Two Former Leaders of the United Auto Workers Sentenced to Prison for Extorting General Motors

Donny Douglas, 70, of Holly, Michigan, a former United Auto Workers (“UAW”) International Servicing Representative, and Jay Campbell, 70, of Davisburg, Michigan, a former UAW Local 594 Chairman, were both sentenced today to terms of imprisonment United States Attorney Barbara L. McQuade announced. Douglas was sentenced to 18 months in prison, and Campbell was sentenced to 12 months and one day in prison based on their June 2006 convictions following a jury trial.

 

McQuade was joined in the announcement by James Vandenberg, the Special Agent in Charge of the Department of Labor, Office of Investigations–Office of Labor Racketeering and Fraud Investigations and FBI Special Agent in Charge Andrew Arena.

 

Douglas and Campbell stand convicted of conspiring to commit extortion and conspiring to violate the Labor-Management Relations Act. The jury found that Douglas and Campbell had conspired to commit extortion by threatening to extend the 1997 strike at the Pontiac Truck Plant by UAW Local 594 unless General Motors hired two unqualified, non-UAW members who were family members or friends of the defendants as skilled tradesmen. Based on the demands of the defendants and in order to avoid continued significant losses from the strike, General Motors hired Campbell’s son and a former UAW Local 594 President’s son-in-law as journeymen even though neither man was a member of the UAW, worked for General Motors, or was qualified for the position.

 

Previously, in May 2007, the district court had sentenced Douglas and Campbell to terms of probation. These sentences were overturned on appeal before the Court of Appeals for the Sixth Circuit. Today, the district court conducted another sentencing hearing based on the decision of the Sixth Circuit.

 

The case was investigated by agents of the Department of Labor, Office of Inspector General–Office of Labor Racketeering and Fraud Investigations and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys David A. Gardey and Kathleen Moro Nesi.

“Buy American Only?” A Letter From a Concerned Citizen, part 2

By Zach Foster
Responding to a letter from a concerned citizen
Continued from Part 1

Bailouts

This gets me to the subject of bailouts.  The big bailouts that took place in 2008 and 2009 completely outraged the majority of the American people.  These bailouts were also a crime against the free market and against capitalism.  The whole concept of pure, untainted free market capitalism is that a business has to work hard to compete with other businesses and provide its goods and services at the best quality and lowest price.  This is one reason why McDonalds and Taco Bell, who have very low-priced value menus with a wide variety of choices, have done a lot better than other higher-priced fast food chains who have had to close down many locations.  This is also why Borders, who didn’t cater to the consumer demand for e-reader books (Kindle, Nook, iPad, etc.), is going out of business, whereas Barnes and Noble, who did cater to that demand, is still in business, and why Honda and Toyota’s low-priced, superior quality cars are outselling Ford while General Motors had to be bailed out.

Businesses that fail need to be allowed to fail once and for all, which weeds out the bad elements of industry and allows room for new contenders (small and medium-sized businesses or new entrepreneurs) to try their luck at meeting the un-met consumer demands.  When big businesses fail and lay off their workers, these new contenders will be the ones to hire the laid off working people, and if the new blood meets consumer demand, then they will succeed.

Thomas Woods, the author of The Politically Incorrect Guide to American History, wrote a fantastic book called Meltdown, which analyzes the Great Depression, the current recession, and vindicates free market capitalism from the lies of the statists and interventionists.  The truth is that when the federal government bailed out all those failed banks in 08-09, as well as parts of the auto and housing industry, they gave these failed businesses a “second chance” which will only postpone another inevitable collapse.  This is like an angry and heartbroken wife, whose husband was cheating on her, giving that husband a “second chance” in which he doesn’t have to shape up but instead can keep cheating on her until he gets caught again.

