Posts Tagged ‘Main Street’

Has This Economic Recovery Left Common Sense By The Wayside?

Saturday, May 3rd, 2014

Today’s post-crisis world is sprinkled with glimmers of economic hope as we witness positive upticks in the auto, retail and construction industries. Economic confidence is on the rise and consumer spending and borrowing are increasing. While this is all good news, small business owners need to be disciplined when developing a growth strategy. In my recent Forbes post, I discuss why common sense is key when planning for future growth.  Click below to read my full post.

 

Forbes Post

Have you been TARPed yet???

Sunday, April 5th, 2009

TARP (Troubled Asset Relief Program) was originally meant to support those banks deemed to have capital issues, so that a catastrophic failure of our financial system could be avoided, or to get healthy banks to lend at a faster clip to stimulate the economy. How anyone could not have known, or predicted that TARP’s passage would actually endanger our capitalist system, and pose what may be the greatest threat that entrepreneurs and Main Street businesses have ever faced, is hard to understand… Do you remember the quote “we’re from government, and we’re here to help.”

Let’s take a quick look at how TARP has morphed…

  • Banks deemed “Too Big To Fail” are forced to accept TARP funds whether they want the capital or not…
  • Due to populist outrage over the AIG bonus debacle, all TARP recipients must follow new government guidelines on compensation and bonuses.
  • The President forces out the CEO of General Motors and orders the company to start building smaller and more energy efficient cars, as a condition of receiving additional TARP funds.
  • Chrysler is being forced into a merger with FIAT, and now the banks that hold its loans, who are TARP participants are being pressured into converting their debt to equity.
  • And now, TARP is being used to support the new Public Private Investment Partnership (PPIP) which although may be needed in concept, will serve to only reward the very largest investment companies, and in some cases the very same people that got us into this mess. Main street investors need not apply. Only a select few Investment managers will be allowed to invest with the Treasury to make outsized profits, and the FDIC will guarantee any losses…
  • Banks that have accepted TARP are now scurrying to figure out how to repay… One needs to question the decision making process that went on at any of these banks. The Boards and Managements Teams need to be questioned and in some cases may need to be replaced. As a shareholder, I would be outraged that management recommended, and the board approved, a contract wherein the other side retained the right to make changes at any time… It is clearly a breach of the fiduciary responsibility that is expected and required of those positions.

 Main Street businesses, investors, or individuals get to pay the price with higher taxes, higher FDIC assessments (which they will pay as a pass-thru from their banks) and more regulations. The program does not do anything to help those that have a troubled loan, a troubled mortgage, or face the downdraft in the economy created by the irresponsibility of the “Too Big to Fail.”

 No one wants TARP because of what it represents; the darkest side of our government reaching into, and trying to run our businesses. That is not what made America great..

 What we need today are programs that are designed to help those that have acted responsibly, and have been the engine of growth for this country; the local main street businesses, and community banks. Incent the entrepreneurs with tax credits for hiring, buying new equipment, and for making new investments in factories, offices and stores. Grant tax and regulatory relief for those that have proven to ability to “get it done,” and return to a system where calculated risk taking is rewarded, and reckless activity punished…That, is what has made America great.