Cerberus Plots To Eliminate Health Care

Elaine Meinel Supkis

Cerberus is my icon for all evil hedge funds. Today, we learn they are truly evil and want to kill their employees rather than follow the law. This deadly organization of para-pirates let go of most of the Aegis employees but first cut their health insurance in the hopes that then, the employees could not use COBRA which allows them to continue to be covered while they look for work! I say, all these hedge funds should be regulated by law and the laws protecting workers should be strengthened. Another large group joins the 50 million uninsured!

From CNN:

Buyout firms like to present themselves as a can't-fail combination of operational genius and financial support that can heal sick businesses and create thriving companies. But sometimes, as in the case of Aegis Mortgage, genius fails and bankruptcy is declared. The private investment firm Cerberus bought a controlling stake in the Houston-based mortgage lender in 1998, but despite an infusion of cash and talent, Aegis ceased operations on Monday, August 6. Now hundreds of employees have been laid off - all without health insurance. It's a reminder that risky turnarounds can mean real pain for more than just investors raising questions about how Cerberus will treat other ailing companies it has purchased, notably Chrysler.

Chrysler is doomed. The UAW is doomed. This is what happens when the rank and file line up to vote for Republicans. Time to examine yet another bankruptcy and to harp on my other theme here: America's refusal to deal with health care and the uninsured.

All these following comments are letters from the former President of Aegis and some employees, sent to Fortune Magazine:

Rick Thompson

Last week, on Monday, August 6, Cerberus closed Aegis Mortgage’s production operations triggering widespread layoffs without 60 days notice or payment of severance. Aegis announced later in the week that its health insurance plan would be cancelled effective at midnight on Friday, August 10, terminating coverage for all employees and former employees covered under COBRA. Immediately thereafter, Aegis filed bankruptcy under Chapter 11 in Delaware. Madeleine, L.L.C. (an affiliate of Cerberus) will seek to recover its subordinated loan to Aegis through these proceedings. The money Aegis saves by not paying severance and cancelling health insurance should increase Madeleine’s recovery under its subordinated loan.
*snip*
I started Aegis with two partners in 1993 and left the company in October 2006 at the request of Cerberus. At the time of my departure, Aegis had $361 million of capital and loan-related reserves. I was confident in the continued success of the company.

As a founder of Aegis, one of our stated corporate values was “to always do the right thing.” My purpose in bringing these facts to light is to publicly ask both Cerberus and Aegis “to do the right thing” in this difficult situation. The right thing is to reinstate the company’s health insurance policy for the thousands of families affected by their actions last week, and to reverse their non-payment of severance for those whose employment was terminated.

I knew these new entities were hell creatures. Vultures and hyenas ripping up companies in order to fill their bellies. Unbridled greed cojoined to ruthless brutal self-centered 'me-me-me all the time.' In other words, inhuman men and women made a deal with the Devil who is Death and it told them it would make them fabulously rich---all they had to do was destroy the lives of thousands of people. I am not made of such stern stuff that I could cheerfully go off and kill lots of people just so I can buy a Masseratti and then lose it at the pound.

Corporate America hates laws. They want anarchy where they can float above nations, float above everything and have no responsibilities, pay no taxes and run things their own way and if this requires chopping up humans and selling them as Soylent Green ™, so be it! Cerberus just took over Chrysler and installed an incompetent idiot who nearly destroyed Home Depot. He also drained it of $300 million in cash and this shows, badly. The stores look as run down and are as badly stocked as Walmart stores.

Cerebus has only one plan for Chrysler: dismembering it and selling off all the parts. Their action at Aegis shows how they are trying to fine-tune how to evade the law and their responsibilities. They cut everyone's health care 2 days before declaring bankruptcy and this way, they thought they were within the law and didn't need to follow the COBRA (emergency health coverage) laws! This heartless act was done so the gangsters running Cerebus could boast to their investors, 'We make MONEY!' Increasingly, the movie, Soylent Green, looks less like fiction and more like our future.

Posted By former Aegis Employee, Sacramento, CA : August 21, 2007 2:57 am

If the law states that the company does not have to provide COBRA eligibility as long as the company has no benefit plan in place at the time they file for bankruptcy, what happens if the benefit plan is truly in place? Word has it, that the benefit plan is still in place and that Aegis may not have been entirely truthful regarding the status of their healthcare plan at the time they filed for BK.

All Aegis formr/current employees should call their health insurance provider and just double check whether or not their plan is still active. I did, and sure enough, the insurance company showed that the policy was still in effect and that they had no “end date” as of yet. My former coworkers all state the same. We were all let go on the 7th and told benefits would be terminated at midnight on August 10th. They filed BK on the 13th and stated at that time that there was no benefit plan in place. Why are they lying? As of this morning, the 20th, benefit plan was still in force.

