Bank of America

[southsider2k5]

CHICAGO � Bank of America says it will extend credit to a Chicago window and door maker whose workers have occupied the factory for five days.

 

The bank said Tuesday that it's willing to give the Republic Windows and Doors factory "a limited amount of additional loans." That's so it can resolve claims of employees who have staged a sit-in since Friday.

 

The factory closed Friday after Bank of America canceled its financing.

 

Workers were given three days' notice. But they refused to leave and vowed to stay there until receiving assurances they would receive severance and accrued vacation pay.

 

The bank has been criticized for cutting off the plant's credit after taking federal bailout money.

 

Brilliant. We get into this mess by extending credit in places where we shouldn't so when someone does something about it, the bank is forced into extending credit to a company in an industry that is falling apart. That's fixing the problem.

[NorthSideSox72]

CHICAGO – Bank of America says it will extend credit to a Chicago window and door maker whose workers have occupied the factory for five days.

 

The bank said Tuesday that it's willing to give the Republic Windows and Doors factory "a limited amount of additional loans." That's so it can resolve claims of employees who have staged a sit-in since Friday.

 

The factory closed Friday after Bank of America canceled its financing.

 

Workers were given three days' notice. But they refused to leave and vowed to stay there until receiving assurances they would receive severance and accrued vacation pay.

 

The bank has been criticized for cutting off the plant's credit after taking federal bailout money.

So company management f***s up, and screws the workers. The bank gets made into the bad guy. The bank is forced to make a loan they know will probably never be repaid - basically a grant - in order to try to save face for doing exactly what they should do.

 

Nice.

 

[Cknolls]

And the politicians look like heroes.

[StrangeSox]

And there goes a small chunk of the $15B.

[Balta1701]

And there goes a small chunk of the $15B.

Frankly, it's probably one of the better uses of that money that we've managed to come up with.

[StrangeSox]

Frankly, it's probably one of the better uses of that money that we've managed to come up with.

 

Let's just agree to disagree, then.

[NorthSideSox72]

Frankly, it's probably one of the better uses of that money that we've managed to come up with.

Forest for the trees, Balta.

 

[Texsox]

How do we know they are such a huge risk? Different banks are more comfortable, or less, lending in different industries. Could this just be BoA is not strong in manufacturing? I know plenty of business owners that spend a great deal of time finding lenders familiar with their industries.Just ask anyone in Ag how it goes when they need capital and LoC.

[NorthSideSox72]

How do we know they are such a huge risk? Different banks are more comfortable, or less, lending in different industries. Could this just be BoA is not strong in manufacturing? I know plenty of business owners that spend a great deal of time finding lenders familiar with their industries.Just ask anyone in Ag how it goes when they need capital and LoC.

If they weren't a significant risk, they wouldn't have dropped the line of credit.

 

[southsider2k5]

How do we know they are such a huge risk? Different banks are more comfortable, or less, lending in different industries. Could this just be BoA is not strong in manufacturing? I know plenty of business owners that spend a great deal of time finding lenders familiar with their industries.Just ask anyone in Ag how it goes when they need capital and LoC.

 

A company in the construction and home improvement industries during the biggest drop in home prices in American history... Nah, they couldn't be a credit risk

[Texsox]

If they weren't a significant risk, they wouldn't have dropped the line of credit.

 

 

A company in the construction and home improvement industries during the biggest drop in home prices in American history... Nah, they couldn't be a credit risk

 

Again, some banks are known for different industry segments. I thought BoA bought the bank that was lending this company or was I mistaken?

 

And some companies will thrive in down markets, while others will fail. Smart lenders will not look at everyone in that industry and make a blanket decision. Huge fortunes were made during the depression

[southsider2k5]

Hmmm, I think I am buying some stock in American Cotton Gin!

[Texsox]

Hmmm, I think I am buying some stock in American Cotton Gin!

 

So you would immediately dismiss every business in a given sector during a downturn? It would seem now that companies that are heavily into replacement products and home improvements would fair well as people decide to hang onto their homes and not buy new. I assume most people would replace their windows if needed, not just cover them with cardboard until the economy improves.

 

Are you envisioning most construction products companies folding over the next year or two? Half out of businesses? 25%? It is sad then that we have so many businesses that are that close to failure that they can not weather a single downturn in the economy. Makes me wonder how solid our policies have been when in modern times we face catastrophic failures with one slow spot in the economy.

[StrangeSox]

The thing is that this business was apparently failing and had drastically reduced orders. That may not be the case for every window company out there, but that is the case with Republic.

[southsider2k5]

So you would immediately dismiss every business in a given sector during a downturn? It would seem now that companies that are heavily into replacement products and home improvements would fair well as people decide to hang onto their homes and not buy new. I assume most people would replace their windows if needed, not just cover them with cardboard until the economy improves.

 

Are you envisioning most construction products companies folding over the next year or two? Half out of businesses? 25%? It is sad then that we have so many businesses that are that close to failure that they can not weather a single downturn in the economy. Makes me wonder how solid our policies have been when in modern times we face catastrophic failures with one slow spot in the economy.

 

All things being equal, if I am BOA, and lending is at an extreme premium at best, yes, I would be willing to dismiss entire sectors. It only makes sense that industries directly tied to the sectors of the economy which are having the hardest time, are the most likely to fail, right? Is that too big of an assumption? The huge downturns in home building and home prices, people don't have the equity in their houses that they used to use for home improvements. They also aren't building houses like they used to. Obviously BOA has their detailed information and can make a LOT more qualified decesion than I can, but not lending to company's that are on the brink of failure seems like good business practice, or did we learn nothing from this whole banking crisis about subprime lending?

