TARP

TARP Watchdog Finds Yet Another Bank Subsidy That "Warrants" Investigation

Moe Tkacik | May 22, 2009, 3:22PM

As we've explained here before, the government didn't just give all that TARP money away to those 579 banks for nothing: it got warrants to buy stock in the banks at certain prices over a ten-year time horizon. And as we informed you last month, no sooner did the banks start making noises about repaying the TARP money did they also begin referring to the cash they were forking over to buy back said warrants as a supposed "early repayment penalty" and angling for a discount on buying them back. JP Morgan CEO Jamie Dimon brought up the issue with Barack Obama himself, while a little bank in West Virginia called Centra sent its CEO and vice president on the media circuit blasting the "penalty" as usurous and "un-American."

But would the Treasury Department really cave to this spin by giving banks that repaid TARP funds early another subsidy? The answer appears to be "yes," at least on the basis of the deal it cut with Indiana's Old National Bancorp, which bought back an estimated $5.81 million worth of warrants last week for the bargain price of $1.2 million, terms a Bloomberg analysis estimates could shortchange taxpayers to the tune of $10 billion. A source tells TPM Neil Barofksy, the special inspector general assigned to oversee the TARP, plans to "soon" add a special audit into the warrant repurchases to the six separate audits of various eyebrow-raising aspects of the bailout already underway at his office. Only three banks have exited the TARP have bought back their warrants thus far -- with disturbing (though strangely mixed) results.

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Topics: Centra Bank, TARP

Charles Millard

Bush Pension Chief Charlie Millard To Senate: "I'll Plead The Fifth"

Moe Tkacik | May 20, 2009, 6:40PM

For practically his entire 18-month term directing the obscure Pension Benefits Guaranty Corporation, Charlie Millard could not stop talking about his radical new plan to plow the majority of the agency's coffers -- which offer partial bankruptcy insurance to the retirement funds of 44 million Americans -- into stocks, real estate and private equity.

Well, that ended today.

Millard pleaded the Fifth three times before a Senate subcommittee convened to discuss the fund this afternoon, refusing to answer any questions about his controversial tenure, which began when Bush appointed him interim director in May 2007 and ended when Obama was sworn into office. There are some pretty good reasons for him to : last week four senators formally requested the Office of the Inspector General to open a criminal investigation into Millard's activities in response to a preliminary OIG report detailing the former Lehman Brother's executive's eyebrow-raising call logs during his time at the office. The report showed that Millard made hundreds of calls to Wall Street investment banks in line for lucrative contracts managing the fund's money under the new investment regime, and traded dozens of emails with a Goldman Sachs executive assisting Millard's post-D.C. job hunt after Goldman was awarded just such a contract.

The PBGC says most of Millard's planned asset reallocation had yet to be completed when he left, and that it is now considering tearing up some of the contracts under which it planned to farm out the funds to the likes of Goldman, JP Morgan, BlackRock and others. But the fund still managed to triple the size of its deficit in the six months between September 30 and March 30, according to numbers released by the Senate today -- meaning the fund currently owes $33.5 billion more than it has the money to cover.

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Topics: Charles Millard

EFCA

Earthgrains, The Wholesome New Poster Child For The "Extreme Anti-Union" Movement

Moe Tkacik | May 20, 2009, 4:07PM

A Cornell survey of trends in union intimidation released today is likely to provide labor supporters some critical talking points in their endless struggle to pass a "card check" bill aimed at making said tactics tougher to pull off.

It's called NO HOLDS BARRED: The Intensification of Employer Opposition to Organizing and the first company it singles out for strongarm tactics is...a healthy baked goods company called Earthgrains!

Until relatively recently, the report says, the St. Louis-based Earthgrains had "a history of maintaining a stable collective bargaining relationship with the majority of [its] workforce." All that changed in 2000, when its Kentucky plant tried to organize -- and Earthgrains responded by videotaping employees talking to union representatives, publicly confiscating any union literature the reps distributed, interrogating employees about whether their co-workers supported unions, maintaining to know how other workers planned to vote, and outright threatening their jobs and retirement plans. Such tactics are now "standard practice," according to the study of 1,004 union organizing drives between 1999 and 2003, in which management threatened to close plants in 57 percent of the campaigns and threatened to cut wages and benefits in 47 percent. (Electronic surveillance and attempting to infiltrate the organizing committee were less common tactics, used in 11% and 28% of campaigns, respectively.)

What distinguishes the current organizing climate from previous decades of employer opposition to unions? The primary difference is that the most intense and aggressive anti-union campaign strategies, the kind previously found only at employers like Wal-Mart, are no longer reserved for a select coterie of extreme anti-union employers.

The report cites the campaigns for the ever-widening gap between the percentage of American non-managerial workers who say they would vote for a union -- higher than ever at 55% -- and the actual union density, which stands at 12.4%, and blames "deregulation, investor-centered trade and investment policies, and an underfunded and disempowered National Labor Relations Board" on what it terms "the rise of the union avoidance industry." But let's go back to Earthgrains for a minute.

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Topics: EFCA

Andrew Cuomo

Before You Take The Advice Of Credit Solutions Of America And Sell That Plasma, You Might Want To Read This

Moe Tkacik | May 19, 2009, 5:55PM

New York AG Andrew Cuomo sued two major debt settlement companies today for fraud and deceptive advertising practices in the first big development in an expansive probe of the debt settlement industry he announced last week. One of the companies, Credit Solutions of America of Richardson, Texas, was sued by its own state attorney general in March -- and from the numbers it sounds like a busy time for the company's lawyers. Cuomo's office said CSA, which has had more than 1,600 Beter Business Bureau complaints filed against it in the past three years, collected approximately $17 million in fees signing up 18,000 New Yorkers between 2003 and 2008 with promises of reducing their debtload by 60% -- a promise they fulfilled for an average of one percent of their customers.

Two things make that shocking statistic even more shocking. Number one, as a New York Times Magazine story published Sunday makes clear, it's hardly unusual these days for customers to receive a 60% reduction in their credit card debts simply by asking the customer service representative on the other end of the line. Number two, as some documents we received from a lawyer representing an ex-client of CSA makes clear, the company endorsed some pretty desperate measures for settling debts: yup, CSA encouraged its clients to sell their blood plasma!

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Topics: Andrew Cuomo