Joined by an inflatable banker pig and fat cat, about 700 union members and supporters demonstrated at the M&I Bank shareholder meeting at New York City’s Time Square. The workers were demanding that M&I executives be held accountable for their part in causing the Great Recession and for using taxpayer money to fund right-wing politicians like Gov. Scott Walker of Wisconsin.
“All across the country, we are standing up against the banks that take taxpayer dollars then use it to help elect politicians who attack workers,” said a fire fighter, who traveled from Wisconsin to demonstrate against M&I. He was joined by other Wisconsin public sector workers and members of a number of New York local unions including the Sheet Metal Workers International Association, Transport Workers Union, SEIU, AFSCME, CWA, Teamsters, and others.
M&I is a large regional bank anchored in Milwaukee, Wisconsin. Despite its regional nature, it helped create the banking crisis that led to the Great Recession, which cost millions of workers their jobs, put an enormous strain on state and local treasuries that caused more layoffs and pay cuts, and led to a spate of worker pay cuts and benefit reductions in the private sector.
M&I’s risky investments caused the bank to lose billions of dollars. It was saved from bankruptcy by a bailout from the US government. After receiving the bailout money, executives with M&I donated heavily to the campaign of Gov. Walker, who in turn blamed public sector workers for Wisconsin’s budget shortfall and used this as an excuse to take away their right to bargain collectively.
In 2007, M&I was riding high. It had been a stodgy old bank that came into being before Wisconsin became a state. Management had always adhered to a conservative investment strategy until a new breed, led by CEO Mark Furlong, rose to power. New management began to invest heavily in mortgage-back securities.
The new investment strategy paid off at first. Profits shot up; the bank stock price rose to an all time high of $38 a share. Unfortunately, many of the bank’s mortgage-back securities were based on mortgages in Florida and Arizona, two of the states where the housing bubble burst first and hardest.
The bank was soon left holding a bunch of worthless paper, which ate away profits. M&I lost $2 billion in 2008, $758 million in 2009, and $515 million in 2010. In fact, M&I hasn’t turned a profit in the last 10 quarters, ending the last quarter with a $142 million loss.
The bank’s losses were so heavy that they only thing that kept it afloat was the $1.3 billion bailout money it received from the federal government. In addition to paying for normal operating expenses, the bailout money was used to pay salaries for CEO Furlong and other top executives.
They in turn, used some of their compensation to donate $54,000 to Gov. Walker’s election campaign. Gov. Walker repaid them by deflecting criticism away from them and other bankers and directing it toward teachers, health care workers, and other public sector workers.
While M&I continues to bleed money, its top executives have been fortunate enough to find another bailout partner. M&I was recently bought out by the Montreal-based BMO Harris Bank. The shareholders met in New York to approve the buyout Tuesday. As a result of the buyout, M&I’s top executives will receive golden parachutes worth $71 million. Furlong’s cut will be $18 million, and he gets a new job as head of BMO Harris in Chicago.
Wisconsin labor unions have been urging people with accounts at M&I to close their accounts. Taking the lead was the Wisconsin AFL-CIO which closed its M&I account last week.
Angry union members outside the shareholders’ meeting in New York pretty much summed up the feelings of a lot of people when they chanted, “Banks got bailed out, people got sold out.”