Knowing that firefighters in England and Wales were striking over pensions and higher retirement ages, I mentioned that that was something you didn't see in the United States. "Red flu" notwithstanding, striking is typically prohibited by the firefighters' contract, state law or both.
This is because fire and police are seen as essential services for public safety and wellbeing. That was the argument President Reagan made in 1981 when he fired striking air traffic controllers.
It wasn't until after I left my new Welsh friends that I saw this argument from a different point of view.
Enter the story of a small, financially strapped volunteer fire department, a 1981 aerial unit and a bank holding the note on that aerial.
The West Newton Volunteer Fire Company is about 30 miles outside Pittsburgh. The department borrowed $55,000 from Commercial Bank & Trust of PA to buy the 1981 aerial.
The fire company defaulted on its loan; the bank repossessed the aerial in August and sold it at auction. But the truck, in disrepair due to lack of funds, didn't fetch enough at auction to cover the balance of the loan.
The language of the loan agreement holds the fire company liable for the full amount of the loan. And the bank has taken it to court to recoup that money and any legal fees that may come from doing so.
Yes, the fire company probably could have handled this situation better so that it didn't come to this. And yes, the bank is well within its rights to go after the additional money — but just because you can do something doesn't mean that you should do it.
And that's where my conversation with the fellows from Wales comes into play. Isn't it reasonable to apply the same logic that prohibits firefighters from striking to something like apparatus repossession?
I think it is very reasonable to claim that a piece of apparatus is vital to public wellbeing and that a bank should have no more right to pluck one from service than should a union be able to pull its members from service.
There will probably never be laws that regulate apparatus repossession the way they regulate striking emergency workers. More importantly, if banks put the needs of their communities before those of their shareholders, there would be no need for such laws.
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Dusty PandaSunday, October 13, 2013 12:05:53 PMThe bank's "share holders" are it's depositing customers. If they give away the money of the customers by not collecting debts, they go out of business. It's pretty simple.
Alan W. RoseSunday, October 13, 2013 12:09:28 PMIf banks could not get that collateral on their loans, there would be no loans for new fire trucks. We have no right to expect that a bank would fund a new fire truck. This is an essential function of government.
Several years ago I was aware of a similar situation. A local bank held the titles to certain vehicles that were owned by a local ambulance manufacturer. The manufacturer sold a rescue truck to a local fire department, however the bank still held the title to the chassis. This was later found to be a common practice of the manufacturer, but we never found out if the banker was complicit. When the manufacturer defaulted on his loan, the bank moved to repossess the completed and delivered, and paid for, rescue truck. Eventually the loan was satisfied by a special DMV fund that existed to settle such matters, but the fire department came very close to having a bought and paid apparatus seized and sold due to the fraudulent actions of the manufacturer regarding it's chassis. The manufacturer went out of business soon after.
Jim CarleySunday, October 13, 2013 12:21:23 PMmost banks can write off items on public safety for tax purposes
Dusty PandaSunday, October 13, 2013 12:23:37 PMA write off MIGHT recoup ten percent of the loss. They shouldn't let the fire dept steal from the bank's depositors because they can recoup a tiny portion of the loss.
Christina ByrdSunday, October 13, 2013 12:26:09 PMWhile I agree in an ideal world this wouldn't happen I also do see the banks side. We can't take emotion and ideology into account. They made an agreement with the bank to payback the money with interest. One way or another it had to be paid back. Rather than blaiming the bank why aren't you throwing the county and city governments under the bus as well. At what point did they step in and help with payments?
Timothy AllardSunday, October 13, 2013 12:27:35 PMObviously without all the facts involved it is hard to make a accurate opinion on this matter, but I think that actions like this are a sad sign of the times. This would have never happened in this country 25-30 years ago because the guy that ran the bank was your neighbor and also was a member of your community. Now most employees are just pawns doing the deeds of a much larger beast. Hence all the issues facing our vets and the public memorials.
Al HimmelrightSunday, October 13, 2013 12:30:34 PMIf the aerial was in such disrepair then it probably wasn't being used. So it was already a disaster for the Vol. Dept., but the bank should have just taken what it could get and be done with it.
Christina ByrdSunday, October 13, 2013 12:32:40 PMThat's business. A write off depends on the pay off differential. Also what attitude did the department have? Were they working with the bank? This isn't a cut and dry issue. There are a lot of factors we do not know.
Kim MortonSunday, October 13, 2013 12:33:32 PMOne has to wonder where the council or whatever governing body has been hiding throughout all this.
Ben ParsleySunday, October 13, 2013 12:36:58 PMI read the discussion about how the band should do better. There is a lot more to this story than is told. When my department buys anything new, We always make sure we budget for it until it is paid. Including necessary repairs. It seems that our government, and that is from the local to federal levels, think they can spend without responsibility. Sounds like there is a lot of it here in this situation.
Dusty PandaSunday, October 13, 2013 12:39:06 PMI have accounts at multiple banks and credit unions (small business owner) and if I ever found out that one of them wrote off that much money without making an effort to recoup it, they'd lose all my business, and that of several other business owners I know. Enough to hurt the banks.
