Citigroup Uses Bailout Money to Lobby Against Workers Rights

According to the Huffington Post, Citigroup has been caught using some of its $50 billion in federal bailout (TARP) money to help organize large corporations against the Employee Free Choice Act — an important piece of legislation which would make it easier for workers to unionize and demand better wages and benefits, not to mention make life more difficult for union obstructionists like Walmart.

And there you go.  That’s exactly why enforceable guidelines for spending the bailout money should have been imposed from the beginning!

CREDO, however, thinks that Neil M. Barofsky, Special Inspector General for TARP, and Elizabeth Warren, Chair of the Congressional Oversight Panel to review TARP, might actually be able to do something about this, if put under pressure.  Sign the petition now asking them to investigate Citigroup and other TARP recipients, and to revoke funding from those who insist on spending it for unintended and damaging purposes.


Similar Posts (automatically generated):

32 comments for “Citigroup Uses Bailout Money to Lobby Against Workers Rights

  1. MikeF
    March 13, 2009 at 11:59 am

    One Citi analyst took part in a Chamber of Commerce conference call… you may disagree with the positions that she took but this is hardly an egregious misuse of TARP funds. In fact, a retail analyst talking to business leaders about how legislation could affect their industry sounds entirely appropriate – unless you think that bailout recipients should be forcefully prevented from criticizing the current administration’s legislative priorities.

  2. March 13, 2009 at 12:08 pm

    Actually, Mike, HuffPo says that Citi hosted the call, which is a bit different than just taking part in it.

    And yes, I do think that taxpayers dollars, which were supposedly intended to bail out the banks for the purpose of helping the public, should indeed be restricted from actively trying to prevent better work conditions for the taxpayers who are keeping those banks alive.

  3. Lynn
    March 13, 2009 at 12:17 pm

    MifeF, in between defending large corporations use of your tax dollars are you also ranting about all the hoops and red tape that poor people have to jump through just to use your tax dollars to buy *almost* enough groceries to get by for the month?

  4. March 13, 2009 at 12:17 pm

    Oh, and they definitely need to be prevented from doing this:

    Just a few weeks ago, Weinswig gave the Wal-Mart a favorable 9.5 rating out of 10. But now, in a cynical bid to stoke public fears that stronger unions will have an adverse affect on stock values, Citigroup downgraded Wal-Mart’s rating from “Buy” to “Hold.”

    At the very, very least, an investigation needs to be done to find out if what is described is what is really being done. (And no, I do not personally doubt at all that it is.)

  5. Lynn
    March 13, 2009 at 12:44 pm

    I don’t get it. What’s the connection between Walmart and stronger unions?

  6. MikeF
    March 13, 2009 at 12:50 pm

    Cara: OK, so they hosted it… it’s still a conference call, either a cheap one-off payment or (more likely) done on an unlimited monthly contract. Either way, it’s a massive stretch to complain on the grounds of taxpayer funds being misused. And the idea that people should be investigated for simply disagreeing with the government is terrifying.

    Lynn: Honestly, I’m not specifically familiar with those hoops and red tape. I do think the stimulus package should have been bigger and contained more funding for unemployment relief and food stamps. I hope there’s a second stimulus that contains those things and I support Obama’s tax reform efforts. I’m not sure what all that has to do with the position that the government should investigate people who have the audacity to criticize it.

  7. MikeF
    March 13, 2009 at 12:53 pm

    Walmart workers are not unionized and the company is famously anti-union. They claim that a union would lead to higher wages and benefits that would diminish the company’s profitability.

  8. March 13, 2009 at 1:03 pm

    And the idea that people should be investigated for simply disagreeing with the government is terrifying.

    Yeah, it would be, if it was the argument. Unfortunately though you’re misconstruing my point, in a way that is seemingly deliberate.

  9. March 13, 2009 at 1:09 pm

    I would add only to Cara’s remarks that it would be, if we were talking about individual persons and not a corporate board with a bellyful of tax dollars.

    it’s still a conference call, either a cheap one-off payment or (more likely) done on an unlimited monthly contract.

    Time is money, so the cost of placing the call is immaterial. Everyone drew a salary for being on it, no?

