The UAW Takes Stock
The UAW could become a major player in the stock market. CNNMoney speculates if the union-administered VEBA health care superfund proposed by The Big 2.8 come to fruition, the UAW could have $60 to 70b to manage. The windfall would give the union "newfound clout to push its agenda" on Wall Street. To keep the VEBA healthy, the UAW would have to make investments which will return enough to cover whatever percentage of the total bill the money transferred from the automakers won't cover. AND they'll need to grow their nest egg to keep up with rapidly rising health care costs. So which stocks will they invest in? Will the UAW show solidarity with their active members and invest in GM, Ford and other unionized companies? Or will they do what's best for their retirees' health care fund and invest in healthy companies that actually turn a consistent profit, regardless of union affiliation?
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I would imagine that a VEBA deal would drastically improve the balance sheet and profit margins of Detroit in the short term and their borrowing expenses and cash flow in the medium term, which will in turn allow them to invest more in their R&D structures, which are getting more efficient and global under their restructuring plans. They spend billions a year on RHC. So, after a VEBA, their auto stocks might not be so bad. The better quesiton is how will the big bosses manage it? I can imagine all sorts of interesting politics in the future between the general members and the union leadership. Maybe a VEBA is what is needed to show the faults and convince the membership that real reform or death of the UAW is needed...
During the time when Cerberus was looking at Chrysler, i saw a CAW official being interviewed who was already angry and suspicious. He was asked why the union didn't buy it? Can't recall exactly what he said, but there was much stuttering and sweating.
Okay, so will they tell the Democratic candidates that raising the capital gains tax rate will ruin their investments so it's off the table? LOL, this will be the end of the UAW.
Aren't there laws in place that dictate what precisely what the VEBA's mission is? I would think that doing anything that is not in the best interest or benefits that VEBA is a dereliction of duty. No different that a retirement or pension fund. The UAW will have no choice but to keep their paws off the VEBA.