Main Street's view of the BailoutJohn Carey
While Washington and the presidential candidates wrangle over how to solve the financial crisis, many companies wish that the politicians would stop arguing and just get on with it.
Here, for example, are the thoughts of George David, chairman of United Technologies Corporation, a $60 billion company headquartered in Connecticut that makes everything from helicopters to air conditioners.
“First,” says David, “I take exception to the word ‘bailout.’ There’s a bailout maybe for the Big Three, which had structural weakness over decades and the government is keeping them afloat. This package is a different category altogether. We have got near panic in the credit markets and some mis-pricing resulting. Assets are being conveyed and marked in balance sheets to levels that are, in my judgment, well below their ultimately realizable value. To the extent government takes them at some current market value, the government is going to make out pretty good on this.”
“It is very important to make this point. This is not having a desperate hand. This is to stop a run on a bank. This is why we have the FDIC. We want government as ultimate guarantor of the integrity of the financial system.”
“Second, and I think this is important. This is a Main Street issue. I read polls that say Americans are divided on whether to do [the package]. Americans are blending their anger at Wall Street compensation and Wall Street fat cats, and because they upset, they are losing sight that the ultimate bearer of the consequences of financial meltdown is themselves—Main street. If this credit contraction doesn’t stop in the next 18 months, we will see a decline of GDP larger than we’ve seen in decades. It is potentially catastrophic, which is why the Congress has to act immediately.”
“We can criticize, comment, analyze, and Monday morning quarterback. All that is all well and good. But this is not the time to finger point. Congress has to act right now. It is of critical importance, if we are not going to see the collapse of the monetary system of the world.”