Winston-Salem is home to one large bank, BB&T.  We used to be home to Wachovia but then they went and "merged" with First Union and moved HQ to Charlotte, so we here in Winston have just one major bank that we call our own.  Thus it was with a little bit of hometown pride that I read in today’s paper that the bank’s head honcho sent a letter to the Congress critters detailing why he thinks the bailout stinks.

For John Allison, the high-risk rollers on Wall Street are getting
too much of the ear of Congress and having too much say in resolving
the financial nightmare that they created.

That’s why Allison, the chairman and chief executive of BB&T
Corp., submitted a 14-point letter Tuesday to all 535 members of
Congress with a simple message regarding the proposed $700 billion
bailout.

"There is no panic on Main Street and in sound financial
institutions," he wrote. "The problems are in high-risk financial
institutions and on Wall Street."

He said that it is important that "Congress hear from the well-run
financial institutions, as most of the concerns have been focused on
the problem companies. It is extremely important that the bailout not
damage well-run companies." Allison’s opinion is seconded by local
community-bank officials and community-bank trade groups.

"Community bankers did not create this financial crisis, but our
banks and communities are clearly feeling the impact," the Independent
Community Bankers of America said in a statement. "As the fundamental
drivers of local economies — we could be in a strong position to help
resolve this crisis."

Go get ’em Mr. Allison.

One of the axioms from business that I adhere to most fervently is that when someone tells me I need to buy NOW or face ruinous price hikes I should actually do the reverse and take a deep breath and consider very carefully the deal I’m considering.  That’s exactly what we need our Congress to do now in the face of the Bush administration’s call to push through a massive bailout package for the financial sector NOW.

Here’s why I think we need to take a deep breath and think before we act:

• Most of the press has focused on this being Treasury Secretary Paulson’s initiative, with nary a mention of President Bush.  There’s lots of speculation that it’s because the President is a lame duck at this point, but personally I think it’s because they don’t want this thing to be associated with the Bush administration, an administration that no one trusts.  Well, Paulson is a Bush appointee and he’s most definitely a part of the administration which means that his actions must be scrutinized very carefully.  Even if his actions are well intentioned (I personally think they are), he is a crony and product of the industry he is asking us, the American taxpayers, to trust him to rescue with our future tax dollars.  I say future tax dollars because this isn’t money we currently have to spend so another part of the rescue package is that we’ll raise our debt ceiling from over $10 trillion to over $11 trillion.  If we’ve learned nothing else I hope that we’ve learned that no one in this administration can be trusted not to let privateers get wealthy in the process of governing our country.  They’ve already done it with the war in Iraq and there’s no reason to think they wouldn’t do it here.
• A big part of the bailout proposal is that it will empower Paulson, and/or his successor, to contract with private enterprises to manage the assets that the government is going to buy.  According to this article in the New York Times some of the companies lobbying for the job are the very same companies who will be benefiting directly from the proposed buyouts.  Is anyone really surprised?
• Although I believe that cronyism has gone on in every president’s administration, the Bush bunch has taken it to a whole new level.  While many pundits are quick to point out the Clinton administration’s contributions to this mess, the reality is that we’ve been under the Bush administration for eight years and they’ve been at the helm plenty long enough to bear the brunt of the responsibility for this mess.  Heck, Bush even had a Republican Congress and an incredibly high approval rating the first couple of years.  Unfortunately the Bushies spent the last five years doing everything they can to undermine the public trust, so now when the economic stakes are greater than they’ve been in over two generations and they need the public trust more than ever, they don’t have a chance in hell of getting it.  And rightly so.  Of course Congress hasn’t done much better, so in general I think we need to do whatever is necessary to hold all of these a-holes accountable and make sure they do the right thing.
• What is the right thing?  I have yet to read or hear anything that clearly outlines the worst case scenario if we don’t do the bailout, versus the worst case scenario if we do pass the bailout. One number I’ve heard is that the bailout will directly cost every man, woman and child in the U.S. over $3,000.  What would the cost be of letting these companies fail?  And why not let them fail and let the competitive, free market establish a replacement?  I don’t think this is a silly question, especially given the fact that AIG’s major shareholders are now looking for a way to not take the government’s proposed $85 billion loan since it will essentially wipe out their holdings. Is it realistic to assume that some other parts of the financial services market might suddenly be motivated to get their own house in order if the alternative is losing everything when the government swoops in to take over?

  Given all these questions it’s kind of hard for us Regular Joe’s to figure out what we think our
  leaders should do, and considering that we have their jobs in our hands
  in less than two months I’d think they’d want to clearly explain to us
  why they’re doing what they’re doing.

• Oh wait, that last point is so naive of me. They don’t want us to know because either they don’t think we’re capable of understanding, or they don’t want us to figure out how inept they’ve been, or both.

I know this stuff can be kind of boring to most of us, but it’s hard to overstate how important this particular issue is.  It’s absurd that no one is effectively framing the issue for us, the people who ultimately are going to pay the bill.  Will someone please step up and tell us what the hell is going on?