WHAT WE ARE
An Analysis By Chuck Cannon
September 24, 2001
PileDrivers Local 34, Oakland /San Francisco
(The text of this commentary must be circulated to as many union members
as possible)
As those of you who have read my articles know, I have been striving to
expose the truth about the United Brotherhood of Carpenters Union. The
views expressed in those articles, as representing the truth are even
more profound today than when they were originally written. I apologize
for not being able to write in a manner that makes a complicated subject
understandable to all. In this analysis I will attempt to rectify many of
my pervious shortcomings.
I have long despaired that enough of us would ever comprehend what was
really happening to our union. Even our labor lawyers haven't had a clue
to what was really going on. If they had any real clues, they certainly
did not communicate them to us. To understand what is happening to our
union and what is intended to happen to all unions; we have to quit
thinking "union," and start thinking, CORPORATION. Let's discuss what we are.
Of course first of all we are members of a labor union. But, by virtue of
our pension plans we are much, much more than a labor union. Our pension
funds are in reality MUTUAL FUNDS. Money is deposited into an account
established for us in our names to be invested for our benefit and
retirement. Our pension funds do essentially the same thing that mutual
funds do when we buy shares in any commercially established mutual fund
through a stockbroker or directly from the fund itself. The only
difference is in the ready availability of our money to us, and its tax
treatment. And with some types of investments ( 401Ks and other
tax-delayed retirement investments) even this difference does not apply.
In fact, union pension fund participants are denied most of the rights
and privileges afforded regular mutual fund participants, such as monthly
account statements, quarterly investment manager's reports, annual
reports, annual stockholder's meetings, and the right to vote directly
for officers and directors of the fund. We are as dispossessed in this
regard as we are as union members. There is no practical reason for this
exclusion except that the top union officials, pension fund
administrators, and the politicians that they are in cahoots with don't
want to afford timely information or universally accepted investors
rights to union members holding pension fund accounts.
WE WONDER WHY?
In addition to truly being shareholders in mutual funds and
being institutional investors, union pension fund participants are also
members of a very elite club of *MERCHANT BANKERS. Many mutual funds are
in fact merchant banks or function as merchant banks through their
investments in the real estate markets, venture capital investments and
other types of money lending. These facts are certainly bits of
information that the Business Unionism Partners don't want union members
to know or to ever become aware of.
Understanding this one essential truth is the key to understanding what
is happening to the Carpenters Union and what is intended to happen to
other American unions and the unions of other modern industrial nations.
The current chaos is not and never has been about labor issues except the
establishment of dictatorial control over unions and their members is to
assure a quid pro quo1 (something for something). The merchant banking
executives (union officials and pension fund administrators) must provide
extremely favorable labor controls to borrowing entrepreneurs in order to
capture them as clients. In short our top union officials and pension
fund administrators are committed to making sure that union members will
do nothing to seriously harm the profitability of those who have borrowed
from (their) our merchant banks.
We must recognize that the aggregate of pension fund monies constitutes
merchant bank capital2 and that these pension-fund merchant banks are no
different than any other Wall Street Bank or corporate enterprise. They
have the potential to attract corporate raiders who are only interested
in exploitation for profit, just the same as with any other business or
corporation in our economy. We must recognize McCarron for what he is. A
corporate raider whose target is all of labors' pension fund monies.
There are two juicy takeover targets belonging to the AFL-CIO, the
AFL-CIO Building and Investment Trust (net assets 1.244 billion) and the
AFL-CIO Housing Investment Trust (net assets 2.58 billion). Their
combined assets are estimated to total in excess of 3.8 billion dollars.
In 1997 McCarron established his own "Builders fixed Income Fund, Inc."
SEC records list the principal owners as of April 2, 2001 as the
Carpenters' Pension Trust Fund of St. Louis, owned 59.82%. The
Carpenters' Pension Fund of Illinois owned 10.53% and the Building Trades
United Pension Trust Milwaukee and Vicinity, owned 14.55%. A report dated
6/30/01 listed net assets of $206,367,743.00 Can the tiger shark swallow
the blue whale? McCarron is betting that it can in a few big bites.
As for McCarron's Builders Fixed Income fund versus the AFL-CIO's two
bigger trusts, the logic is very simple; if you want to take over a
corporation, position your own corporation to undercut the other guy's
business. Cut his customers a better deal than he can, make his clients
flock to you and when his business stagnates, buy or completely force him
out of business. In McCarron's case guarantee cheaper; trouble free labor
along with the loans to him. This is what McCarron is up to. SIMPLE! Age
old Wall Street takeover tactics, it has nothing to do with labor
principles. Now we know why a union dictatorship is vital to McCarron's plans.