The Fed

These bailouts, which only punished the American people and the big and small businesses who were doing the right thing, and rewarded the failure of the businesses who were doing the wrong thing.  These bailouts were financed by the Federal Reserve System, which is a quasi-government organization that is basically in charge of big banks (Wells Fargo, Chase, Citibank, etc.) and financial organizations (AIG, Fannie Mae and Freddie Mac, etc.).  Banks are businesses, not storage lockers for money, and rather than letting these businesses try to figure out how to meet the demands of their clients, the Federal Reserve tells them how much to hold in the vaults, how much to lend, and how much to invest.  The Federal Reserve also has the power to print as much money as it wants, which is obviously bad because the more money that is being printed means inflation goes up.

Before the Federal Reserve, there was a U.S. Central bank which was on a gold standard.  The gold standard means that every paper dollar printed needs to have an actual gold dollar that exists somewhere in a bank.  Gold is real money and paper is just an I.O.U.  This was alright though, because with real gold backing up the I.O.U., people had faith in the paper, and they used it for everyday buying and selling.  Even if the central bank used a fractional gold reserve (for every gold dollar there is, they print two or three or four), there was at least SOMETHING partially backing up the paper money.  Nowadays more and more paper money is printed with nothing to back it up other than the “good credit of the United States.”

When the Federal Reserve was created in 1913 by J.P. Morgan, John Rockefeller, and a few government employees and politicians that were in their pockets, it was created with the intent to expand the money supply (inflation) and bail out particular businesses and industries which Morgan and Rockefeller were conveniently invested in.  The Fed essentially became the new central bank and began to coerce banks into doing whatever it ordered.  It also began printing more and more money to pay for expensive and Unconstitutional government grants, loans, bailouts, and other programs.  It is because of the evils of the Fed that inflation is so high (prices are so high) and the dollar is almost worthless.  The gold standard has been abandoned and the Fed will continue to manipulate banks and financial institutions and kill our dollar.  The only way to reverse this is to reinstate the Gold Standard and abolish the Federal Reserve.

To sum up the above points I made: 1) Government interventions, including those in the form of tariffs, are very bad for business, workers, and the whole economy.  2)  The free market is about competition and consumer sovereignty.  Don’t necessarily buy American—buy what’s best.  3)  Bailouts are anti-capitalistic and the only way to stop this is to bring back the Gold Standard and end the Fed.

The Contender

Finally, in your email to me you mentioned that in all your readings, you found no one with real solutions or sufficient character and a backbone.  I can honestly say to you that there is a hardworking group of people who are engaged in a grass roots effort to support an honest and hardworking man who is painfully aware not only of the REAL problems that are hurting the working class, but of real solutions to those problems.  This man of course is Ron Paul, who is an outspoken Austrian school economist who has been able to pinpoint problems and their remedies.  He is the only Republican contender who has tackled these issues, regardless of how unpopular the truth was, and remained unwavering in his position.  If you’ve heard of him but have found cause to distrust him, I beg you to reconsider and see what he has to say.

He has three very popular books out (among many others he’s written) which have changed the minds of many Americans.  There is The Revolution: A Manifesto, in which he outlines his political platform and uses the Constitution, American and world history, and the guidance of the Founding Fathers to back up his platform.  In the book End the Fed he makes the case and the plan for abolishing the Federal Reserve System and reviving the value of our hard-earned money.  In his latest book, Liberty Defined, he provides ideas for Constitutional solutions to various political, fiscal, and social ills that are plaguing our society.  I certainly hope my short explanation provided you with some meaningful answers, or at least provoked your thinking and ore beliefs.  I truly hope you also take into consideration the reading I recommended to you, which surely changed my thinking and strengthened my beliefs.  God be with you, my friend.

The above image used is in the public domain and was obtained from Wikimedia Commons.

Geithner Op-Ed: ‘A Rescue Worth Fueling’

WASHINGTON (5/31/2011) – In an Op-ed to be published in the June 1, 2011 edition of The Washington Post, Treasury Secretary Tim Geithner discusses the Obama Administration's successful restructuring of GM and Chrysler.

A rescue worth fueling

By Timothy Geithner

On June 1, 2009, General Motors filed for bankruptcy, backed by $30 billion in support from the federal government. The same day, in the same New York courthouse, a judge approved Chrysler’s plan to forge an alliance with Fiat and emerge from bankruptcy as a restructured business with an uncertain future.

