Local business leaders: Pass economic rescue plan now

Oct 01, 2008 (The Leader-Telegram - McClatchy-Tribune Information Services via COMTEX) -- BAC | Quote | Chart | News | PowerRating -- Community leaders in the Chippewa Valley spoke out Tuesday morning about current problems in the economy and the failure of Congress to pass an emergency plan.

The comments were made during a round-table discussion with U.S. Rep. Ron Kind, D-La Crosse, at the Eau Claire Area Chamber of Commerce.

"It's really about liquidity in the marketplace," said Kind, who voted in favor of the $700 billion emergency rescue plan for the nation's financial system. "It's the lifeblood of our economy, and it's being choked right now."

Kind said "people in this region did not cause this crisis," but something must be done because "lines of credit are drying up and banks have stopped lending to each other."

The House of Representatives on Monday defeated the controversial plan, 228-205, and the Dow Jones industrial average responded by dropping nearly 778 points.

Republican congressional candidate Paul Stark of Eau Claire voiced his opposition to the plan heading into the vote. Stark is challenging Kind in the 3rd Congressional District.

"It should take more than a few days to decide to spend $700 billion," Stark told the Leader-Telegram. "I feel the government is trying to push this on the American people too quickly."

The plan would allow the administration to use tax dollars to purchase devalued mortgage-related assets held by financial firms.

"I was so disappointed in all the finger pointing (Monday)," said Charles Grossklaus, president and chief executive of RCU, who attended the round-table talks. "Congress has to get something done."

"I think everyone felt to first take the politics out of it," said Bob McCoy, president of the Eau Claire Area Chamber of Commerce. "And then that there is a need to make something happen to stabilize the economy.

"If it doesn't happen pretty soon, the consumer is going to be impacted."

Grossklaus described financial institutions in west-central Wisconsin as healthy but said that could change if action isn't taken. He said RCU has hundreds of millions of dollars for lines of credit available and has not seen an increase in withdrawals.

Grossklaus credited area financial institutions for not getting involved with the subprime mortgages that played a key role in the national economy's downturn. However, he added that some recent news, such as Bank of America increasing equity requirements for franchise loans, will affect the area.

"(We need to) monitor the situation," he said. "And the people who caused this in the first place should really pay the price."

Grossklaus said he and other banking professionals in the area would support increasing the Federal Deposit Insurance Corp. limit to $250,000 from the current level of $100,000.

Bill Hilgedick, an Edward Jones financial adviser in Eau Claire, also took part in Tuesday's discussion. He said there was an overall sense of optimism that Congress would pass an agreeable plan.

"Anybody who has any investments at all is being affected," he said. "(Congress is) going to get something done, and it looks like they're moving in the right direction."

Hilgedick said a portion of the plan limiting "excessive" compensation for executives was championed by many at the meeting. McCoy added the plan includes checks and balances such as its payout schedule -- the government could get $250 billion immediately and $100 billion more if the president determined it was necessary, but the final $350 billion would be subject to a congressional resolution of disapproval.

"There is a concern among the public about what it would cost taxpayers," Hilgedick said. "But what I'm hearing is that it might not be as much of a burden on taxpayers as we expected."

Kind said there were two key reasons why the legislation failed: Many constituencies expressed opposition to the measure, making it a difficult vote politically for some lawmakers, and the legislation is a complicated strategy that requires a degree of convincing for politicians and a degree of trust in the current administration.

Kind also offered a sports analogy for the current situation.

"You have to have rules," he said. "These markets have not had referees, so what you get is tainted food, unsafe toys, mercury in our water and a financial meltdown."

Kind highlighted the need for a revised bailout plan but added that the 12 additional votes needed are "a moving target right now." More than two-thirds of Republicans and about 40 percent of Democrats opposed the initial bill. Wisconsin's House delegation voted 5-3 in favor of the package. Rep. David Obey, D-Wausau, was among the yes voters.

"It's got to be a bipartisan effort," Kind said. "Both parties have to be on board. It's not a perfect plan, but it's the best possible plan right now."

Marlaire can be reached at 833-9215, 800-236-7077 or liam.marlaire@ecpc.com.

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