Local professor, banker/mayor react to economic bailout issues

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October 2, 2008

Genie Collins The Times-Recorder Thu Oct 02, 2008, 11:26 PM EDT

AMERICUS — Jobs and economic stability are only two of the aspects of the economic future at stake, as the country goes forth with the revised economic bailout plan.

Late Wednesday, the Senate passed a revised version of the $700 billion bailout plan by a 75-24 margin, after adding tax provisions aimed at winning over dissenting House members.

On the local level, there are plenty of opinions about the issue that sparked a lengthy and deep debate in Congress.

John Kooti, Ph.D., dean of the School of Business at Georgia Southwestern State University (GSW), who has been in Singapore this week with Students in Free Enterprise, e-mailed the following statement to the Times-Recorder :

“It seems that we have allowed this situation to get to a point that we have no choice but to rescue financial markets.

“In the short term, the rescue package will help to stabilize the financial markets and keep the economy from going further into a recession or depression,” Kooti added. “We need to stabilize the market and bring confidence to investors and consumers. In the long run, the free market economy will be fine.”

“My initial reaction was ... I hated that partisan politics got in the way of legislation that could help the entire country,” said Americus Mayor Barry Blount, who is also a local banker, of his initial reaction to the bailout plan.

“Hopefully, the House will pass (the plan), ... revise the financial situation and give working people a chance to ... improve their economic status, or allow those without jobs to get them,” Blount said.

Blount added that improving the financial system is “of the utmost importance at this time.”

“I feel that the failure to pass was not for a lack of our leaders to want to do something, just that the plan had flaws and to many people have been placed in a panic mode and want to rush into something that we as taxpayers are going to have to live with,” said Len Hicks, vice president/special assets officer with Sumter Bank & Trust.

“I have heard comments of runs on banks and banks not making loans,” he added. “We have not seen that here. A prudent bank/lending institution does not make loans that are bad to start with, and I feel that a lot of the lenders, in typical commercial banks, are getting bad press for those in the typical investment banks that raise money by selling securities.”

Hicks said, “A commercial bank takes deposits for checking and savings accounts from customers and lends that money to consumers based on the credit worthiness and repay ability. There have been times in the past that loans were made and mortgages were processed at the request of Fannie Mae/Freddie Mac or other mortgage servicing companies, private or government back/guaranteed, where the credit threshold was lowered due to pressure and the request of the customer/borrower.

“When economics or the situation of the borrower changed, they got in a credit crunch and a lot want to blame someone for something that they were a part of creating.”

Hicks said, “It is similar to what I witnessed this pass weekend. I counted almost 100 cars in line to get gas. All that spoke as I drove by were complaints about the government and the situation they have put us in.

“I think that it was around the 70th car that I noticed that most were sitting and complaining as their cars were running.

“At sometime, we as consumers, have to take responsibility for the situation that we and our country are in,” Hicks said. “There is nothing wrong with wanting more, but instead of needs being first in our budgets we place wants and we want it right now, and then something happens and we want to blame someone else or want someone else to bail us out.”

Hicks said, “This bailout package is going to cost those who work and pay taxes and; if it is a business it will be passed on to the consumers.

“I tell folks if they have doubts or fears about their bank, call them or go see them; don't get caught up in the spin or comments; be informed.”

U.S. Sen. Saxby Chambliss, R-Ga., defended his vote for the $700 billion plan Thursday, saying the much-criticized package was needed to avert “a slide down into a financial depression.”

“We’ve got a crisis in this country and in the financial community,” Chambliss told reporters at the Hartsfield-Jackson Atlanta International Airport. “Taking no action is simply not an option.”

“The stock market plunge on Monday was a serious wake-up call,” the veteran legislator said.

At first, Chambliss said, there were 50 calls against the bailout package for every one call that came in for it. But the tide has swiftly changed, he said.

“Now we are getting many more calls from people who say, ‘Thank you,’” Chambliss added.

Chambliss will face opposition in November from Democrat Jim Martin, who ran for lieutenant governor against Casey Cagle in 2006 and lost. Martin attacked the overall vote as a “typical Washington solution” that saddles taxpayers with the debt. The state’s seven House Republicans voted against the chamber’s version of the plan that was defeated Monday.

Also, Republican candidate Rick Goddard has attacked incumbent Democrat U.S. Rep. Jim Marshall for supporting the bill.

The Associated Press also contributed to this story.

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