Bailout plan drawing more critics
Wake up and good morning. A forlorn-looking President Bush, clearly wishing he was talking about just about anything but a financial crisis in his last few months in office, urged Congress to make speedy work of the bailout package and push it through pretty much intact -- as the Bush administration wants it. Watch the video of his remarks.
The good news, this being a democracy and all, is other opinions are rising fast to the surface. Take those of John Allison, CEO of North Carolina's BB&T, a not-too-big, not-too-little $136-billion banking company that's prominent in the Tampa Bay area after it bought Republic Bank here years ago. For Greek-philosophy-quoting Allison, the high-risk rollers on Wall Street are getting too much of the ear of Congress and having too much say in resolving the financial nightmare that they created, the Winston-Salem Journal reports. That's why he submitted a 14-point letter (PDF) Tuesday to all 535 members of Congress with a simple message on the proposed $700-billion bailout. "There is no panic on Main Street and in sound financial institutions," he wrote. "The problems are in high-risk financial institutions and on Wall Street."
If Bush looks unhappy, at least he'll be long gone from office when efforts to make the bailout actually work take place. But it raises a huge question. Is a bailout proposal pushed by Hank Paulson, a U.S. Treasury Secretary who is also scheduled to leave office in January with President Bush, going to get long-term support? Put another way, who will come in and fill Paulson's big shoes in a new administration? Here's an informed list, ranging from Democrats Tim Geithner (now president of the New York Federal Reserve) and Steve Rattner of the private-equity shop Quadrangle Group, to Republicans John Thain, who as recently arrived CEO of Merrill Lynch just sold the investment firm to Bank of America, New York City Mayor Michael Bloomberg (I strongly doubt this one), and the perennial Mitt Romney.
Here's another indirect casualty of the nation's financial pickle. Georgia-based, 2,700-employee Bill Heard Enterprises Inc., the biggest Chevrolet dealer in the country with a dealership in Plant City, said it is immediately closing its 13 remaining dealerships, unable to survive in a weak economy with high gas prices and an inventory heavy on trucks and SUVs. If that's not a partial indictment of the Chevrolet product line, then what is? But there's a lot more to this story.
Bill Heard Jr., in a rare interview in late July with his hometown Columbus Ledger-Enquirer, gave three reasons for his company's woes. It didn't react fast enough to the economic downturn. It is Chevrolet-exclusive. And banks tightened requirements to grant buyers loans. The company was squeezed again last month when financial company GMAC cut off the company's credit for new inventory. And Bill Heard has been fighting allegations of deceptive advertising going back years, according to a story in the Atlanta Journal-Constitution. Last year, Georgia's Consumer Affairs office filed a lawsuit accusing the company of engaging in a 16-year pattern of deceptive sales pitches. The allegations came after the company sent 10,000 Georgia car owners a flier with the words “Urgent Potential Recall Notice” that appeared to come from General Motors. The suit alleges the recall notice “was intended and designed to mislead recipients into believing that their automobiles were subject to an urgent recall, so that the recipients would call Bill Heard’s sales staff and be solicited for an automobile purchase or service contract.” It is the first suit the agency has filed against a car dealer in three decades. Company officials told the Journal-Constitution that they placed blame on an advertising firm.
-- Robert Trigaux, Times Business Columnist