My husband and I went through some bankruptcies. I posted at Fortune Magazine, how these poor people can protect themselves from hell hound predators: they must form an association and then put together money in an account run by the team of lawyers they hire and then SUE. Yes, it will cost some money but they can win! We won! Our association went to court and two years later, we all got thousands of dollars. Also, if the employees band together, they can help each other through the change over, psychologically and physically. When we went through this horror ourselves, keeping everyone sane was an important part of recovery. My husband was psychologically very hurt by the bankrupty because he was moving up rapidly on the corporate ladder when it was kicked out from under him in a bad credit crunch. Few people remember when credit suddenly became very expensive and interest rates rose above 10%!

Posted By Current Aegis Employee , Houston, TX : August 20, 2007 2:53 pm

I still work for what is left of Aegis in Houston, TX. No, I am NOT a socialist, but I would like to have health insurance like I did just 10 days ago. If I get sick, then the meager savings I have will be eaten up in no time flat.

Loss of income and then loss of health: the two go together. The stress of losing a job, the stress of hunting for a job, the stress of bill collectors, all this leads to psychological and physical problems. My heart goes out to everyone. But then, there is also a responsibility here to do the right thing all the time. The headquarters of this organization, Aegis, is in Texas. We all know what Texans wanted, the vast majority of them handed their state to the Bush clan long ago and enthusiastically supported him as he took over the US even after not winning a popular election. Texas whooped it up and corporate Texas gave money for this take over.

And they got their darling little tax cuts and all the other goodies. They didn't want the government to interfere with everything they wanted to do and now we are in a huge mess: the entire economic system, run deep in the red, is now falling off the cliff. Texans must understand, they created this problem. When the stock market stumbled in 2000, this was no big deal. The anxiety to keep the money flowing into corporate coffers meant the government cut their taxes and then spent like crazy, we quadrupled our national debt, we quadrupled our trade deficit and Greenspan gave away money like a mad man, dropping rates to 1%. This, too, was applauded by Texans who whooped it up even more drunkenly.

We Americans have a responsibility to look to the future, plan ahead and not spend like drunks at a bar after midnight. This sort of sober care can't be done individually, it is a collective matter. Years and years ago, some of us have demanded a national health care system like in Germany. I lived under that system and know it well. I loved it.

Back here, it is hellishly hard, getting good health care. Only if you have good insurance, can you get it. I have insurance, luckily, part of our court settlement when my husband's health was ruined by poisons at work (a long story). But even though I have health insurance, it infuriates me that other people don't have it. My son lost his when he finished school and went to work. Now he is getting it back. I was terrified the whole time he was in that 'no health care' zone.

When will reality set in? The employees of Aegis shouldn't have to worry about health care. It should be a given! But this means Texans will have to pay TAXES. They must grow up and take responsibility for themselves. I have argued for years with people like many Texans who imagine they will be healthy forever and who want to have fun with money rather then use it wisely. And how does Europe pay for health care?

Through taxing GASOLINE. The US has abused cheap gas for a century now. All our competitors are killing us in trade because they can sell cheaper since the cost of health care isn't eating into their profit margins and they have healthier workers who live longer, to boot! And on top of this, they don't import oceans of oil which helps their bottom line so they don't run huge trade deficits! My god! How simple is this? Can Texans figure this out before they all die?

From Yahoo:

Garcia said the workers were not searched, handcuffed or detained by the officers, but that the way they were handled merits their kidnapping claim.

"Capt. Tillman told us that we had two options: that either we go back to work ... or be detained," he said.

Patricia Ice, an attorney for the Mississippi Immigrants Rights Alliance, acknowledged that the men were in violation of their visa agreement by leaving the original employer. But the company had violated agreements with the workers, she said.

The workers, all from Veracruz, Mexico, said they paid a recruiter between $1,500 and $2,000 to come to the U.S., expecting to make $16.50 an hour. Instead, they said Southwest Shipyards paid them $14 an hour, of which they only kept $12 an hour after transportation and living expenses were deducted.

What the hell is going on? Again, in the slave states of the Deep South, they are importing workers to work at double the minimum wage? Where are the Americans? All over the world, we bring in 'guest workers' whose sole function is to cut wages, prevent unionization and eliminate taxes and welfare! The desire for cheap labor with no health care is destroying our social fabric here. Our cities teem with unemployed people who can't find work but we get a flood of aliens paying money to come here to do the jobs our own should be doing? Our nation has to decide if it is a nation or if it is a way-station to some other place. The Deep South is very big on flag waving and are the first to drop the flag, piss on it and run off to alien places to replace American patriots who want better pay!

