With the economy in shambles the last few years, much of the blame has gone to the banking industry. Poor business decisions and bad loans culminated in throwing good money after bad, attempting to keep the house of cards from crashing down. In wake of the banking catastrophe, the United States government was put in a position to either let the banking industry fail, or infuse it with bailout money in an effort to keep the ship afloat.
Popular belief is that the banking industry was the sole beneficiary of this bailout, when in fact, that isn’t true. Many companies took government money during the financial crisis, including Harley Davidson and Verizon. In fact, according to new government disclosures reported in the Washington Post, Verizon took $1.5 billion in government funds during the financial collapse.
If you’ve been following Verizon from when they were known as Bell Atlantic and NYNEX, you will undoubtedly remember that the company has benefited from billions in tax cuts and other subsidies, for obligations that they were able to sidestep, some allegedly of the unethical nature.
What’s so head scratching about the Verizon situation is that CEO Ivan Seidenberg publicly stated that the company didn’t need financial help, and criticized the government for it’s bailout techniques. As a matter of fact, in 2008 Seidenberg was quoted in the Wall Street Journal as saying, “No bailout for me, thanks”, and proclaimed that the telecom industry was not in dire straits like many other business models in the country. These statements along with pop shots at the US government for, “helping create really bad business models”, became a bit curious considering two weeks later that same government loaned Verizon $1.5 billion.
Verizon insists it was a simple short-term loan, in an effort to preempt the funding crisis that has taken place in the financing industry the last four years, not a bailout. The fact remains, Verizon is a company with a long history of manipulating government involvement and funding in the private sector. Bailout dollars were intended to assist companies in industries which, if they went belly up, this country would have seen an economic crisis worse than that of The Great Depression.
How do you feel about Verizon taking bailout dollars as a “short-term loan”? Was it manipulating the system to their benefit or was it greedy move on the part of Big Red?