Friday, April 17, 2009

Silence as Price of TARP Bailout Funds

Organized labor has seized the bailout of financial services companies as a tool to silence them in the political process.

Last month, the House of Representatives passed two bills in reaction to the AIG executive compensation story: H.R. 1586 (imposing a 90 percent tax on income in the form of retention bonuses received by executives at firms that accepted more than $5 billion in bailout funds) and H.R. 1664 (requiring Treasury to curb "unreasonable or excessive" executive compensation at firms that accepted federal bailout money).

Last Tuesday, labor federation Change to Win asked Neil Barofsky, Inspector General of the Troubled Asset Relief Program (TARP), to audit Bank of America and other firms who received TARP money to determine whether Bank of America and other financial institutionsused TARP money to lobby against the two bills. Treasury officials responded with puzzlement. Money is fungible. Change to Win doesn't agree. In particular, it wants the TARP Inspector General to disclose how much TARP recipients paid in membership dues to the Financial Services Roundtable, a financial services industry group that spoke out against the House bills amid the AIG populist revenge fervor. The Roundtable wrote to lawmakers just after H.R. 1586 passed urging Congressmen to consider the likely effect of bill on the success of the TARP program.

The AFL-CIO's Executive Pay Watch Website unveiled an annual update on April 14 which includes a section on pay practices at companies that have received TARP money. The site also features a report on companies, including Bank of America, that are actively opposing the union-backed Employee Free Choice Act (H.R. 1409, S. 560), a bill that would allow workers to form unions through a majority "card check" process and not by secret ballot. The AFL-CIO has its eye on B of A and Citigroup, TARP recipients who likely oppose the bill.


marianne said...

The information posted does not support the opening sentence, "Organized labor has seized the bailout of financial services companies as a tool to silence them in the political process." Exactly how are they silenced? By having to disclose whether they financed their lobbying activities with TARP funds? What am I missing?

David Hutchinson said...

The idea, I think, is that an interest group, here organized labor, seeks at least to co-opt a government agency to conduct an investigation, the results of which organized labor could use to further demonize the TARP recipients in the eyes of the public. At most (and this is an informed extrapolation), the goal would be to have the government condition the provision of TARP funds on the political inactivity of the recipients.

Either end seeks to chill the political participation of TARP recipients respecting issues not necessarily related to the provisioning of TARP funds, on the strength of that provisioning. That this is organized labor's intent can perhaps be inferred by their interests and their petition of the TARP official. In any case, whatever the intent of organized labor's petition, it seems the effect of it, if taken up, would be as described above.