  10. Lynn
    March 13, 2009 at 1:21 pm

    “Either way, it’s a massive stretch to complain on the grounds of taxpayer funds being misused.”

    That’s the best way to characterize most concern about means tested welfare fraud. Especially relative to not means tested welfare–like the kind that banks and box stores get.

  11. a lawyer
    March 13, 2009 at 2:49 pm

    Walmart workers are not unionized and the company is famously anti-union. They claim that a union would lead to higher wages and benefits that would diminish the company’s profitability.

    Walmart’s business model is based on cutting prices to a minimum: their slogan is “always low prices” and that’s what they deliver. They make a profit doing this because they cut costs to a minimum. Labor costs are a major portion of a retail store’s expenses and the whole point of a union is to get the company to spend significantly more on wages and benefits for the employees. So if it’s unionized then Walmart’s cost-cutting business model is going to be adversely affected and the company will be less profitable.

    It’s not theoretically impossible for a union to increase a company’s profits by getting the company positive press, increasing employee morale, helping the company attract better workers, or lobbying for regulations and tax benefits that benefit the company at the expense of the general public. But presumably Walmart’s management has a better handle on the likely effect of unionization on profits than pro-union activists do. Corporate management can be phenomenally incompetent, as we’ve recently seen in the banking industry, but Walmart’s phenomenal success suggests their management is very good at what they do.

    I’m still in favor of unionization because I care more about the well-being of Walmart’s employees than I do about the company’s profits. But from a business perspective I’m not seeing unionization being anything other than a net negative for Walmart’s profits, and thus for its stockholders.

  12. Manju
    March 13, 2009 at 2:57 pm

    it was a research call on one of the great economic issues of our day. i used to work at citi (well, salomon smith barney) and they do this all day long thru the squawk box.

    to restrict it would raise some first ammendment issues, no? i suppose you could get away with it if that’s part of the condiions upon which the govt gives citi money, but you can’t do it after the fact.

  13. Manju
    March 13, 2009 at 3:14 pm

    “In fact, a retail analyst talking to business leaders about how legislation could affect their industry sounds entirely appropriate”

    very true and it works both ways. i’m currently raising venture capital money for a stem cell company, so you can imagine in this environment i’ve been pretty worried. vc firms are conserving cash for their existing portfoiio companies and are having trouble raising money themselves, since thier investors (endowments, pensions, wealthy individuals, etc) have seen their wealth deteriorate rabidly. the ipo market has dried up so the lack of liquidity has affected us all. everyone’s hoarding their cash in other words.

    but with obama administration’s stand, suddenly stem cell comapnis are one of the few being entertained by professional invesors. when i do my pitch, i never fail to bring it up, and it looks like we’re going to get our financing.

    i’m sure somewhere in citi there is a healthcare research analyst with similar views. i saw some biotech companies with stem cell platform rocket the other day (aastrom, geron) and i’m sure they’ve received upgrades form the sell side analysts.

  14. March 13, 2009 at 3:45 pm

    Cara,

    Are you willing to modify your position to something like: “all organizations receiving taxpayer money should be forbidden from commenting/advocating on any matter of public policy that affects them” … and if not, why not?

  15. March 13, 2009 at 4:08 pm

    Here’s what I’d say Alo “all organizations receiving taxpayer money should be forbidden from commenting/advocating against the cause for which they were given the money.” So, for example, Planned Parenthood, which receives public funding, should not be able to lobby against affordable contraception! And if they started? Yup, revoke their funding.

    The reason that the bailout was supposedly given to the banks was because if they collapsed, the economic situation of the general American (and global) public would be completely and totally fucked. And now, they’re working against the economic interests the general American public — the direct opposite of what they were given the money for.

    And yes, that is fucked. And no, I cannot believe that I am actually arguing the point here.

  16. Manju
    March 13, 2009 at 4:17 pm

    “And now, they’re working against the economic interests the general American public — the direct opposite of what they were given the money for.”

    Well, the flaw in your argument Cara, is you’re treating an opinion–that he pro-union legislation is good for the general American public– as if its fact.

