Tuesday, December 09, 2008
A standoff between workers at Republic Windows & Doors and its owners and bank over the plant's closing stretched into a fifth day after talks produced no agreement despite considerable political pressure and threats of investigations.The WARN Act dates from the late 1980s. At the time of its passage it looked like a reasonable law: A plant laying off workers should give those workers some time to adjust and prepare. Yet that is not its real purpose. It is used in this case as time to build pressure against an employer or, in this case, its creditor. Bank of America has now relented and handed over some loans.
The 240 union workers staging a sit-in at the plant on Goose Island in Chicago decided to stay put at least until negotiations between their representatives and company owners and Bank of America continue Tuesday afternoon.
On Monday, workers were visited by a parade of politicians, including Gov. Rod Blagojevich and U.S. Sen. Dick Durbin (D-Ill.), who voiced their support for the workers while threatening Republic and Bank of America with lost business, legal action and federal inquiry. At City Hall, Chicago aldermen called for hearings on Republic, which had received about $10.4 million in city redevelopment funds as of the end of 2007, according to city documents.
Workers have been occupying the building since its abrupt closing Friday. They are protesting the loss of what they said is vacation and severance pay they've earned and the lack of notice about the closing. The federal WARN Act requires 60-day notice of a plant's closing.
But as James Taranto wonders, isn't this how banks got in trouble? Yes, yes it is. Ed Morrissey noticed this in the discussion of CRA and its effects when attached to legal pressure -- it leads to bad lending. There's the case last summer of FDIC getting into the subprime mortgage business itself because to not do so meant paying off a bank that had gotten into trouble.
Not that BofA should complain too much. �I'm sure Senator Durbin and Docket Number 734...I mean... Governor Blagojevich reminded them that the bank had benefited from the bailout, and he who pays the fiddler calls the tune. �Lie down with dogs...
The whole story should remind us that laws have unintended consequences, and more regulation of business leads to all manner of pressure that keeps businesses from doing what they should do in a recession. �Banks with balance sheet issues shouldn't be lending to failing firms, and failing firms should be allowed to fail. �Authors of the auto bailout should pay attention, but the details of that clusterfarg don't show any learning.