SEIU president Andy Stern has been bashing Bank of America - the same bank that gave union big loan
by Juan Gonzalez
Thursday, April 30th 2009, 4:00 AM
For the past few months, Andy Stern, president of the powerful Service Employees International Union, has railed against the government's $45 billion Bank of America bailout.
He has condemned the bank for lavish bonuses, for exploiting millions of mortgage and credit card customers, and for mistreating its low-level workers.
SEIU's Change to Win labor coalition even led a "Just Vote No" shareholder revolt Wednesday at the bank's annual meeting in Charlotte, N.C., at which Ken Lewiswas ousted as bank chairman but kept on as CEO.
But guess what? Despite all the public fanfare, Stern has been quietly doing big business with Bank of America.
Last year, his union borrowed $10 million from the bank, SEIU's financial report shows. That loan brought the union's total debt with Bank of America to $87.7 million.
Ken Lewis, in other words, is SEIU's main creditor.
And that's not the only surprise in the report.
SEIU's other big lender last year - to the tune of $15 million - was Amalgamated Bank. That's the institution owned by UNITE HERE, a rival union that represents clothing, hotel, restaurant and laundry workers.
The Amalgamated loan was issued in September, an SEIU spokeswoman said. It arrived just before a power feud between UNITE HERE's two top leaders, Bruce Raynor and John Wilhelm, erupted into the nastiest labor split in years.
Once it became clear that Wilhelm had leadership support in that dispute, Raynor rushed to rewrite the bank's bylaws in December to assure himself control of Amalgamated's board of directors. He then ousted Wilhelm as a bank director.
Amalgamated is the only union-owned bank in America. It has $500 million in assets, and is often called the crown jewel of the labor movement.
By the time he ousted Wilhelm from the bank board, Raynor was openly working with Andy Stern to convince a third of UNITE HERE's nearly half-million members to secede and affiliate with SEIU.
The UNITE HERE breakaway group calls itself Workers United. Stern spoke at its founding meeting last month. SEIU bankrolled the secession effort and a suit aimed at getting control of Amalgamated.
"Raynor conspired to move money from Amalgamated Bank to SEIU for the purpose of attacking our union with money from our own bank," Wilhelm says.
Last week, UNITE HERE's leadership voted to start suspension proceedings against Raynor, who's still the union's president.
Raynor declined to talk about the Amalgamated Bank loan. SEIU spokeswomanRamona Oliver dismissed Wilhelm's claim.
"We do a lot of business ... with Amalgamated," Oliver said. "There nothing unusual about that $15 million loan."
So why would SEIU, which boasted nearly $250 million in dues income from members last year, even need to take out big loans from Bank of America and Amalgamated Bank? It turns out Stern's organization has been burning through cash.
Last year, the union spent $67 million on "political and lobbying" expenses - twice what it spent in 2007. It sold virtually all of its investments to generate additional cash.
Much of that money went to elect Barack Obama.
"We put all we had on the table to make sure that [Obama's victory] happened," Oliver said.
The union's latest financial report shows SEIU has only $33 million in net assets. That's an average of just $18 for each of its 1.8 million members. UNITE HERE, on the other hand, has more than $200 million - an average of about $568 per member.
SEIU's outstanding loans total $102 million. Its liabilities have skyrocketed to 82% of its assets.
Like the Wall Street banks Stern has rightly criticized, SEIU is spending beyond its means. His solution seems to be a hostile takeover of another union's membership, along with a plan to snatch up labor's only bank.
Ken Lewis should take survival lessons from Andy Stern.