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Another example of politicians using the TARP card to influence the bankruptcy process. Banks may think twice before they provide their next DIP. If nothing else, the cost of this financing will increase. Which I believe is counter to what said politicians would like to see happening.
by Rodney Johnson
May 9 (HS Dent) — Hartmarx, the clothier whoÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s recent fame is making suits warn by President Obama, filed for bankruptcy protection in late January. Wells Fargo supplied Debtor in Possession Financing (DIP) while the company reorganized. Three bidders have emerged: two of the bidders are interested in keeping the operation going, the third would liquidate the company. When employees got wind of the third bid, they rallied against Wells Fargo, assailing the bank and calling congressmen, as reported by Progress Illinois:
This news of a potential liquidiation caused workers, union leaders, and members of Congress to spring into action to aid the company, which employs 3,000 people nationwide, including 1,000 in Illinois. Rep. Phil Hare, who spent 13 years as a Hartmarx employee, described himself as ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œlividÃƒÂ¢Ã¢â€šÂ¬Ã‚Â at the bank, which accepted $25 billion in federal bailout funds. He went on to enlist the help of Rep. Barney Frank (D-MA) and Sen. Chuck Schumer (D-NY). Rep. Jan Schakowsky, whose great-aunt found a job with Hartmarx after emigrating from Russia, called Wells Fargo CEO John Strumpf and urged him to keep the company running. Illinois Treasurer Alexi Giannoulias, meanwhile, sent a letter to Strumpf threatening to sever the stateÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s business with the bank if Hartmarx was ultimately liquidated.
This is not isolated. This is not about Chrysler, GM, and tens of thousands of workers and the ability of the United State to mass produce heavy vehicles as a point of national security and safety. This is a company that makes clothing, who through the power of employees, not owners, is bringing pressure on a bank through political paths because of TARP funding. A year ago this would have been seen as a bizarre episode. Today it is an indication of where we are headed, as the recently silenced critics of the Chrysler deal know all too well.