The Chicago Sit-In: The Shape of Things to Come?

"We never expected this. We expected to go to jail." These were the words of Melvin Maclin, a factory employee and vice president of the local union that represents the workers at Republic Windows and Doors. The 200 workers involved, who occupied the plant of their former employer after the company abruptly fired them last week, are sitting in and demanding severance and vacation pay.

Symbols of Economic Turmoil

The protesters, the company and the bank have all become symbols of the crisis currently burning its way through the American economy. The protesters are the poor workers thrown out of work by forces beyond their control. The bank, a recent recipient of billions of dollars in bailout money, is cast as the villain, yanking the credit rug out from under the poor company, forcing it to fire 200 employees, refusing to allow it to have the money it needs to pay off its people and denying any and all responsibility in the matter. As for the company, it seems to be caught in the middle of two competing forces, its former workers and the bank.

What is happening in Chicago is the playing-out of the fears that many Americans have, fears of sudden unemployment, fears of companies going bankrupt almost overnight; and resentment toward the banking industry for taking the money meant to ease the credit crisis and using it for other purposes. The situation also begs the question: Who, exactly, is responsible to those workers protesting at Republic? Is it the company or is it the bank?

Who is Responsible to the Employees?

"The [bailout] money went to the banks to lend," said Jesse Jackson while visiting the protesters. "Rather than lend, they acquired more banks and drove smaller banks out of business. In the meantime, even President Bush had to say we got the deal through for you to lend, but they would not lend. So if banks would not lend, they are holding capital and making money off of government investment." Jackson and his Rainbow-PUSH Coalition are working to have the funding restored to help the workers while Illinois Governor Rod Blagojevich said that the State would suspend all business with Bank of America as a result of its actions with Republic. He wants to put pressure on the bank to restore the money to Republic.

The bank, on the other hand, says they did nothing wrong by pulling Republic’s credit and that they were not responsible for the company’s financial obligations. Never mind that they approved the purchase of Merrill Lynch at around the same time (what was the bailout money supposed to do again?), strictly speaking they are correct. Republic was kept afloat by financing from Bank of America. The bank made a business decision to pull that financing and when they did, they left Republic unable to meet its financial obligations and over 200 workers were fired with no real notice as a result.

While you can make an argument, as Jackson and Blagojevich do, that the bank is at fault for the situation by pulling the funding, you cannot say that the bank is legally liable for the workers contract. It is the difference between a moral argument and a legal one, between the right thing to do and the legally permissible thing to do. They are all too often not the same thing.

Bank Bails Out and the Company is Left Holding the Bag

Whether it seems right or not, that little difference between moral and legal leaves us with the company as the party with the responsibility to its workers. After all, unless Bank of America is a party to Republic’s labor contracts, which is doubtful, then it really does all rest with the company.

Still, what can they do? Illinois Attorney General Lisa Madigan is looking into the way Republic handled the situation and, depending on what she finds, criminal indictments could follow. Will that resolve the situation or simply add a punitive element into the mix? What it certainly would do is create an atmosphere where owners and executives at companies that find themselves in this kind of situation would now also have law enforcement to worry about. Involving the criminal law against these companies wouldn’t right any wrongs or protect anyone. If our law enforcement political officials wanted to do that, they would force banks like Bank of America to use their bailout money as it was intended—to finance lending to businesses and individuals.

The Bottom Line

One feels sorry for the workers and for Republic, they are both caught up in something far bigger than themselves, but that does not mean Republic is off the hook. As unfair as it may seem after Bank of America’s high-handed actions, Republic is ultimately responsible for paying its employees and the company’s owner has to figure out how to pay the employees. There are no two ways about it. If they cannot find financing elsewhere, they will have to file for bankruptcy, a victim of a bad economy and a self-serving bank, and then it will all be up to the judge.

Republic Windows and Doors is a symbol of what is wrong in our society right now, and it is likely to be only one of the first. If your business relies on a line of credit, it is time for you to make sure that line is secure, otherwise, get some back-up funding if you can. The last thing you want is to be the next Republic.