  17. The Opoponax
    March 13, 2009 at 4:24 pm

    So if it’s unionized then Walmart’s cost-cutting business model is going to be adversely affected and the company will be less profitable.

    A lot of retail sales jobs are unionized. It doesn’t seem to hurt other companies. Also, as far as I’m aware, “but then our company would be less profitable!” isn’t a blanket excuse for companies to do whatever they want.

  18. Tom Foolery
    March 13, 2009 at 4:40 pm

    A lot of retail sales jobs are unionized. It doesn’t seem to hurt other companies.

    So they must all be tied for title of “biggest retailer in the U.S.,” then? Come on.

  19. smmo
    March 13, 2009 at 4:40 pm

    It’s not theoretically impossible for a union to increase a company’s profits by getting the company positive press, increasing employee morale, helping the company attract better workers, or lobbying for regulations and tax benefits that benefit the company at the expense of the general public. But presumably Walmart’s management has a better handle on the likely effect of unionization on profits than pro-union activists do. Corporate management can be phenomenally incompetent, as we’ve recently seen in the banking industry, but Walmart’s phenomenal success suggests their management is very good at what they do.

    Walmart is subsidized by taxpayers. They pay their workers so poorly that many of them find it necessary to seek public assistance. Enormous profits for shareholders at expense of EVERYONE ELSE is a disgrace, no matter how profitable it may be. Free hand of the market my ass.

    The reasons for the failures of Citigroup etc. are complex, to be sure, but union organizing is not going to be on that list.

  20. codyb
    March 13, 2009 at 4:41 pm

    manju, it gets messy to try to say ‘this or that is better for everyone because it is better for the majority’ because the minorty gets forgotten.

    its true, free market, no unions, all that BS would in THEORY materially benefit more people (though i think a just society is more important than consumer goods, but thats just me) becasue they could buy cheaper stuff.

    but as for people who are barely paid enough to live, do they give a shit if a TVs and other crap is cheaper for the middle and upper class if they are barely making a living?

    “Well, the flaw in your argument Cara, is you’re treating an opinion–that he pro-union legislation is good for the general American public– as if its fact.”

    it may not be best for most people, but i think its more important that people can get decent wages and eat than other people can buy lots more crap.

  21. Lynn
    March 13, 2009 at 5:46 pm

    “Walmart is subsidized by taxpayers. They pay their workers so poorly that many of them find it necessary to seek public assistance. Enormous profits for shareholders at expense of EVERYONE ELSE is a disgrace, no matter how profitable it may be. Free hand of the market my ass.”

    Yes. There business model isn’t just to minimize prices by minimizing costs. Its to displace as much cost as possible onto taxpayers.

  22. The Opoponax
    March 13, 2009 at 6:21 pm

    So they must all be tied for title of “biggest retailer in the U.S.,” then? Come on.

    So every retailer that isn’t the biggest is an unprofitable money hole with a bad business model, then? Come on.

    A lot of huge retailers use union labor. And, again, But We Might Possibly Not Be The Biggest Retailer In The U.S. If We Unionized isn’t really much of an argument. Boo fricking hoo. Could you show me where it says in the Constitution (or any other Founding document) that the entire country should be run according to policies that are convenient for Walmart?

  23. Tom Foolery
    March 13, 2009 at 9:14 pm

    ould you show me where it says in the Constitution (or any other Founding document) that the entire country should be run according to policies that are convenient for Walmart?

    Nice straw man you’ve got, there.

    A lot of huge retailers use union labor. And, again, But We Might Possibly Not Be The Biggest Retailer In The U.S. If We Unionized isn’t really much of an argument. Boo fricking hoo.

    And “boo frickin’ hoo” is an argument? Millions of people shop at Walmart for a reason, dude — low prices. But apparently, you know better how to run a multibillion dollar retail business? Cool.

  24. March 14, 2009 at 4:48 am

    So they must all be tied for title of “biggest retailer in the U.S.,” then? Come on.

    So every retailer that isn’t the biggest is an unprofitable money hole with a bad business model, then? Come on.

    A lot of huge retailers use union labor. And, again, But We Might Possibly Not Be The Biggest Retailer In The U.S. If We Unionized isn’t really much of an argument. Boo fricking hoo. Could you show me where it says in the Constitution (or any other Founding document) that the entire country should be run according to policies that are convenient for Walmart?
    Oops…forgot to say great post! Looking forward to your next one.

