortgages bundled together to form the securities.

If All of These Big Players Wanted Homeowner Relief, Why Does the Bailout Only Help Wall Street?

Because of the limited attention to homeowners in the bailout legislation, proposals like the ones outlined by McCain and Clinton (and presumably favored by Obama) would provide more concrete assistance to homeowners. This raises a very important question: If such powerful senators as Obama, Clinton and McCain really wanted direct assistance for homeowners, why does the bailout legislation fail to provide such relief? Are these individuals, particularly Clinton and Obama, simply saying what they believe their constituents want them to say? Is McCain simply trying to convince voters that he feels their pain, whether he does or not? Or, are these powerful leaders truly committed to helping consumers, but caved to corporate interests in both of their parties in order to secure passage of the bailout? Perhaps they knew that, despite the grand and moralistic statements by their colleagues in Congress, relief for "Main Street" would have faced much tougher resistance than relief for Wall Street? I'm going with a mixture of all of these things.

Update: A New York Times article, published after I wrote this essay, confirms that McCain borrowed the idea from Hillary Clinton.

FactCheck.Org Confirms What Neither Party Will Admit: Bipartisan Blame for Wall Street Woes

When venerable Wall Street institutions like Lehman Brothers started imploding, liberal blogs and newspapers were quick to blame Republicans. Republicans on the other, said that Democrats caused the crisis. Turns out both are wrong. The nonpartisan website FactCheck.Org has concluded, as I did in a previous post on the financial crisis, that neither party can claim innocence with respect to the financial crisis (nor can the public, for that matter).

Democrats typically point vaguely to "deregulation" as causing the banking crisis. When pressed for specifics, they most commonly blame the Gramm-Leach-Bliley Act of 1999, which allowed traditional banks, insurance companies, and investment banks to consolidate. Republicans often accuse Democrats of resisting tighter regulation of Fannie Mae and Freddie Mac. Neither explanation really works.

Let's start with the Democrats narrative. FactCheck nails it by locating the cause of the crisis in the housing and securities markets. Very low interest rates, the risky mortgage, greed among homebuyers who overextended themselves in order to reap the benefits of soaring home appreciation, and the securitization of bad debt caused most of this mess. The Gramm-Leach-Bliley Act did not effectuate this, and even if it did, many Democrats supported the legislation (including Bill Clinton and Robert Rubin).

With respect to the Republican argument, tighter regulation of Fannie Mae and Freddie Mac might have prevented their troubles, but that certainly cannot explain the poor state of US and world markets. They are just one piece of a very large puzzle. Also some of the proposals that Republicans made on this issue came very late in the game, perhaps too late to prevent the crisis .

Because we are in an election year, public officials cannot resist the temptation to distort this important issue with partisanship rhetoric. But that does not change the fact that blame is everywhere.

Update: The RSS feed for FactCheck.Org now appears in the media section on the left side of the blog. FactCheck is truly a vital resource.

READING THE FINE PRINT: BAILOUT IS STILL A DEAL PRIMARILY FOR BANKERS

I read through the bill and intended to write a full analysis. Fortunately, ABC News has captured some of the same concerns I had: Does the Bailout Ignore Homeowners, Execs?



Although Pelosi, Reed and other members of Congress announced with much fanfare that the legislation would include "relief" for homeowners and cap corporate salaries, the proposed legislation only moderately delivers those promises. For example, the limit on executive salary only applies if the government purchases $300 million or more in assets from the company. Although the bill would prohibit "golden parachutes," it would exempt existing employment agreements from this provision. The proposed legislation would only impose additional tax burdens on companies that pay extremely high salaries; it would not explicitly limit those salaries.



As for homeowners struggling to pay their mortgages, the proposed legislation would only help those persons whose mortgages the government purchases. Also, the legislation only requires the Secretary of the Treasury to write a plan to "mitigate" foreclosures and to help funnel distressed borrowers through existing assistance programs. The bill does not provide any money at all for foreclosure prevention.



I heard Dennis Kucinich rail against the bill today on C-Span. It was a great speech. Also, true conservatives in the House (i.e., those who hate "big government") seem bothered as well. But the Senate seems bent on getting the bill passed. After all, it probably will help the economy somewhat, but most importantly, two members of the Senate are running for president. Their colleagues do not want voters to view their respective parties as responsible for blocking a bill designed to save banks (or was it "the" economy?). Tune in for more updates.

Breaking News: JP Morgan Chase and Bank of America to Buy the United States!