Now onto the business of that remarkable announcement put forth just yesterday when the top four banks in the US made this stupid statement that they discovered the Federal Reserve LENDS MONEY! Whoo hoo. And is willing to lend, is anxious to lend and wants to lend (to paraphrase from Liza's drunken father in 'My Fair Lady'). This bizarre Wall Street guerrila theater is pure monkey business.

From Market Watch:

The decision by four money center banks to tap the Federal Reserve for $2 billion to pry open the lending spigots of the U.S. financial system was seen in some quarters Wednesday as a turning point in the four-week old credit crisis.

It was. But unfortunately the point turned from denial to full-fledged fear.
*snip*
That this was coordinated by the Fed was pretty much proven by Citi's canned statement to the press, which stated that "Citi is pleased to inject liquidity into the financial system during times of markets stress and to support creditworthy clients."

That it was needed by the financial markets, and desperate corporate borrowers, can also not be denied. The commercial paper market had essentially been shut for the past several days, so kudos to the banks for stepping up, even if it was also in their own greedy self-interest.

But if anyone thinks this ends the credit crisis, then I've got a two-bedroom condo in Florida I'd like to sell them.

Why 'kudos' for banks taking on more loans they can't afford? This is beyond dumb. Banks are supposed to be collecting...hold onto your hats, everyone....SAVINGS! Oh, jeeze. Yes, savings. The thing Americans ceased doing after Greenspan lowered rates to 1%. Savings is the foundation of banking and if banks have to go to the Federal Reserve to pick up $2 billion to deposit in their banks, this is a VERY BAD SIGN. All these clowns have to do is offer decent savings rates and not lend money cheaply. Then savings will flourish and lending will shrink!

We went through a phase where money was lent with increasing abandon and now we are lost in the woods. We can't get out unless we follow the trail of crumbs we left on this journey through the woods but the birds ate the crumbs and we are lost. So what does the government and its private Federal Reserve do?

It builds a gingerbread house! 'Come, little banking children, come into my housie,' cackles the friendly Bankruptcy Witch. The bankers nibble and nibble like little mousies and suddenly are addicted to this loan stuff rather than seeking savers and taking care of them.

Down the hatch. The Witch loves soylent green. She is a cannibal. And so it goes: we are cannibalizing our economic system and that news is bad news for it shows that they have all decided to shaft the savers and destroy savings via...INFLATION. Thanks, guys. I really appreciate this and will probably retaliate. Look at gold to go up in value.

From Bloomberg:

The yen fell the most in three years against the euro as stocks rallied, giving traders confidence to buy riskier assets by borrowing in the Japanese currency.

Investors sold yen and bought the higher-yielding Australian and New Zealand dollars, which rose around 3 percent versus Japan's currency. Stocks in Europe and Asia advanced, while U.S. index futures climbed, encouraging the carry trades. The Bank of Japan kept its benchmark rate at 0.5 percent, the lowest among major economies.

``Equity markets have stabilized and riskier assets are gaining renewed support,'' said Ian Stannard, a currency strategist at BNP Paribas SA in London. ``The yen is back under pressure.''

Welcome to the status quo that caused the banking crisis in the first place. We had three warning shots this year. End of February and middle of July and then two weeks ago. Instead of fixing what is wrong, all the efforts have been to restart the very system that is destroying us Talk about insane! Depressions are not fun. This is when savers vanish entirely! We can't afford to do this. Inflation a la 1970's is insane. We already know how to avoid confiscation of our savings: buy gold. The scheme to stop this defense by selling off all gold reserves will work only for a while for gold is not infinite unlike fiat dollars and euros. It is quite physical!

And thus, when we discover limits to our spending, that will end the entire global economic system. Talk about stupid. Avoiding this should be started today. But the path to the gingerbread house is so inviting.

From the Nikkei:

Fukui Sounds Bit Hawkish Despite No Rate Move

TOKYO (Dow Jones)--The Bank of Japan's governor cautioned Thursday that the central bank can't wait for all conditions to be met before lifting interest rates, suggesting he wants to move quickly on a policy change in spite of a global financial crisis.
****************************************
Stocks: Nikkei Jumps On Higher U.S. Stocks, Yen's Fall

TOKYO (Kyodo)--Tokyo stocks rose sharply Thursday, driving the Nikkei index more than 400 points higher as investors stepped up buying of a broad range of shares following strong gains in U.S. shares overnight and the depreciation of the yen against other major currencies.
***************************************
Market Instability Keeps BOJ From Raising Key Interest Rate

TOKYO (Nikkei)--The Bank of Japan decided at a policy board meeting Thursday to put its plans for an interest rate hike on hold, maintaining its target rate for unsecured overnight call money around 0.5%. **************************************

The Japanese are still playing the 'weak yen' game. Note that the weaker the yen, the stronger their economy. This should be obvious to everyone by now. Even the Japanese admit this within their own headlines. The need to keep this system going is important to them. But the counter forces are also at work. Many things hidden from view are pressing against this goofy system that benefits Toyota so much. There is rising rage in China, the dragon is now making its moves. The world just spent half a trillion on resetting this destructive system and making it run further. This was a tremendous price to pay for a system that will push Europe into a depression (no inflation, job losses and a strong currency), push the US into hyper-inflation and cause the entire world's trade to go into a global recession from hell.

