Executives and owners of several Hampton Roads businesses endorsed plans for a bailout of the nation's financial markets Friday, but some expressed wariness about the $700 billion plan that was being debated in Washington.
Stephen Ballard, owner and chief executive officer of S.B. Ballard Construction Co. in Virginia Beach, said he called Republican U.S. Rep. Thelma Drake on Friday to urge her to work for speedy approval of the plan.
"I told her she needed to make this thing work and get it done... so that on Monday the American economy comes back," he said. "We need to get this resolved... so the American public gets some confidence back and everyone stops being in such a panic."
Objections from House Republicans brought the talks to a standstill Thursday. Late Friday, Democrats said they had accepted a Republican proposal to create a hybrid plan that would keep the securities in private hands.
Ballard said his business has been hurt by the economic slowdown and credit crunch. Of the 27 units in the Bayvista condominium complex that Ballard built in Virginia Beach, 10 remain available.
"We haven't sold one since January," he said.
A residence hall he had hoped to build at Norfolk State University also has been delayed.
"The American economy right now couldn't take another hit," Ballard said, "and I'm concerned about the housing industry and the building industry."
A major government effort is essential for stabilizing the nation's financial markets and spurring confidence among bank depositors, said Brad Schwartz, executive vice president and chief financial officer at Monarch Bank in Chesapeake. But, he said, the Treasury Department program was designed to help Wall Street's investment banks rather than Main Street. Community bankers, he said, are monitoring several details, including the Treasury's plans to insure the assets of money-market mutual funds.
Schwartz, who joined about 50 other Virginia bankers at meetings in Washington this week with members of Congress and federal regulators, said lending will slow significantly unless the financial markets receive some sort of support.
One part of the Treasury plan, which calls for buying troubled car loans and sour credit-card debt, probably would be eliminated, Schwartz said.
A solution to the credit crisis lies with the federal government because "the problem is big, and there isn't anybody else who can step forward with the safety net that's needed," said Jack Gibson, president and CEO of Norfolk-based Bank of Hampton Roads and its parent, Hampton Roads Bankshares Inc.
Some of the region's small-business owners voiced concern about the way the bailout package was put together.
"I'm not questioning the fact that we need to do something dramatic," said Rowena Fullinwider, president of Rowena's Inc., a food manufacturer based in Norfolk. "However, to do this without a clear definition of oversight makes me as a citizen, more than a businessperson, really, really nervous. I would like that oversight defined and put into whatever they're going to do about it."
Fullinwider said she was disconcerted by the speed with which many politicians signed on to the program.
"I don't think everyone should go, 'Yes, yes, yes, just throw it out there,' " she said. "It looked, to me, like that's what was happening. I was flabbergasted."
In Virginia Beach, Edward L. Hamm Jr. said he thought the government had to take action.
"The approach that they've selected would have a dramatic impact that would show the investors in those kinds of institutions that the government is behind them," said Hamm, president and CEO of the engineering and consulting firm E.L. Hamm & Associates Inc.
Hamm, however, isn't convinced a bailout is necessary.
"My intuition tells me that if we do nothing, the probability over time is that we would be OK," he said. "But that is a risk that I'm not willing to take."
Bill Putnam, co-owner of Progressive Window Co. in Virginia Beach, said the bailout plan would help his window-installation company by easing fears about the national economy.
"I don't like the government getting involved in something like this, but I think we're at the point where he have to," Putnam said. "When people are fearful of their future, their retirement, their personal cash flow, they are not spending money."
The Treasury's bailout package came under a blistering critique earlier this week from John Allison, the chairman and CEO of BB&T Corp., the Winston-Salem, N.C.-based parent of Branch Banking & Trust Co. and brokerage firm Scott & Stringfellow Inc. The Treasury's plan "is primarily a bailout of poorly run financial institutions," Allison wrote in a letter to some members of Congress.
Allison faulted the program's architects for not focusing on housing-related issues and called for direct government purchases of housing assets, including lots and houses under construction.
Protecting the nation's banking system is an established government function, said Allison, who is scheduled to retire from BB&T at the year's end after almost 20 years as its top executive.
"It is completely unclear why the government needs to or should bail out insurance companies, investment banks, hedge funds and foreign companies," he said.
Tom Shean, (757) 446-2379, tom.shean@pilotonline.com
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please
Please folks, look through the posts which actually offer you inforamtion and confirm it independently. Look at Don Tabor's timeline on the the legislation. There is good info available here. Understanding a problem is a large step to curing it.
If Obama understood the issue he could explain it. He won't. His position is purely political. To get in depth would alienate his followers who want it kept light.