The Associated Press has just released a stunning news item. JP Morgan Chase and Bank of America, the nation’s last two remaining banks, have tentatively entered into an agreement to buy the United States of America. The transaction includes all federally and state-owned real and personal property, natural resources, and prisons. The contract, however, does not permit the purchase of citizens of the United States, because lawyers feared such a provision would violate the constitutional prohibition of slavery. Both companies, however, expect to hire many U.S. workers to run the government and would likely pay them "slave wages." When asked what this meant, company officials said that "employees would earn the minimum wage." The constitution does not explicitly prevent employers from paying "slave wages."

Another provision would release all incumbent political officials from their respective offices. A source close to the transaction said angrily that "this bunch of yahoos has absolutely no damn business presiding over such a huge and complex economy as the U.S.A." He said that their "mismanagement and shenanigans have landed the country on the ‘clearance’ table at Wal-Mart. Buying it was a no-brainer. It’s a great financial opportunity for us."

One heavily negotiated provision would allow the candidate who wins the upcoming presidential election to serve as president, although the companies expect to refashion the presidency into a symbolic leadership position. A spokesperson for one of the banks who wished to remain anonymous said that the president would "become more like the Queen of England – adored and important – but not having a bit of power over what we say or do."

Both presidential candidates have responded to the shocking news. The Obama campaign said that "Now, as a result of this unprecedented transaction, no one can doubt or deny that if Barack Obama is elected as President of the United States, the presidency and the nation will have changed dramatically. In fact, things will change beyond our wildest expectations."

The McCain team said that "As a former POW and decorated veteran, John McCain is well prepared to guide the country through this difficult period of readjustment." The McCain campaign also said that the "proposed reduction of the president’s role should finally put to rest those nasty fears spread by our opponent concerning Sarah Palin being a ‘heartbeat away from the Oval Office.’"

President Bush has also released a statement responding to the transaction, which his administration reportedly helped negotiate. President Bush says that "I’m outta here anyway, so it don’t mean a hill of beans to me." Bush’s statement also attempts to calm likely anxiety among voters over the idea of two banks owning the country. Bush says that "People need to just relax and get used to it. At this point, these guys own about everything of value in the country anyway, so this is the next logical step." Members of Congress are recuperating from actually having to work last week to complete the bailout negotiations. Consequently, no member of Congress has responded to requests for comments.

Dissenting Justice will have more analysis of the situation as it develops. Although this is a satire, you never know what might happen!

Bringing Back Welfare As We Knew It: My Indignant Take on the Wall Street Bail-Out

Bill Clinton’s 1996 "welfare reform" made him (and his wife) the enemy of the left and a hero to moderates and conservatives who apparently believed that single black mothers on welfare were the greatest threat to American taxpayers. Of course, AFDC payments constituted only 1% of the federal budget, and a majority of welfare beneficiaries were (and still are) white. Nevertheless, the "welfare queen" became a rallying cry for opponents to welfare. Welfare recipients, according to the royal rhetoric, are lazy, make bad choices, have ample opportunity for economic advancement, and are incentivized to idleness and pathology by governmental subsidies. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 required recipients to work, curtailed benefits to unmarried individuals (under the false assumption that marriage ends poverty), and placed a lifetime limit on benefits. By contrast, the unconditional bail-out for Wall Street, as it currently stands, marks a return to welfare as we knew it.

Earlier this year, I wrote a column questioning why the Bear Stearns bail-out failed to trigger a discourse concerning the pathology of Wall Street’s "welfare kings." See (http://www.blackprof.com/?p=2002). Although some liberal commentators have attempted to blame the present financial unrest on "deregulation," most financial experts believe that reckless investment decisions created this havoc. Historically low interest rates in the early in 2000s made it very easy for banks to obtain money to lend (at a profit). The wide availability of credit increased demand for housing which caused rapid price appreciation. Banks, wanting to fatten their coffers, engaged in reckless lending, using "creative" products such as adjustable rate mortgages and no-income verification loans to finance home purchases for individuals with poor credit ratings or "A-credit," but insufficient income. Homeowners used their homes as ATM cards, dipping into their equity to purchase cars and other consumables. Investment banks purchased mortgages, bundled them together as securities, and sold them as assets to investors wanting a fixed return.