I will discuss the developments in China and India at the Diplomacy web page. This is highly important to what is going on in the economic realm.

Culture of Life News Main Page

Comments

[teddy]

I see that Japan is yearning for a weaker yen to carry on their carry trade. Overnite, the yen is down over 1% and the Nikkei up over 2.5%. The games that people play!

[Elaine Meinel Supkis]

It is now painfully obvious, yes. Just two weeks ago, the Bank of Japan claimed they didn't manipulate the currency.

[Tom Noonan]

There is a slight problem. Take a mortgage lender which will be nameless. Now the fellow that starts this company has to know how to set it up, and probably employs some lawyers to help him with this; and probably has some rich guy who provides him with some seed money. He probably garners some investors and clients initially from some community organization with which he and the rich guy are associated; and the local and then national newspapers print favourable articles about it if it takes off. What I am getting at is that the mortgage company is backed by a pretty extensive conspiracy that is quite legal.

Then we have the private equity company which is a fund of superannuation contributions which are compulsorily garnered from serious professional earners, or perhaps just anyone, even poorly documented casuals. Anyway this company gets the tick from the government, and is also quite legal, and well lawyered.

Then the private equity swallows the mortgager, and one feeling victimised gets a lawyer who is less than six degrees of separation from the lawyers of the first and second parties. It's a mess. One can with patience wait a long time and see the rich guy make terrible investment decisions, or sometimes just become disgusting and lack credibility.

The truth is that life, that is the biosphere of which we are a part, is simply evil at its core. If you are a rural person then you would know this.

[blues]

Gosh, Tom. What about God's nefarious plan?

[krn]

What is the "Diplomacy Web Page"?

[Elaine Meinel Supkis]

http://elainemeinelsupkis.typepad.com/diplomacy/

This web page has many elements within it and one is the 'Diplomacy' page. Money is intimate with diplomacy. 99% of the articles talking about free trade and our financial prospects leave out this key element. There is little to no context. Not to mention, history missing.

As for 'evil to the core'---money is connected with this and it is called 'greed' and the 'greed is good' philosophy we have lived under for quite a while is most dangerous as we can plainly see today.

Farmers, as always, are just as corrupted if not more, by all this. Note the disaster modern farming has become.

[D. F. Facti]

The Aegis people need to get to the Department of Labor. As I recall, the sponsoring employer must give 30 days' notice of cancelation of COBRA to those already so covered.. If 15 or more people were already covered under COBRA, then the DOL will look into it. They may have to flie a lawsuit anyway.

Either the buyer or the seller in an acquisition/takeover must assume COBRA liability. It looks like Cerberus has that liability. They can't cancel anyone already covered under COBRA without 30 days' notice unless the insured didn't pay the premium or it wasn't received timely, etc. I am not a lawyer, but that's my recollection.

Now - trying to weasle out of health coverage - - - hmmm - - - I think this may be a gray area. The contract with the insurer undoubtedly continued beyond the tremination date Cerberus used.

How can ANYone defend this obvious swindle?

Sons of bitches.

[Elaine Meinel Supkis]

Thanks for the info, Facti. Really appreciate it. And yes, this is a swindle. And yes, the employees should sue. But suing is hard when one is facing eviction because many Americans have no savings to pull on in bad times. Thanks to banks not seeking savings anymore.

[Dan Dashnaw]

Department of Labor? HAHAHAHA!!! There is no nation on the face of the earth, with the possible exception of Burhma, that has labor laws as toothless as the USA. As a grad student in Labor Studies, I can tell you that breaking labor law isn't even risky. It's SOP.So you lawyer up and sue them. The labor board is full of Bushies who will obstruct you in everyway imaginable. Maybe as the case drags through the courts ( it's all about delllllaying the process), maybe you win. But wait! Unfair labor practice penalties can be mitigated by the earnings the worker has enjoyed after the termination. The longer it takes...the cheaper it is for the offending employer. As Michael Corleone said in the Godfather "It's not personal...it's just business...

[Elaine Meinel Supkis]

We live in NY where we have much better protection than Texans. I would feel sorry for Texans except they are the cause of their own misery. They MUST stop supporting corporate fascism.

[Health Care Insurance]

What are the various types of health insurance programmes that are available to me, and which is best suited to suit the needs of my family and myself? How do I choose the ideal health care plan? What are the major points that one needs to bear in mind while buying Health Care Insurance Policy? http://natural-health-care-information.blogspot.com