Left banks with SEIU

Ivan Osorio Editorial Director, CEI
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Some prominent Democratic and progressive groups — including the Democratic National Committee, Democratic Governors Association, and America Votes — are shifting accounts, or at least parts of them, from Bank of America to the union-owned Amalgamated Bank. Politically charged business moves are nothing new. However, news accounts of Amalgamated Bank’s surge in politically conscious deposits have made no mention of its recent history, which includes a bitter struggle over control. As in every power struggle, there were some big winners and some very big losers.

At the center of this drama are the politically powerful Service Employees International Union (SEIU) and its notorious former head, Andy Stern. Amalgamated Bank is controlled by Workers United, a subsidiary of SEIU. SEIU gained jurisdiction over Workers United — and by extension control over Amalgamated — as a result of an ugly, protracted union civil war, which Stern sought to utilize to expand his own union.

Workers United, which joined SEIU on March 23, 2009, broke away from UNITE-HERE, a union representing workers in the hospitality and textile industries. Hospitality and textiles? Yes, UNITE-HERE was a result of the 2004 merger of two unions representing workers in two unrelated industries. The Hotel Employees and Restaurant Employees (HERE) and UNITE (formerly the Union of Needletrades, Industrial and Textile Employees, itself the product of a series of textile worker union mergers) came together in what seemed a mutually beneficial arrangement.

UNITE’s organizing prospects have diminished greatly in recent decades, as U.S. textile producers have shifted labor-intensive production overseas. However, it had its own bank, Amalgamated. HERE, on the other hand, faced better organizing opportunities with service workers. “On paper, the marriage made sense,” noted The New York Times’ Steven Greenhouse in 2009, after the relationship had gone sour. “Unite … had lots of money to organize workers, but few workers left to unionize because so many apparel jobs had moved overseas. At the same time, Here was starved for cash, but saw an ocean of hotel and restaurant workers to unionize.”

However, the merger seemed poorly planned and fragile from the beginning. Rather than create a new leadership structure for the newly merged union, UNITE-HERE adopted what was in effect a dual presidency. Former UNITE President Bruce Raynor became the new union’s president, while former HERE President John Wilhelm became head of UNITE-HERE’s hospitality division.

What happened next is not entirely clear, as it involved internal union politics, but both sides in the dispute did air public grievances. Raynor accused Wilhelm and other board members of undermining his authority under the union’s constitution. He also claimed that the merger had failed, given that organizing was down. Wilhelm claimed that Raynor sought to subvert the board’s decision-making process when it didn’t go his way. But a few events are clear.

A war of words ensued. “We’re not going to allow them to hijack the resources that were put aside by generations of ladies’ and men’s garment workers,” said Raynor, according to The New York Times. “We’ll do whatever we have to do to show that we can’t be held captive by a bunch of thugs.” Wilhelm, in a statement, said: “The merger has not worked for Bruce Raynor because he believes that the Union is his personal property and wants to rule it as an absolute dictatorship.”

On January 30, 2009, then-SEIU head Andy Stern wrote to Raynor and Wilhelm, saying that the merger had failed, and suggesting that they consider merging with SEIU. Raynor took up Stern’s offer. His breakaway faction became Workers United, joining SEIU in March 2009. Under a July 2010 agreement that resolved disputes over assets, Workers United — by then part of SEIU — retained control of Amalgamated Bank. UNITE-HERE got the union’s New York headquarters. But the conflicts weren’t over.

In March 2011, SEIU’s leadership filed internal charges against Bruce Raynor, for allegedly misreporting $2,316.00 in meal expenses. On April 26, 2011, Raynor announced that he would resign the presidency of Workers United and would reimburse the $2,316.00 in order to dispel any doubts about his behavior. After leading one of the biggest fights over union assets in recent years, Bruce Raynor, in a denouement befitting a Greek tragedy, ended up seeing his tenure undone over $2,316.00.

Raynor would remain on the board of Amalgamated Bank, reported Greenhouse at the time. As of this writing, a mere 15 months later, his name is not listed among the board members on the Amalgamated website, and the Workers United website is no longer online.

Now, with the Occupy Wall Street movement setting the trend, moving deposits to Amalgamated has become a leftist cause du jour. For SEIU, business and political influence seem to mix quite well.

Ivan Osorio is editorial director at the Competitive Enterprise Institute.

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Ivan Osorio