Ultimately, market fundamentals could not sustain this excess, and the Federal Reserve began raising interest rates to bring the market back to reality. Adjustable rate loans caused payment shock for borrowers, and foreclosures soared. Suddenly, mortgage-backed securities became risky and unstable assets, and financial institutions that held these securities or traditional mortgages began to suffer huge losses. Lenders refused to extend credit to holders of these assets or to purchase them due to their risk. Essentially credit dried up. Foreign sources of money also ran from the United States, exacerbating the unavailability of credit. Bear Stearns, Lehman Brothers, and other venerable Wall Street institutions hit the dust. And the story continues to unfold.

In response to recent events, the Bush administration has requested $700 billion to allow the Secretary of Treasury to purchase mortgage-backed securities from troubled financial institutions. The companies would receive "market value" for the securities (whatever that is) and would presumably have a better credit rating without the risky assets. In addition to infusing capital into troubled firms, this plan, if successful, would help stabilize financial markets, attract foreign and domestic sources of credit, and prevent steep economic decline. Because a private-sector solution to this madness seems out of reach, governmental intervention is necessary.

Still, we need to label this intervention honestly: it is a handout to people who engaged in highly irresponsible behavior. Not only was their behavior reckless, but they, as financial professionals, had greater knowledge of the risks and consequences of their behavior than the average homeowner, who lacks sophistication concerning financial markets and lending parameters. Although many commentators have bashed "sub-prime" borrowers, which I view as the new "welfare queens" (http://www.blogger.com/(http://www.blackprof.com/?p=2002)) they have not similarly critiqued the companies which had the capital and power to create the current situation – and the financial expertise to avoid it!

The fact that this problem has intensified during a presidential election makes things even more dramatic. Democrats and Republicans are rightfully calling for more conditions placed on the receipt of federal money (and this seems inevitable). Hillary Clinton has even proposed that the government purchase individual mortgages and reiussue them to distressed homeowners under more favorable terms; a similar course of action took place during the Great Depression. But neither side can claim "clean hands" on this issue -- although Democrats have tried to do so. Liberals, in particular, have blamed the current mess on "deregulation," citing to several pieces of legislation, but most often, the Gramm-Leach-Bliley Act of 1999. That legislation allowed commercial banks, investment banks, and insurance companies to consolidate. This statute, however, did not create financial chaos; risky investments did. Countrywide and Washington Mutual are strictly commercial banks. The former has already folded into Bank of America, while the latter is on life support. Bear Sterns and Lehman Brothers were strictly investment banks, and they have both died. AIG is exclusively an insurer, but it too needed a federal rescue. On the other hand, JP Morgan Chase is a consolidated investment and commercial bank, but it is among the strongest of the remaining financial institutions in the country. Furthermore, Bill Clinton signed the legislation into law, and Robert Rubin (former head of Goldman Sachs, now Chairman of Citicorp), his Secretary of Treasury, lobbied for it. Democrats also voted for the measure in large numbers.

Recently, Obama called Rubin for "advice" on the economic crisis, and he initially chose James Johnson, a former managing director of Lehman Brothers and Vice President at Fannie Mae, to head his Vice President vetting team. Johnson resigned after the Republicans politicized his connection to Fannie Mae and his receipt of millions of dollars in "loans" from the troubled company. In the past, Democratic Senators Charles Schumer and Christopher Dodd have both rejected stricter regulation of financial institutions, as has Representative Barney Frank. All of these men sit on congressional banking and finance committees. And Fannie Mae employees gave Dodd, Obama, and Clinton most of their campaign contributions this year. No one is innocent.

McCain has "suspended" his campaign, but, ironically, this move is just a campaign strategy designed to delay having a presidential debate during this chaos. Polls have begun to shift towards Obama during the turmoil, proving the old maxim that "it’s the economy stupid." Statistical data indicate that voters tend to blame the incumbent’s party for economic distress. Obama says the show must go on and that presidents have to "multi-task." That’s a great response to McCain’s gimmick. But at the end of the day, both candidates, as leaders of their respective parties, need to endorse the solution. Because it is an election year, expect to hear emotional (and nauseating) appeals to bipartisanship – so that neither side will become vulnerable to charges of "playing politics" with the solution.

Ultimately, both candidates will ceremoniously help craft and endorse the legislation, which will likely have some conditions placed upon the Secretary of the Treasury and the companies that receive governmental assistance. But I do not expect "the people" to benefit directly from the legislation, in terms of mortgage-payment assistance or reissuance with more favorable terms. Nor do I expect that the "conditions" in the law will involve things like job training for financial professionals, a lifetime limit on the receipt of subsidies, or other similar conditions that were all placed in welfare reform legislation. Welfare as we knew has made a triumphant return.