 

And to say one slow spot in the economy is a misnomer. We aren't talking about a two quarter downturn. We are talking about a 2 to 3 YEAR downturn. There is a big difference there. This is going to be much bigger than anything we have seen for at least a generation.

[Texsox]

The thing is that this business was apparently failing and had drastically reduced orders. That may not be the case for every window company out there, but that is the case with Republic.

 

Hence my question earlier. I was wondering if this company in particular had problems. BoA is not regarded, at least here, as manufacturing friendly in their lending practices.

[Texsox]

All things being equal, if I am BOA, and lending is at an extreme premium at best, yes, I would be willing to dismiss entire sectors. It only makes sense that industries directly tied to the sectors of the economy which are having the hardest time, are the most likely to fail, right? Is that too big of an assumption? The huge downturns in home building and home prices, people don't have the equity in their houses that they used to use for home improvements. They also aren't building houses like they used to. Obviously BOA has their detailed information and can make a LOT more qualified decesion than I can, but not lending to company's that are on the brink of failure seems like good business practice, or did we learn nothing from this whole banking crisis about subprime lending?

 

And to say one slow spot in the economy is a misnomer. We aren't talking about a two quarter downturn. We are talking about a 2 to 3 YEAR downturn. There is a big difference there. This is going to be much bigger than anything we have seen for at least a generation.

 

I agree wholeheartedly to a point.

 

From past experiences, some lenders just are not comfortable in different sectors. When I was back in Chicago, after our bank was bought out, the new bank dropped us quickly because, in part, to their difficulties in valuating our inventory. Chips, memory, etc all fall in price and manufacturers offer "ship and debits" to protect the distributor. It has been happening since the dawn of that business model and continues 20 years later. Once we found a bank that was willing to learn about our industry, we received our LoC and continued just fine. The company recently was acquired by a national chain, so the bet was pretty solid. That bank had zero experience in our industry and try to apply a formula that was not a good tool.

 

Some of the banking industry's practices contributed to this problem. Not thinking about each loan is one of them. Wouldn't you agree that they should be looking carefully at each loan and not making blanket decisions in advance?

 

My original question was are we assuming their financials suck? It seems we are not. It seems we suddenly have faith in the banking industry making correct decisions. They had lots of information before and look what they did with it. I'll leave it open that they may still make mistakes. I am probably leaning in your direction that if they are going to make mistakes, leaving the money in the bank may be better, although that would be contrary to the concept of the bailout. No loans = no defaults, but we may still have the economic catastrophe that was predicted if we did not cough up $700,000,000,000.00

 

I still see a danger that the bailout is just going to go to large bonuses and company parties. That is a shame.

[mr_genius]

The bank didn't want to give out a loan to a company that was goign under. Giving out s***ty loans that will never be paid back is a big reason we are in this whole credit crisis.

[jasonxctf]

exactly. as someone in the lending world, i understand that there a rules/requirements for these types of things to occur.

 

now if BOA told this customer back in Sept that the LOC was going to be revoked in November, then I've got no problem with this. If BOA just showed up last week and said we are cutting you off immediately (for any issue not associated with non compliance) then BOA's got some explaining to do.

 

I am surprised, however that in a PR move, a Harris Bank or JP Morgan Chase rep didn't come out and save the day.

 

My prophecy (spl?) has come true...

 

CHICAGO (Reuters) – JPMorgan Chase & Co offered $400,000 on Wednesday to help pay severance to laid-off workers occupying a Chicago factory, whose protest has come to symbolize resentment over the federal bailout of big banks while workers suffer.

 

JPMorgan Chase's offer, announced by U.S. Rep. Luis Gutierrez, who has been mediating the dispute, follows on Bank of America Corp's pledge to make an unspecified, limited loan to Republic Windows & Doors on behalf of the 250 workers.

 

 

[Texsox]

The bank didn't want to give out a loan to a company that was goign under. Giving out s***ty loans that will never be paid back is a big reason we are in this whole credit crisis.

 

Were the company's financials ever made public? We seem quick to make assumptions, although they seem right.

 

6 months ago

Public says "Well you are the bankers, we trust you to make the correct decisions for the bank and the US."

 

$700 billion bailout and 6 months later

Public says "Well you are the bankers, we trust you to make the correct decisions for the bank and the US."

[mr_genius]

Were the company's financials ever made public? We seem quick to make assumptions, although they seem right.

 

6 months ago

Public says "Well you are the bankers, we trust you to make the correct decisions for the bank and the US."

 

$700 billion bailout and 6 months later

Public says "Well you are the bankers, we trust you to make the correct decisions for the bank and the US."

 

They obviously don't know what they're doing and government mandates that they give out extremely risky loans just makes things that much worse. Why even have a financial system? just give out free money to everyone at every request. We'll all be super rich.

 

These bailouts are a cancer

Edited December 11, 2008 by mr_genius

[StrangeSox]

The bailout of the Republic workers cost 1.75M.

 

Any chance at all that BoA or JPM ever see a dime of that money again?

[Texsox]

The bailout of the Republic workers cost 1.75M.

 

Any chance at all that BoA or JPM ever see a dime of that money again?

 

Wait, are they closing their doors?

[StrangeSox]

Wait, are they closing their doors?

 

I think they still are closing the factory.

 

http://money.cnn.com/news/newsfeeds/articl...16_FORTUNE5.htm

 

The end of that article talks about people who have made deposits getting their money back.

[Shamrock4Life]

I thought I read somewhere that the owners of this company, formed a different company and built a new factory in Iowa.

 

Upon further review: here is a link to a google search:

 

http://www.google.com/search?hl=en&rls...owa&spell=1

 

figured I would post that instead of cherry picking a certain article. This whole things smells fishy.

 

EDIT: to post a link where I actually spell "windows" correctly.

Edited December 11, 2008 by Shamrock4Life