Do you want to look it up or follow people like davidj? Personally I will be smiling and confident when I place my ballot for McCain. Never have I been more convinced of the dangers of his opposition.
Bankers Want US [you and I] to Socialize their Losses
Bankers are the custodians and fiduciaries of the deposits we intrust to them.
Bankers live on the spread between the interest they pay us -- remember 1 percent CD rates -- and the interest they charge on their loans -- remember 10 percent car loans and 25 percent credit card rates. That spread produced nice juice profits.
With those juice profits, bankers, first, gave themselves nice fat salaries, second, extended loans to their fat cat developer friends who built, without consideration to the market, to many houses and condos, and third, because of their lending policies, put our deposits above $100K it risk of loss.
As custodians and fiduciaries, and without the tax payer bail out, a lot of Virginia bankers and developers might go belly up.
Hey, that's capitalism.
Politicians, not low income buyers, to blame
No one can blame low income wage earners for trying to take advantage of new ways to buy a home. Supporters of the Community Reinvestment Act thought they were doing good. But any time government meddles in the marketplace, there will be unintended consequences you won't like.
Those same sub-prime mortgages which made it possible for low income renters to buy a $200K home they could not afford to pay for at realistic interest rates were also used by middle income buyers to buy $800K homes they could not afford to pay for either. Since Fannie and Freddie only had to actually have 2.5% of the money they loaned, huge amounts of money which could only be spent on houses were injected into the housing market, driving prices skyward. Sooner or later, the bubble had to burst.
The lesson? Keep governments role in the marketplace to that of a referee, preventing the use of force and fraud, but otherwise leaving us alone.
Read my lips...
If any of my representatives in the senate or house vote for this bill, they will NOT get my vote come re-election time. The American people overwhelmingly are against this measure. Lawyers (our representatives) are not econominc experts and it is their continual meddling that has got us to this point. Let the markets work!
NO
BAILOUT!!!!!
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There is a flip side to this. All the people that saw it as madness, and sat out. While I don't enjoy seeing the job losses, and I don't enjoy seeing the cheaters getting away, I *AM* looking forward to collapse of property prices. I know there are others like me. Ah I remember those smug useless people that matter of factly tell you that you better buy, because prices aren't going down. They remind you of how much their property price has increased, as if they somehow worked to "earn" the riches. People who bought somehow supposedly deserve huge increases in equity. They often borrow it all and spend it on short term items like vacations and cars. But now, it's time to give it back. Of course they need to be bailed out, and they deserve not to pay taxes on the amount forgiven by the bankruptcy court said the gov't. But at last, a kick in the face to the smug, often occupationally worthless who felt they were entitled. Kiss your granite goodbye, and watch the young people you dumped on buy it at the foreclosure sale.
Low income and minority citizens are to blame?
Seriously, those $600,000-$800,000 houses in Great Bridge and Hickory that can't be sold were built for low income minorities? Really? I'm glad that's cleared up.
Not Taxpayers Money
Taxpayers money? If they give 700 trillion not one dime will come out of my pocket. So don't be fooled by those words "taxpayers money". Let them go down.
NO BAILOUT!!!!
FannieMae, Freddie Mac, blah blah blah--whatever. I'll bet S.B.Ballard is worried. This "poor" guy and other developers like him took advantage of every opportunity to destroy the northend and other nice areas so they could line their pockets with tons of our hard earned money. Seven years ago You could of bought one house on a full lot at the Northend for around $200,000. But these guys got greedy and started kocking down single homes and throwing up multiple cheap vinyl condos/townhomes and then charging $600,000 for one unit! I hope that there is no bailout and that you should suffer as I do everytime I'm sitting in my living room listening to my neighbors cough or talk on the phone in their little, expensive plastic home. Don't even get me started about the nightmare of the lack of residential parking in these areas.
Sure, build some cheap little boxes, stack them on top of each other and call them condos. Great idea--if you're a gerbil!You developers were so greedy and probably blew every bit of money that came your way--TOUGH!!!! I say no bailout for you and those of your ilk. And you say quantity not quality--so take it! Take it like a man and shut up about it!
No bailout
No bailout as long as CEOs and entities such as ACORN will benefit.....those who sold mortgages to people who can't pay them, well, bad decision. If I make a bad decision, I have to take the consequences. Why don't they have to do the same? Allow these people to refinance their mortgages from the interest only ARMs to a fixed rate, paying principal. Companies/banks will take a hit, but not a total hit. People will keep their homes and everyone moves on. As far as all these expensive condos not being sold, well, build something the average person can afford and maybe you will sell them - but being so greedy as to put it out of the average person's price range, well, you buy it. There needs to be more affordable housing for people anyway (lower income, elderly).
