Lots of ideas but little consensus on economy at Tampa Bay TARP forum

As he was getting fed up with Washington, local developer Don Phillips envisioned a local town hall forum for business owners, bankers and politicians to share their angst and insights over the financial crisis crippling the economy.

His vision came true Wednesday, as hundreds of bay area business leaders and politicians converged inside the Tampa Port Authority's Cruise Terminal 3 for a lively panel discussion about the nation's economic woes.

Ostensibly, the people were there to talk about the $700 billion Troubled Assets Relief Program, also known as TARP for shoring up the banking system, but the three-hour hobnob dissected everything from the $789 billion stimulus plan to the auto bailout.

Everyone had an idea, whether it was redirecting stimulus dollars, cutting taxes, changing Securities and Exchange Commission rules or letting weak companies collapse.

"Capitalism without bankruptcy is like religion without death," said Daniel Mitchell from the conservative Cato Institute think tank.

Mitchell fit in well, as most of the speakers and sponsors were conservative Republican leaders, including Lt. Gov. Jeff Kottkamp, longtime GOP fundraiser and consultant Al Austin, and U.S. Reps. Adam Putnam and Gus Bilirakis.

But there were diverse opinions about the causes of the crisis and potential solutions.

Longtime banker Tramm Hudson said the first installment of TARP money in the fall helped the financial system avert collapse.

But Ike Brannon, a former economist for the Treasury Department and adviser to the McCain-Palin campaign, called it a "seat of the pants" move by his former boss, then-Treasury Secretary Henry Paulson.

"No one really had any clue what needed to be done," Brannon said. "In retrospect, I don't think that it was a very good idea."

Kottkamp applauded the federal stimulus plan for plowing $1.4 billion into Florida road projects, creating 39,000 jobs.

"It'll help us get through until the economy starts to come back," he said.

Rebecca Smith, president of A.D. Morgan Co. in Tampa, disagreed, calling the stimulus bill exclusionary. Ditto the Obama administration's foreclosure relief program, which is designed to help people refinance at a low rate if they owe more than their home is worth. If bankers allow mortgage modification for one group, Smith said, they should do it for everyone.

One of the biggest divides was whether bankers were hoarding TARP money or helping ease the credit crunch by lending again.

Bankruptcy attorney David Jennis said banks have retrenched severely over the past 18 months, with small business owners who have never missed a payment suddenly finding their loans or lines of credit slashed.

"This is catastrophic for our local businesses," Bilirakis said.

Businessman Don DeFosset, a director with Regions Financial, insisted his bank is lending more now than a year ago. Part of the issue is there is a void because so many nontraditional lenders have been forced to flee the market; part of it is that bankers can lend only to the degree regulators let them, and they have to reflect the depreciating value of real estate and other assets in making loans.

As one solution, bankers have been pushing for the SEC to change its "mark to market" rules that force banks to write down the value of declining assets to reflect their true market value.

If the rule is revoked, bankers say, they would have more flexibility to hold on to assets that could rebound in value and wouldn't be forced to slash so many credit lines.

The long list of Republican attendees aside, organizer Don Phillips said he tried hard to make it a bipartisan forum.

Among the Democrats there were Tampa Mayor Pam Iorio, former state Sen. Les Miller and former Tampa City Council member Bob Buckhorn.

Buckhorn said the political affiliation of the crowd was less important than the role they play in the local economy.

"What you have here are the people who create the jobs," he said.

Lots of ideas but little consensus on economy at Tampa Bay TARP forum 02/18/09 [Last modified: Wednesday, February 18, 2009 11:14pm]

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