Next Stop: Zombie Company Lane


Let me see if I follow the chronology correctly here.
1. Bank of America pulls credit lines from Republic Window & Doors, presumably there are profitability reasons attached. Republic Window & Doors is in what might broadly be called the "real estate" market, even the "new construction market" which isn't exactly a massive cash cow at the moment.
2. Republic Window & Doors, seeking to avoid bankruptcy, lays off most of its employees. In doing so they run afoul of state rules requiring 60 days notice, etc.
3. Republic employees stage a sit in.
4. Illinois Governor Rod Blagojevich suggests to Illinois agencies that doing business with Bank of America is a bad idea, on the rationale that since B of A got bailout money, whats the harm in lending to the likes of Republic Window & Door?
So, the price of accepting bailout funds has become the wholesale replacement of traditional credit criteria with political influence criteria when making lending decisions.
I am reminded of Japan. Anyone else?
Given the state of Illinois finances, further, I wonder if Rod isn't doing B of A a favor.
Illinois Governor Suspends Business With Bank Of America [The Huffington Post]