Of course a builder wants the bailout
Trust no one complicit in the real estate bubble.
Americans had the mistaken belief that home values could rise twenty percent or more per year indefinitely. (Like Babs says - home prices never go down!) Borrowing against these inflated home prices pumped trillions in imaginary wealth into the economy.
The last people we should be listening to are real estate agents, builders, underwater home mortgage holders or the Wall Street geniuses who leveraged even more money against these already overvalued loans.
And what will happen to our currency with this bailout? Have you noticed the price of oil and food lately? The world is watching, and the inflationary consequences of allowing our government to start writing $700 billion checks will be dire.
Bailout
These people in Washington, throw millions and billions around like confetti. Don't they realize that a few of us never make 700 billion in a lifetime?
After the hoopla.
This bailout, at best, will postpone the timing, and the duration, of the Great Recession. It is nothing more than a give-back to the Wall Street crowd....payback for past support. What would you expect from the ex-CEO of Goldman? After the hoopla is over, we'll find ourselves in the same mess we're in now, except at least a trillion dollars poorer. They say consumer spending fuels two-thirds of the Nation's economy. If we're getting to the point of running out of personal credit, what does that portend down the road? A "bad moon rising" for sure, and more pain.
I'm still waiting to find out if they intend to bail out the banks and investment houses that are mired in 60+ trillion dollars of credit default swaps, as well as those holding the trillions of dollars of credit card, auto loan and other personal debt. When I try to find out, all I see is ambiguous language. I wouldn't, however, put it past those Wall Street fat cats, and their Washington poodles.
Very funny. .
Mccain reminds me of a frustrated, short attention spanned angry little ole man. Talking angrily out of turn, making up fake figures on the fly, as well as fake stories of olden times. He is/has been a Bush puppet voting with him (according to him) >90% of the time, so how is he representing change? Moreover, when he (Mccain) played the "experience card" Obama should have played the "education" card; Mccain the absolute bottom of 900 (894)at the Military Academy; Obama: BA International Studies (Magna Cum Laude, and Juris Doctor from Harvard. Worse still is the vice president. .Palin could only qualify to perhaps work in a library.
Long Time Coming
This "crisis" started a long time ago. The Community Reinvestment Act in 1995 started it as it required any lending institution to grant low income and undocumented loans. Just do a Google search on that act and read the issues. And also make sure to look at who was in the White House at that time.
As far as the local builders, BayVista is a poor example. The lowest unit is priced at $800,000 and the upper at $1.4M. Who wants to spend that kind of money on a 2600 sq.ft condo on Shore Drive? I do not think that segment of the morgage industry is the problem area.
I don't think that we should be bailing out CEOs that have done poorly to protect their companies and workers. Why should the CEO of WaMu get $13M for 18 days of work even though that bank was the latest casualty in the mortgage crunch?
Yes, more condos on Shore Drive
Yes, more condos on Shore Drive was a great idea. Surely Thelma can relate to the condo shortage crisis we have in Va. Beach and will heed Ballard's concerns.
Are we now done with
Are we now done with reparations? Let's move forward. None of us were alive in 1865. Move forward.
Really, did Gramm have a time machine?
By 2000, we were already well on the way to this mess. Gramm's addition the the bill at most delayed the final accounting and perhaps let it get worse before it collapsed, but the problem originated in 1977 with the Community Reinvestment Act and deepened with the creation of Fanni and Freddie and the overwhelming regulatory advantages they were given which forced lenders to work with them or go out of business. Prior to that, no lender would have touched a sub-prime mortgage.
The last real opportunity to avert disaster was 1995, when Democrats prevented reform legislation from getting through the Senate. So, perhaps Gramm can be blamed for allowing it to drag out, but to try to hang the whole thing on him is like holding the band director responsible for the sinking of the Titanic.
heart of the matter
You all do understand that if the goverment has to prop up our financial markets then they are not real? It is all make believe after that. It either can or cannot make it on it's own. Capitalism will be dead. Nor can you regulate a business into being succesful.
So it's that simple
All the "minorities" caused this problem.
That's a joke.
You think the majority of the people making these decisions even care if a minority or white person got a loan--they were in it to make money and it backfired on them. And out of these millions of people who had sub-prime loans you just happen to believe it's only the "minorities'" fault? Utter garbage.
