Good Banks, Bad Banks
Check out this turn of events: JP Morgan Chase is stepping up to offer $400,000 to cover severance pay for the workers staging a sit in at a Chicago factory, Reuters reports. The bank’s offer comes on the heels of Bank of America’s pledge to also make a loan to Republic Windows & Doors.
The company’s 250 employees drew national attention with their standoff, which began Dec. 5 after the company said it was shutting down because Bank of America was cutting off its credit.
The worker sit-in that began on Friday has become a symbol of Main Street resentment of the federal bailout of Wall Street banks, which Bank of America has tapped for $15 billion and JPMorgan for $25 billion.
President-elect Barack Obama and other politicians have voiced support for the workers’ cause, arguing that the Wall Street bailout was not serving its purpose to loosen credit for Main Street businesses.
Clearly, these two banks figured out which way the public relations wind was blowing. Too bad it took such a dramatic action to get their attention.
And then there’s Goldman Sachs, which apparently didn’t get the memo about actually caring what the public might think. Bloomberg says the firm has ticked off officials in 11 states by advising investors to bet against their debts with credit default swaps. From Bloomberg:
Bets against public debt, once unheard of on bonds considered safe enough for retirees, have soared as the National Conference of State Legislatures projects recession-fueled budget crises will cause $97 billion of shortfalls nationwide over the next 18 to 24 months.
It’s “disturbing” to advise investors to bet against the financial health of a state whose bonds Goldman helps sell, Assemblyman Gary S. Schaer, a Democrat who chairs the Financial Institutions and Insurance Committee, said last week in a letter to Chief Executive Officer Lloyd C. Blankfein.
I’d certainly say so. Maybe those states need to figure out how to put together a high-profile, 11-state sit in. Apparently that’s the only way to get banks to listen these days.