Kevin CoughlinSunday, October 13, 2013 12:47:00 PM@Dusty the depositors are not share holders unless the bank is really a credit union. Some depositors might hold shares in the bank, but they don't have to be depositors to own shares. That being said...The fire company really put itself into a jam by not being able to repay the debt. Sounds like the rig wasn't well maintained also. The issue is "public policy" in that the bank have every legal right to take possession, sell ans sue for the remaining unpaid balance. The bank apparently has answered the question of public policy by saying the bank's interest in collecting the balance of the loan outweighs the public's interest in adequate fire protection for that community. A cold- hearted decision? Maybe. I hope that the bank proceeded with all due diligence trying to work with the fire company before repossessing the truck. The bank could write-off the remaining balance but it seems the bank has a different agenda.
Bill PolenSunday, October 13, 2013 1:15:37 PMIf a banker was not allowed to reposes whatever was pledged as security for the loan there could be no loans. It would be illegal to loan without some type of security under Federal law. The banker could also be sued by the bank stockholders for not fulfilling his fiduciary duty. It's just like home loans - the more restrictions on foreclosure - the harder it is to get a loan. Texas is a good example - it's almost impossible to get a home equity loan - because of Texas homestead law. Even in bankruptcy the home equity in Texas is protected. At one time Texans in financial trouble would borrow all they could and put it into buying a mult-million dollar home the declare bankruptcy keeping all the equity in his home. The former governor Conley did it.
I once had a banker the worst loan to make was to a church or preacher - both sometimes think it will all work out and fail to plan realistically - and the community looks down on the banker if he foreclose.
Gary C MillerSunday, October 13, 2013 1:18:47 PMFirst off, why did this department purchase a 1981 aerial? Was it to boost call volume? If so that's a lame excuse for making such a purchase as appears that they never had an aerial prior to this purchase. I am not too far from the mentioned department and unfortunately this is an all too common practice in our area. Not too long ago a neighboring department obtained financing for a 1972 GMC air truck in hopes of using it to boost call volume. It replaced a second due 1987 Ford F750 engine, where's the logic in that? I never could understand why a department would want to purchase someone else's garbage, after all if it's for sale there's a reason behind it or the current owner would be running it until the wheels fell off.
Although Pennsylvania municipalities are required to provide their own fire coverage I'm guessing this isn't a municipality funded department as most municipalities around here are pretty tight with every dollar they spend and never would have approved such a purchase. The bank on the other hand is just as much to blame for financing a 33 year old apparatus. It would appear that this company has a difficult time managing funds or raising funds if they can't handle a $55,000 loan. The few banks that I have heard of financing apparatus have provided 30-40 year loans, which in this case works out to a payment between $115-$153/month. If a department can't swing that then they have no business buying apparatus, and in turn the bank should have assured that the department could make the payments prior to approving the loan.
Tommy LaFolletteSunday, October 13, 2013 1:19:17 PMApples and oranges!!! The union calling for a strike just because it's demands are not met during negotiations is much different than than not paying your bills. It's not illiegal to quit your job if they stop paying you for your work... But once you have a contract you should honor your agreements.... And the fire dept didn't keep there end of the deal!!!
I guess every manufacturer should just give there equipment to public service proffesionals and all fire,police, and Ems should do it for free because it's our civil responsability?
John BertiSunday, October 13, 2013 2:11:26 PMWow, based on your logic of not buying "anyone else's garbage" we would be selling a lot of chickens to pay for a million dollar ladder truck. Most volunteer departments get limited support, we're better than average and still have to do a ton of fundraisers. At least we're lucky enough to afford someone else's cast offs.....
Gary C MillerSunday, October 13, 2013 2:41:04 PMJohn Berti , I understand where you're coming from on this. My point I was trying to get across was why would a department purchase such an old piece, my theory is that it's 33 years old how much useful life does it have left? On the same token did this department do it's homework? For instance here's a 96' Pierce 105' aerial for the cost of the above apparatus that I found after a 5 second search http://www.fentonfire.com/ladders_and_quints/listing.php?lid=4551 Is this a good purchase? Maybe, maybe not but hey it's already 15 years newer and that's a good start. It just seems to me that sometimes some departments don't use good common sense. I realize that not all departments can afford new and some can barely afford to maintain what they have. I've been there, I took a department with a $7,000/year budget to two new apparatus bought and paid for. It takes work and effort to make it happen and when you reach that point you need to be smart about what you do with those funds. By all means I applaud any service who tries to better the product they deliver but there has to be a point when we say "Is this our best option or do we need to work a little harder and go for something better?" All too often this isn't the case.....
Paul R Tate JrSunday, October 13, 2013 6:23:38 PMSorry...but if they couldn't afford it they shouldn't have purchased it. Poor financial plannig by the FD does not mean the bank is the bad guys.
Karl GrothMonday, October 14, 2013 4:29:10 AM"This is because fire and police are seen as essential services for public safety and wellbeing. That was the argument President Reagan made in 1981 when he fired striking air traffic controllers."
Actually in many states they legally can't strike, but, are legally entitled to binding arbitration when it comes to contract issues.
As far as reprocessing the truck is concerned the lender should have the right to do so. It is ridiculous to think a department could buy a truck, default on the payments and then cry public safety and not lose that equipment. No company would ever sell a department a truck if that was allowed.
I am pretty sure the truck itself in the example you gave was more of a safety issue than not having it. That said, if you are buying the equipment you better have long term funding plans in place to pay for the loan. Your example sounds like a department/government that needs better managers.
Eric HackettMonday, October 14, 2013 7:53:58 PMKind of funny that you mention the "red flu" in this article, with the red flu being firefighters calling in "sick" to further strain the system to get their demands met. Then you go on to say "but just because you can do something doesn't mean that you should do it". Pretty hypocritical, don't you think? I'm sorry they lost their aerial but they new the terms of the loan.