  25. corwin
    March 14, 2009 at 3:14 pm

    Oppo,
    Most of us who oppose “card check” do so because of the very real possiblilty of intimidation; i.e. getting the shit beaten out of you if your vote is openly available.
    There is a branch of logic , inductive reasoning, which uses examples as a shortcut. To wit:
    General Motors was the largest corporation in the world. And the biggest employer in the US. It is heavily unionized.
    Wal Mart is currently the largest corporation in the world. it is the biggest employer in the US. It is not unionized.
    Quad erat demonstandum

  26. Skeptic
    March 14, 2009 at 10:34 pm

    Corwin: it’s a little difficult to respond, because you really don’t explain the point you’re trying to make. However:

    There is a branch of logic , inductive reasoning, which uses examples as a shortcut.

    Um, what do you mean? Shortcuts to what?

    Inductive logic is simply reasoning from particular (empirical) cases to general principles. In your example, you’re basically saying “One company is unionized, and was once the largest company in the world, but is no longer; another company, which is NOT unionized, is now the world’s largest.” You don’t actually state the conclusion you’re drawing from that–you just go all QED on us–so I’m left to infer your point; I assume it’s that “Unions caused GM to to lose its status as the world’s largest company; therefore, unions are bad.” (Forgive me if I’m putting words in your mouth here, but otherwise, what WAS your point?)

    First: the UAW was recognized by GM in 1937. If unions are responsible for GM’s not being the biggest company in the world, how is it that it became the largest company in the world while it was unionized? Perhaps the explanation of GM’s history is a little more complicated than you’re making out?

    Second: I would much rather have a company that was not the world’s largest, but which paid its workers a living wage, over a company like WalMart, which pays its workers so poorly that many of them are forced to go on public assistance to survive. Yes: paying workers reasonable wages would probably force WalMart to raise its prices. But I’d rather see us pay our workers more generously so they could afford Walmart’s goods at higher prices, instead of saying that we have to keep wages down because folks otherwise won’t be able to afford to buy stuff because they don’t make enough money. WalMart is part of a larger problem here, of course, but its practices are some of the most egregious, and I would argue some of the most costly to our society as a whole.

    Finally, viz-a-viz your first statement about card check: you say that you oppose the EFCA because you’re worried about workers getting intimidated. Do you honestly think they’re not getting intimicated already? By folks who are systematically opposed to their interests? Because, you know, they are. That is the point of the legislation. If you’re not convinced, take a look at how WalMart and lots of other companies handle union organizers.

    Frankly, I’m a little skeptical that James Hoffa is going to show up and beat the shit out of me (really? I mean, “getting the shit beaten out of you?”) if I vote against a union. I’m a lot less afraid of that than I would be of getting fired me if I were trying to organize a union in a currently non-union shop.

  27. CTD
    March 16, 2009 at 10:37 am

    Um, nowhere does the linked article demonstrate that TARP funds where used to “lobby against workers rights.”

    As has been pointed out before, a Citi retail analyst gave her opinion about the effects of passage of a particular piece of legislation might have on retail profits. That is her job. You might agree or disagree with her opinion, but why should she be prevented from doing her job simply because her employer received TARP money? Or she not allowed to make predictions about the potential economic affect of legislation ever again?

    Oh, and they definitely need to be prevented from doing this:

    Just a few weeks ago, Weinswig gave the Wal-Mart a favorable 9.5 rating out of 10. But now, in a cynical bid to stoke public fears that stronger unions will have an adverse affect on stock values, Citigroup downgraded Wal-Mart’s rating from “Buy” to “Hold.”

    Why? Again, that is her job. She’s employed to giver her opinion on such matters. In her opinion, because of the likely passage of Card Check, widespread unionization would reduce Wal Mart’s profitability and therefore, it’s dividends paid to shareholders. So she downgraded it. That’s neither difficult to understand nor controversial.

    all organizations receiving taxpayer money should be forbidden from commenting/advocating against the cause for which they were given the money.

