Tag Archives: bailout

Small Business Owners Deal with Crisis

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How are small business owners dealing with the latest financial crisis? How do they know if their bank is failing? What if they have a loan that is taken over by the FDIC or is acquired by a competitor? How could "Alf" speak English so well? You’re telling me the guy is from Melmac, eats cats and has the face of a bull terrier, yet he can pontificate like Oscar Wilde?

BusinessWeek responded to three of these pressing questions in a recent article focused on the impact the recent financial goings on have had on American small businesses. The article touches on the status and trends of banks, credit unions, loans and other information that could be useful to know:

While the financial crisis doesn’t necessarily affect the small business sector directly, economic pessimism and fears about winter fuel costs are likely to sap consumer confidence for some time. "Entrepreneurs should be mentally and financially prepared to hunker down in this economy for a couple of years," Thacker says. "The downturn that started a year ago could last another two Christmas seasons. I’m hoping its going to be less time than that, but people are worried."

Shameless plug: For those truly interested in helping their small business thrive, the Indiana Chamber offers Building a Business in Indiana. This publication, authored by attorneys at Bose McKinney & Evans LLP, walks new business owners through myriad trials and issues regarding a new business — things like protecting your company, taking advantage of the available tax credits and grants, legal obligations to employees, tax status and much more.

U.S. Chamber Lauds Today’s Passage of Bill

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The U.S. Chamber of Commerce is expressing its support for the passage of today’s "financial rescue" bill, claiming it had to be passed in order to keep the American economy — and its businesses — afloat.

With the American economy on life support, Congress took the necessary step to stop the bleeding.  Today’s bipartisan vote in the House is a major step toward stabilizing the credit markets and supporting Main Street businesses.

Every day there was a delay in shoring up our financial markets, Americans saw their investments plummet. Over the past few days, uncertainty and turmoil have dramatically affected markets and lowered equity prices, eroded individual savings, and destroyed household wealth. 

Economic Stabilization Bill Passes House, Bush to Sign

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The U.S. House of Representatives just passed the Emergency Economic Stabilization Act of 2008 by a tally of 263 to 171.

Republicans who said they would switch their votes from "no" to "yes" included Rep. Howard Cobble, R-N.C., and Rep. Sue Myrick, R-N.C. In a statement, Myrick said, "We’re on the cusp of a complete catastrophic credit meltdown. There is no liquidity in the market. We are out of time. Either you believe that fact, or you don’t. I do."

Indiana’s Congressmen voted as follows:

Yay
Andre Carson (D)
Joe Donnelly (D)
Brad Ellsworth (D)
Mark Souder (R)

Nay
Dan Burton (R)
Steve Buyer (R)
Mike Pence (R)
Baron Hill (D)
Pete Visclosky (D)

Both Indiana Senators Richard Lugar (R) and Evan Bayh (D) voted for the bill in the Senate, where it passed 74-25.

Sen. Evan Bayh, D-Ind., cast a reluctant “yes” vote.

“As distasteful as it is for Congress to take this action, doing nothing would likely make things much worse,” he said in a statement. “Once we have dealt with the present crisis, we must channel our anger into making sure this never, ever happens again.”

Sen. Richard Lugar, R-Ind., also voted for the bill.

“Failure to pass (this) legislation would lead to massive unemployment and failure of small business and farming operations in Indiana,” he said in a statement. “That is unacceptable.”

Chamber President Calls on Legislators to Restore Financial Markets, Consumer Confidence

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The Indiana Chamber of Commerce, on behalf of its more than 4,800 members who employ 800,000 Hoosier workers, urges the Indiana delegation and all members of Congress to swiftly and decisively reach agreement on a plan to stabilize our country’s financial system. 

“We recognize that the complexities of the situation are enormous and that any short-term solutions carry potential long-term implications. However, the negative impacts of the current economic uncertainty are guaranteed to increase beyond their current levels,” states Indiana Chamber President Kevin Brinegar. “Rhetoric must give way to thoughtful progress. Now, more than ever, partisanship and politics must be put aside for the benefit of our state and country.

“The Indiana Chamber and its members are typically not in the position of advocating for government intervention in the free market system,” Brinegar continues. “Today’s unique circumstances, however, make it essential for our legislative and executive leaders in Washington to act now to restore our financial markets and consumer confidence.”

Wildly fluctuating stock markets and tightening credit markets will impact businesses of all types and sizes. Indiana companies, particularly small businesses, cannot be allowed to be decimated by inaction at the federal level, Brinegar says. The window of opportunity to act — effectively — is rapidly closing.

“Let’s settle the crisis now,” he concludes, “then utilize the excellent public and private sector resources we have to work on a comprehensive reform plan that, in the long term, protects our valued companies, their employees and all taxpayers.”

Bailout Supporters and Detractors

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No matter what side of yesterday’s great bailout debate you were on, you’d probably like to know how Indiana’s Congressmen voted, so here goes:

Voted Against:

Dan Burton (R)
Mike Pence (R)
Steve Buyer (R)
Pete Visclosky (D)
Andre Carson (D)
Baron Hill (D)

Voted For:

Joe Donnelly (D)
Brad Ellsworth (D)
Mark Souder (R)

(Hat tip to Hoosier Access.)

Ultimately, the $700 billion bailout was defeated 228-205. Indiana Congressman Mike Pence’s quote in a Bloomberg article was also highlighted in today’s Drudge Report:

"The American People rejected this bill and now Congress did likewise," Pence said.

Congress Appears to Vote “Nay” on Bailout

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You have a nice weekend? Yeah, me too. Weather was nice, football was watched, fun was had. Oh, one small thing I should also mention: our entire economic structure is swirling in a giant (bleep)storm.

So in "Other than that Mrs. Lincoln, how was the play?" news, we’d like to discuss the bailout. (And as I write this, it appears the current proposal is on the verge of defeat in the House.)

According to John Berlau of the Competitive Enterprise Institute, defeat today would be ideal, as the proposed $700 billion could actually have had a net negative impact on the economy. He writes in The American Spectator:

"The government has to do something to keep markets from falling and the economy from getting worse." How many times have you heard that mantra this past week from President Bush, Treasury Secretary Hank Paulson, Democrat leaders, the news media, and even some ostensibly conservative periodicals?

But what if the bailout, as originally proposed and in its latest incarnation, would spend $700 billion of taxpayers’ money and actually make the economy worse? Believe it or not, there is good evidence this may happen. The inflationary prospects of the bailout price tag may lead to spikes in oil and crop prices that could hit ordinary Americans in their cars and on their kitchen tables. And government purchases of financial assets could ironically further constrain credit through causing write-downs on even the balance sheets of financial firms not participating in the bailout by worsening the effects of mark-to-market accounting rules.

But not everyone is so bearish on the matter. Obviously, Treasurer Paulson and many members of Congress didn’t think it was such an economic downer.  

Also of note, Ball State economist Michael Hicks is now on record saying the ultimate proposal could cost much less — $100 billion over five or six years.

Just $100 billion? Oh, see, and here I thought this was going to impact me financially.