Two years later, all three American automakers have returned to profitability, the industry has added new shifts and 115,000 jobs, and GM and Chrysler have returned more than 50 percent of the government’s investment. The industry is mounting one of the most improbable turnarounds in recent history.

This outcome was anything but assured. In December 2008, the industry faced the prospect of uncontrolled liquidations just as our financial system was reeling from the worst financial crisis since the Great Depression. President George W. Bush provided more than $17 billion in temporary loans to GM and Chrysler to avert that disaster, but those efforts, while important, were not enough. President Obama took office faced with an industry that was burning and had to determine whether additional government support made sense. 

In a series of meetings in early 2009, the administration’s autos team sought to examine an interwoven web of options and to highlight the risks each entailed. The companies needed to make dramatic changes. Years of bad decisions had caused them to progressively lose market share to foreign competitors, and the financial crisis had dried up financing for almost everything, compounding the collapse in demand for vehicles. It was not clear whether there was a responsible way to put taxpayer dollars on the line in a way that helped ensure the companies emerged stronger, not weaker.

The challenges extended beyond GM and Chrysler. The restructuring of these automakers could affect companies throughout the supply chain that employed nearly 400,000 American workers. Ford and other automakers depended on those suppliers, increasing the risk of damage if they liquidated or moved overseas. With the credit markets frozen and no major sources of private financing available, government inaction meant devastating liquidations. Nonetheless, even a federally supported bankruptcy could aggravate the situation by causing car buyers to lose confidence. And the automakers realistically could have taken a long time to emerge from bankruptcy. In the balance hung thousands of auto dealerships nationwide and small businesses in communities with concentrations of auto workers.  It was the uniquely deep linkages between the auto companies and suppliers, dealers and communities that led some experts to estimate that at least 1 million jobs could have been lost if GM and Chrysler went under.

Ultimately, the most difficult decisions centered on Chrysler, which was ailing even more than its larger counterparts and was, we determined, no longer viable as a stand-alone company. The choice was backing Chrysler’s effort to partner with Fiat or letting the company fail. A rich internal debate ensued. Our team presented the president with a range of stark options, including the fact that standing behind Chrysler’s restructuring still gave only a slightly higher than 50 percent chance of long-term success.  

Nothing about the president’s call was popular. It may have been more politically expedient to let Chrysler fail. But the president knew that if Chrysler collapsed, tens of thousands of jobs would have been shed in the near term — a body blow to an economy already on the ropes. 

In return for government support, we demanded tough concessions from Chrysler and from GM — substantially tougher than had been proposed before. They were forced to go through bankruptcy, clean their balance sheets and adopt stringent plans to move toward profitability. We gave the companies enough space to make sound business decisions and push ahead as they would in a private restructuring. That meant sacrifices across the board — from managers, unions, stockholders, creditors and dealers. These investments offered Chrysler and GM a second chance but also helped the workers, communities and suppliers depending on them. 

Today, six years earlier than planned, Chrysler has repaid its outstanding government loans. While it has a long way to go, Chrysler has made enormous strides. Tough decisions, stemming from the restructuring, have helped Chrysler post five consecutive quarters of operating profit. It has announced more than $3 billion in investments in plants and technology since emerging from bankruptcy and is poised to hire back workers.

The story has been similar for GM — and the industry as a whole. The domestic automakers are getting stronger. For the first time since 2004, each has achieved positive quarterly net income.

While it remains unacceptably high, Detroit’s unemployment has fallen nearly one-third over the past two years. The car companies are leading a comeback in American manufacturing. And while we will not get back all of our investments in the industry, we will recover much more than most predicted, and far sooner.

What happens next for Chrysler and GM is up to their executives, managers and workers — just as with any other company. We cannot guarantee their success, and at some point they may stumble. But we’ve given them a better shot. The choice to stop the American automobile industry from unraveling was the right one. 

The writer is secretary of the Treasury.