    I don’t think you have much of an understanding of the purpose of TARP. They weren’t given the money to unionize, to say the least.

    And now, they’re working against the economic interests the general American public — the direct opposite of what they were given the money for.

    1. See above.

    2. Though I believe that TARP and Obama’s never-ending bailouts are against the interests of the general public, I don’t think that’s what you’re referring to. Unionization is most certainly NOT in the interest of the general public. Unions exist solely to protect the interests of their members. Usually to the detriment of anyone NOT in the union.

    But by all means, let’s turn Wal Mart into GM.

  28. March 16, 2009 at 11:49 am

    Why? Again, that is her job.

    No, it’s not her job to stoke public fears about pending legislation that could help American workers. And if, as is alleged, that is why the rating was lowered, it needs to be prevented.

    I don’t think you have much of an understanding of the purpose of TARP. They weren’t given the money to unionize, to say the least.

    I don’t think you have much of an understanding of anything that has been said here if you think that anyone is making such an argument.

  29. Sailorman
    March 23, 2009 at 9:06 am

    Cara,

    It’s not at all clear that unionizing would help the general public.

    Certainly, it would really help the (very small) proportion of the public who happens to be in the union. Equally certain is that it would really hurt the (very small) proportion of the public who, for whatever reason, would be able to get a non-union job but not a union job.

    But of course, a lot of the public–especially the poor–also shops at WalMart. They receive a benefit from the low prices. So it is unclear whether unionization would raise prices at WalMart, and whether such a raise in prices (if any) would have more or less of a detrimental effect on the public than would the union question.

    You seem to be operating on the assumption that price changes would either not occur or would have no effect, and I don’t think that makes any sense. DO you have any support for that assumption?

    You also seem to be operating on the assumption that unions operate for the common good of the country. That is simply untrue.

    Unions are like any other group, from a all-white country club to the kids in a treehouse: protectionist. They operate for the benefit of their own members, not the country and not the company their members work for. The only way that they take public considerations into account is when the public interest happens to align with the union interest; the only way that they take company considerations into account is what the company interest aligns with the union members’ interests.

    That is as it should be, and is not a condemnation of the union model. But if you think that “union” always means “public benefit” and/or “good” then I think you are looking at it from the wrong perspective.

  30. Sailorman
    March 23, 2009 at 9:11 am

    Oh, BTW, I do sort of agree with you on this:

    Just a few weeks ago, Weinswig gave the Wal-Mart a favorable 9.5 rating out of 10. But now, in a cynical bid to stoke public fears that stronger unions will have an adverse affect on stock values, Citigroup downgraded Wal-Mart’s rating from “Buy” to “Hold.”

    Gaming the system is bad. By “gaming” I mean that the downgrade may not actually be based on a belief that the union will make Wal-Mart’s stock drop, but may be an attempt to make a point unrelated to the putative analysis. If so, they would be releasing a known-false analysis.

    I don’t know if this IS gaming the system, though.

  31. April 22, 2009 at 11:23 am

    Corwin talks about logic, but he makes a major logical error. Without going into the esoteric terminology of logic, here’s his mistake. He argues that the Employee Free Choice Act is bad because it would somehow allow unions to intimidate workers into joining. This is hypothetical, but it also ignores the demonstrated fact that without the Act (i.e. now) employers frequently intimidate workers into voting against the union. Hence the apparent contradiction that poll after poll finds that most American workers would joinn a union if they could, but when it comes to the vote the union loses most of the time. By the way, Corwin also ignores the way union elections work and the way the Act would work in another important way. During an organizing campaign, workers and union staff try to assess the outcome beforehand (so they know how to campaign, or when to pull out, etc.). this involves talking to the workers, trying to get them to sign a poster in favor of the union, for example, or come to a rally, etc. It’s not that hard to tell who the opponents are usually. With the Employee Free Choice Act, the only difference in this respect would be that some workers would not sign the card, so the union would know they hadn’t signed – unless the workers decided to go through an NLRB election, which would still be an option under the Act (Corwin forgot to mention that, too). But rather than looking at facts, the opponents of the Employee Free Choice Act prefer to rely on stereotypes like Corwin’s.

Comments are closed.