There are tools that are essential to the employment and recycling of the
investment money and assets controlled by the "Business Unionism
Partners." They are the tools provided by the quasi-federal government
corporations3 in its relationship with all big investors and investment
institutions. Consider that the government is the biggest money launderer
in town. Institutions like the AFL-CIO Investment Trusts originate loans
to entrepreneurs. These loans are then sold to quasi-government
institutions like the Government National Mortgage Assn. (GNMA or Ginnie
Mae), The Federal National Mortgage Assn. (FNMA or Fanny Mae), The
Federal Home Mortgage Loan Assn. (FHLMC or Freddie Mac), these loans then
become collateral units by the issuance of bonds secured by mortgages.
These mortgages are ultimately insured by the taxpayers. If there is any
doubt about it, remember the great Savings and Loan debacle of the 1980s
and who paid in the end.
The Investment funds and trusts, outfits like the AFL-CIO's Investment
Trusts and McCarron's Builders fixed Income Fund, or our labor union
pension funds, or ordinary people like you and me who have money to
invest, buy these bonds (instruments) in the investment markets. What are
bought are participations in the larger package. The financial
institutions (merchant banks) actually buy back the loans from the
quasi-government corporations minus the risk. The principal and interest
is paid on these loans by the borrowers to the appropriate agencies. The
interest that is paid on the loans is passed on to the bondholders
(participants) at periodic intervals. As loans are paid off, in some
situations the paid off principal is also passed back to the bondholders
and is deducted from the value of the bond at maturity. In other
situations the bondholder's share of the principal is only returned when
the bond matures. The significance of this exchange is that in the
process of turning the loans into collateral through the issuance of
quasi-government bonds, much of the risk is transferred (laundered) from
the borrower and assumed (ultimately) by the broad spectrum of taxpayers.
This arrangement has worked very well except for the 80s S&L scandal. It
is necessary to mention it here in order to explain how the system works
and how institutions like the AFL-CIO's Investment Trusts and McCarron's
Builders Fixed Income Fund function, and are a part of and work within
the system. It is a very profitable system entailing minimal risk.
There are takeover sharks ever lurking in the financial waters looking
for targets. When a target is sensed they go for it in a feeding frenzy.
However few law-abiding people would see labor unions and their pension
funds as potential takeover targets because of their unique nature and
status under the law. Fewer yet would be in a position to attack, but
McCarron and other 'Business Unionism" sharks have been positioning
themselves for this attack at least since 19944. So what we see here is
strictly business the way it is done every day in the corporate world.
Labor principles and morals don't enter into it. If the end result
happens to amount to a lot of misery for working people, well, that's
just business. The worst news is that the ambitions of McCarron and the
Business Unionism Partners are global5.
What's to be done? Labor lawyers are not effective in this situation;
their discipline has not yielded one clue as to what was going on. But
corporate lawyers and specifically anti-trust lawyers might have had some
effect. McCarron has been the inter-locking director on the boards
linking ULLICO (United Labor Life Insurance Co.), Perini Corp., and PB
Capital Partners. He is also listed as being the President and Chairman,
Inland Empire Hotel Corporation; President, RPS Resort Corporation;
President and Chairman, Santa Nella Hotel Corporation; and President,
THMI Motel Corporation6. He has been on all sides of the market, up down
and sideways.
The nature of the businesses that he is occupied with suggests plenty of
conflict of interests. If, he has used his position as an officer for any
of these companies to benefit from the adverse conditions that he is
imposing upon the members of the Carpenters Union, or if because of the
linkages between corporations self dealing has occurred; an anti-trust
inquiry is warranted and maybe an anti-trust suit if legal grounds can be
found to support it. While labor unions are legally exempt from the
anti-trust statues, commercial corporations and their officers are not
exempt. This is an avenue that should be pursued even if McCarron has
recently perceived his indiscretion and resigned the directorships. The
fact still remains that the restructuring of the Carpenters Union was
carried out while he was an inter-locking director of these named and
maybe other corporations yet to be discovered. If the labor movement and
its unions could rouse themselves from their current stupor, maybe a
class action suit might be initiated. And last, the fight to regain
political control of our unions must continue and grow.
*Merchant bank
A British term for a bank that specializes not in lending its own funds,
but in
providing various financial services such as accepting bills arising out
of trade,
underwriting new issues, and providing advice on acquisitions, mergers,
foreign
exchange, or portfolio management.
Reaching a new plateau_ Why institutional investors should become their
own merchant banks. Peter D. Ashe http://www.assetpub.com/archive/ps/96-02psfeb/feb96PS70.html
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