Most of us think of it as being harder to get consumer credit, car loans, mortgages, etc, but the real impact is on businesses where they take bridge loans to make payroll when they aren’t cash rich even if they are in otherwise decent financial conditions. The most obvious example being Republic Window and Doors where the Governor demonstrates even a stopped clock is right some of the time:
Gov. Rod Blagojevich said this morning the state of Illinois “will suspend doing any business with Bank of America” until the company restores credit to the shuttered Republic Windows & Doors company on the North Side.
Blagojevich made the announcement after meeting with former workers who have been staging a sit-in on the factory floor since Friday to protest abruptly losing their jobs. The governor said the state has “hundreds of millions of dollars” in dealings with the bank.
The tone deaf response from Bank of America is that they aren’t responsible for paying wages which is true, and utterly misses the point. We are in the middle of bailing out companies with the hope that it frees up credit to avoid just these kind of problems. BoA hasn’t received a ton of that funding, but would have been in serious hurt without it and it’s time to free up that credit in cases like this.
You wonder what they’re doing with the money the government and depositors put in them. Before I closed out my account with Chase I think I was getting under 1% in my savings account while they were charging me something like 29% on my credit card.
BOA charges 25-29% as well.
P.S. Bring back the McFadden Act and Douglas Amendment!