We’ve been saying for a long time that probably the most important foreshadowing of what politicized banking will look like came just a few weeks after the TARP was passed. It happened in Chicago, when protesting workers backed-up by threatening politicians got Bank of America to agree to extend loans to a failing window-manufacturer. Very clearly, banks operating on government funding would find themselves unable to resist the demands of powerful special interests.
Now it looks like Bank of America may have found itself in another labour mess. This time it is even more immediate: the powerful Service Employers International Union wants Bank of America to unionize its tellers and office workers. And now it is calling on Treasury Secretary Tim Geithner to oust Ken Lewis.
Of course, the SEIU frames its campaign against Lewis as a public service. But it seems pretty clearly aimed at its unionization efforts. And if successful, it could have dire consequences for the economy. Banks would quickly learn that they cannot afford to cross unions, and many banking executives would rather keep their jobs by kow-towing to mau-mauing unions than serve shareholder interests.
Charlie Gasparino lays out the latest battle in the New York Post today:
A BofA spokesman says, “We think Bank of America is a model employer, and we don’t see any advantage of associates being represented by a third party.”
Yet Lewis certainly has to worry about the union’s threats. BofA still owes tens of billions to the federal government, bailout funds that covered losses like those arising from its ill-timed purchase of Wall Street basketcase Merrill Lynch.
The feds, that is, have de-facto control of the bank (as they do of Citigroup and much of the rest of the industry). And that control is being exercised by the Obama administration — the most union-friendly in decades.
The SEIU alone spent $60 million to elect this president. But so far the union doesn’t have much to show for a return on that investment. Sure, Anna Burger, formerly No. 2 at the SEIU, sits on the president’s Economic Recovery Advisory Board — but patronage jobs aren’t what the union wants.
Growing membership is. Why not use this crisis — with banks dependent on the government, and Big labour’s friends in charge in Washington — to enlarge the rolls?
…And [Lewis’s] hold on the CEO jobs appears more precarious by the day. The big question inside Bank of America is: Will Lewis be willing to give into the SEIU to save his job?
Long gone are the days when we would have been confident that powerful executives would stand up to government demands. So this should be a real concern for Bank of America shareholders.
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