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Venture

Robert Trigaux

Find me a banker who admits credit is tight

23

October

Wake up and good morning. So if credit is so tough and hard to get, where are the bankers fessing up to being more stingy than usual? Harder to find than a loud tie in a bank boardroom these days. I bumped into SunTrust's top executive for the Tampa Bay area, Dan Mahurin, at a USF luncheon the other day and he assured me business was still pretty good for a rough economy. SunTrust customers (at least some) are getting business loans and mortgages, he said. Granted, no banker likes to say his or her customers are unworthy to get loans these days, but come on. One thing was certain. Mahurin is glad to be at SunTrust, which has weathered the body blows to the banking industry better than many institutions of late. Even so, SunTrust Banks this morning said its third-quarter profit fell 25 percent, hurt by the effects of the tough credit environment.

In a talk he gave at the College of Business at Florida State University this month, Bank of America Market President Mike Fields recounted the events that have rattled Wall Street and undermined credit markets. The aftermath of the financial crisis will be lenders getting back to basics, the Tallahassee Democrat reported. (Drum roll: Here's my favorite Fields quote.)

"You really don't want to loan money to somebody who can't pay it back. Now there's a novel thought, but apparently we kind of got away from that."

Hmmm, you think? Is that one reason the government is injecting $250-billion in U.S. taxpayer money into capital-depleted banks?

Check out this video report from MarketWatch of interviews with home lenders about industry trends from the Mortgage Bankers Association meeting in California. This is the same meeting at which the anti-war protester group Code Pink tried to handcuff Karl Rove.

Interesting interview with AutoNation CEO Mike Jackson. AutoNation, based in Fort Lauderdale, is the nation's largest auto retailer operating under different metro area names (including AutoWay in Tampa Bay). Here's the complete interview in which Jackson says the future of car sales will be fewer dealerships having less need to wheel and deal. "At the dealer level, a shakeout needed to happen," he says. "It will be painful. It will be ugly. But it is also long overdue." Jackson also says his company, whose shares have dropped to $6 from $18 this year in the ugly economy, will continue to shrink its sales mix of domestic autos because they are less competitive. The best Jackson quote makes reference to the shutdown of the Bill Heard dealerships, which sold over 7 percent of Chevy's nationwide:

“The business model of huge, irrational inventories and huge, irrational marketing budgets with razor-thin margins, a la the Bill Heard model, is obsolete. It’s dead. It will not survive this downturn.”

When Georgia-based Bill Heard Enterprises Inc. went bust it closed 15 dealerships in seven states, including a Plant City dealership. Many others won't survive, say experts. Almost 600 of the about 20,000 U.S. new car dealers have shut their doors this year, and an additional 2,000 will close within 18 months. In September alone, 61 dealers — two a day — closed shop or downsized to used car lots, says the National Automobile Dealers Association.

But what really sank Bill Heard's business? This story looks deeper and may have found an answer. Heard went for the "subprime" car buyer. Like the Wall Street investment bankers who grabbed up securities backed by risky subprime home mortgages, Heard apparently staked too much on people who couldn’t pay what they owed. And they are the most vulnerable consumer when the economy starts to tank.

One final "I didn't know that existed" tidbit. I've heard of outdoor billboard advertising. But indoor billboards? It seems one of our own, CEO of ADvantage Indoor Advertising Chuck Nelms in Clearwater, was just elected vice president of the Indoor Billboard Advertising Association at its annual convention this past weekend. Congratulations. But who exactly belongs to this association?

"Advertising companies throughout North America that specialize in restroom advertising." Hence ADvantage's Web site at stallmall.com. Well, it surely plays to a captive audience. I am smarter for knowing.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:22pm]

    

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