McCain's advisor created the crisis
McCain's Economic Adviser is ex-Texas Sen. Phil Gramm. On Dec. 15, 2000, hours before Congress was to leave for Christmas recess, Gramm had a 262-page amendment slipped into the appropriations bill. It forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors. And that, my friends, is why everything's falling apart. That is why the taxpayers are now on the hook for the follies of Fannie Mae, Freddie Mac, Bear Stearns and now the insurance giant AIG to the tune of $700 billion.
Those who were unqualified to begin with.
Since when is it Congress and the Federal governments job to bail out people who should have not been qualified to buy homes in the first place? Political Correctness policy is to blame. So Wall Street mortgage brokers should pay for this for one, next an investigation in both houses of Congress is needed to bring to justice those members who allowed this to happen years ago. Nancy you might really want to drain that swamp before election time draws near so you can do some damage control for Mr. Change.
Threatening lawsuits,
Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.
When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.
In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."
Meanwhile, economists were screaming from the rooftops that the Democrats were forcing
http://news.yahoo.com/s/ucac/20080924/cm_ucac/theygaveyourmortgagetoalessqualifiedminority
Before the Democrats'
Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."
Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.
Instead of looking at "outdated criteria," such as the mortgage applica
Let the "free market" determine the outcome
I agree with Mr. C. Nicholas, this is a questionable plan with no guarantees if will work at the macro level and for the micro level to include small and medium business firms, becomes more so. And since the “Democrats said they had accepted a Republican proposal to create a hybrid plan that would keep the securities in private hands”, how does the government plan on being repaid?
This situation was created by lobbyist influence over politicians to reduce laws and regulations to allow the big banking, investment, financial firms on Wall Street expand into markets they had no experience in other than buying smaller companies to become a one-stop shopping center, that became too big and lost focus.
Institutions which maintained their core business practice are sound, let the free market and capitalism run its course for self correction eliminating those business with poor business practices.
If they really have $700 Billion available
to rally the economy, then give us an across the board, $700 Billion dollar tax cut, along with a $700 Billion cut in Federal Spending, and I guarantee the economy will surge enough to overcome the effects of the sub-prime mortgage mess.
If the $700 Billion isn't available (and it isn't) then just give us the $700 Billion cut in Federal Spending and that will make so much money now being soaked up by the deficit available for private sector credit, that we won't even notice any liquidity problems.
Always remember that with the Federal Government being the worlds biggest borrower, it competes with business and individuals for the available capital, and does so from the head of the line. Government interference in the marketplace made this problem. The best way for government to help with this problem is to stop being the problem.
Dems have the votes. They
Dems have the votes. They can do whatever they want. I wonder why they dont. Becuase if it works they want the credit and if it fails they want to blame the Republicans.
Pelosi and Reid are the worst partisan leaders ever. They cant even keep Oboma proped up in his first opportunity to show leadership in his 177 days in the senate.
Does voting "Present" count?
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*sigh*... the people who are in businesses related to building think that this will somehow re-ignite the housing mania. It won't. People aren't going to line up to buy your overpriced condos. The run up in housing prices, and the banks (that are begging for a bailout) that gave people 103% CLTV loans (loans for 100% of the property value) are what caused this. With nothing to loose, why are people with mortgages for 100% of the value of a property going to hold onto it if the value decreases? They were sold property as an investment. When the investment doesn't work out, you dump it. Property needs to revert to 2001 prices to fix things. It's going to cause lots of pain, multiple trillions of dollars of pain, but the current values of all the property is overstated. Incomes don't justify their costs. Sorry, this is what it's about, NO ONE WILL SAY IT THOUGH (except me). The gains have to be given back. Remember those beanie babies worth $4,000? They aren't anymore. Same with cheap homes that used to cost $200,000 selling for $500,000.
Bush's rush to this through
The mean fact that George Bush wants to shove this down the throats of the American people should give everyone pause. This is the same approach he used with the war in Iraq and we see what that has led us to. This bailout package needs "defination", not just blanket approval.
With all due respect to the comments from business people in the
article, they do not know if this rescue plan will work or not. They hope that this infusion of money into WALL Street will stablize 401K plans and make people feel better about spending more money replacing windows or buying new residences etc. What that will do is deepen the problem and prolong the pain. The government has NO role in the regulation of free markets except the powers granted by The Constitution of the United States. What Congress and the Executive Branch of government wants to do now is cover up their involvement in this scandal. They want the focus to go away from them as fast as possible. If something is announced in three days, six days later no one will be talking about it anymore and they can get on with their "business." Both parties are deeply involved in this scheme to defraud the American people. FOLLOW THE MONEY FOLKS. Follow the money. Call your representatives and tell them to vote NO on any bail out. The markets will fall and reach their true low and then start to rebound. It will be painful no matter what. But this will be less painful in five years time.