"A rich man's wallet is not the equivalent of a poor man's soapbox."-- Senator Bill Bradley (D-N.J.), after the Senate killed curbs on campaign spending. Foes argued these would abridge free speechEDITED BY LARRY LIGHTReturn to top
TAKE MY JOB, PLEASE!
GIVEN A CHOICE BETWEEN A job and a pink slip, most people would take the job, right? Not employees of First Interstate Bancorp, recently acquired by Wells Fargo. A bunch of them are clamoring to be laid off because the severance packages are so lush.
This is a headache for Wells Fargo, which expects its recent takeover of First Interstate to result in some 7,200 job cuts. In scores of letters and calls to Wells management, employees not on the downsize list stress their poor performances, vacation needs, or desire for a nest egg, says the bank. At least a dozen have obtained legal counsel and are threatening to sue Wells for unfairly doling out severance checks to some, while retaining others.
First Interstate created these rich deals to protect employees from a takeover. That didn't dissuade Wells, which previously expected to pay $270 million in severance--and now says the figure will be much higher. Per person, the outlay is twice as generous as the bank's normal severance package. Wells must offer at least one year's pay for some laid-off managers, and as much as two years' to others, depending on tenure. Lower-ranked salaried employees get four weeks for every year's service.EDITED BY LARRY LIGHT $by By Linda HimelsteinReturn to top
A CRACKABLE NEST EGG?
THE CHORUS OF SKEPTICISM greeting the new 401(k) credit card is deafening. But Banc One's product, which lets you tap your tax-free 401(k) retirement account for day-to-day expenses, has apparently passed regulatory muster.
According to the bank, the Internal Revenue Service has informally told it there won't be any move to squelch the thing. Reason: Banc One will require that cardholders repay each month's loans within five years, which satisfies the tax code. Beyond that period, any loan from a 401(k) plan is taxed. Also, says tax attorney Mark Wintner of Stroock & Stroock & Lavan, there are no legal restrictions on what a 401(k) loan must be used for. The IRS won't comment.
The Columbus (Ohio) superregional bank aims to test-market the card this fall. Critics say that card borrowing is for short-term consumer needs, which is anathema to long-term retirement planning. Stephen Brobeck, executive director of the Consumer Federation of America, warns that 401(k) accounts may end up depleted. "Businesses have a responsibility not to market dangerous products."EDITED BY LARRY LIGHT $by By Mike McNameeReturn to top
ON THE MARCH AGAIN IN GDANSK
THE GDANSK SHIPYARD, birthplace of the Solidarity movement, is a hot issue for Poland's government, led by ex-Communists. President Aleksander Kwasniewski, who heads the Democratic Left Alliance party (SLD), has forced the operation to file for bankruptcy. Irony: These former Marxists point to other restructured Polish shipyards as models--because they are profitable.
The government, which owns 60% of the ailing shipyard, has made 5,000 Gdansk workers take a two-month leave. Now, the shipyard loses up to $7 million per ship. Hoping to show Western lenders it's serious about free-market reforms, the government wants to ax Gdansk's subsidies and lease it to a company that will pare the workforce by two-thirds.
The Solidarity union, an opponent of the SLD and any layoffs, views the yard closing as political revenge. It organized a large worker march in Warsaw to protest the bankruptcy. During the presidency of Solidarity founder Lech Walesa, ousted by Kwasniewski in last December's election, subsidies were copious to Gdansk and other money-losers.EDITED BY LARRY LIGHT $by By Peggy SimpsonReturn to top