I know this sounds ludicrous, but imagine a situation in which the federal government infuses cash into a bank to strengthen its lending abilities, and a state government then steps in to punish the bank when it refuses to make a business decision that could weaken those abilities.
Well, ludicrous or not, this is exactly what happened after the Bank of America cut off credit to Republic Windows and Doors, a Chicago company that then laid off some 250 workers after just a few days notice.
The workers _ who didn’t get severance or vacation pay _ immediately staged a sit-in, and you can’t blame them for that.
Next, Illinois Gov. Rod R. Blagojevich said his state would end hundreds of millions of dollars worth of business dealings with Bank of America, and you can absolutely blame this grandstander for his move. (Apparently, he didn’t know he would be indicted by the U.S. Justice Department on political corruption charges the next day.)
It’s true, as Blagojevich points out, that the federal government injected $15 billion into the Bank of America to help lessen the nation’s credit crunch, but it hardly follows that the bank should play a willy-nilly game with this cash, that it should forsake all business sense in its disposal of the money, dumping loads onto failed enterprises that will never in 100 years be able to repay the sums.
The idea of the government’s asset acquisitions and other bailout actions has not been to convert financial institutions into welfare agencies or persuade executives that they should be even dumber than they were in helping to land us in the current mess in the first place.
The idea is for these organizations to employ their expertise, discernment and heft on behalf of an economy that might otherwise sink into one of the nastiest recessions this nation has ever seen.
Maybe, of course, once you’ve started this kind of extraordinary, virtually unexampled governmental interventionism, it’s going to be very, very hard to keep the politicians from hubristically thinking they can somehow successfully manage every nook and cranny of this vast economy, preventing every possible dislocation.
“. . . I think it is important for us to make sure that, moving forward, any economic plan we put in place helps businesses to meet payroll so we are not seeing these kinds of circumstances again,” said President-elect Barack Obama, as if there were any way to prevent comparable circumstances to those in Chicago without either destroying banks or having a never-ceasing infusion of government cash.
After all, the job losses over the past month have been somewhere on the order of a half a million, many of them at least indirectly occurring for reasons of tight credit. And even if we escape the clutches of this recession, there will be business failures.
I happen to assume we will get out of the recession. The issue is how quickly and the degree to which our bountiful, liberating free-market system will still be intact, and the answer resides in whether our leaders are pragmatic and prudent and smart, or whether they instead heed egotism, collectivist enthusiasms and political opportunism.
Though I wonder about the utopian phrasing of Obama’s remarks on future economic plans, I appreciate his concern about the Chicago workers, and hope that a reasonable way can be found to give them what they are due.
But there is nothing reasonable about Blagojevich’s bully-boy, abuse-of-power tactics or plowing money into an operation that just wasn’t credit worthy. Try that on a large scale and you will hurt millions more than you help.
Didn’t we discover as much by giving housing mortgages to people who could not afford them?
Examiner columnist Jay Ambrose is a former Washington opinion writer and editor of two dailies. He can be reached at: [email protected].
