Prospects for a revised financial bailout improved as the Senate prepared to vote tonight and House leaders said headway is being made. However, CEOs are split on whether passing the bill is truly the best way to tackle the financial crisis.
From the front lines, CEOs weigh in on how the current credit crunch is impacting their business and what needs to be done to improve liquidity and reignite growth:
Bailout and the Home Builders
“We endorse the bill as an industry, we think the rescue is essential. But what’s critical is that the bill is followed immediately afterwards with something to stimulate housing, to put a floor on housing prices… I think the biggest problem is the fear of buying right now. We need a housing stimulus very short term to bring things back.”
—Ara Hovnanian, President & CEO, Hovnanian Enterprises
Fixing Mortgage & Housing
“It’s very difficult. This whole credit crunch has affected our business at the absolute root, because it’s all about consumers. The pendulum has now swung too far the other way – credit is too tight, that even qualified buyers can’t get a loan…What we have to do now is do whatever we can to have a rescue plan because the economy will not recover unless the housing market recovers first.”
—Margaret Kelly, CEO, RE/MAX International
The Imploding Financial Crisis
“Unless there are some significant changes, [the bailout bill] could make life even more difficult [for smaller banks and institutions]. The recent move to increase the FDIC insurance will help, but certainly it would have been devastating to pass this bill without giving additional insurance to the smaller institutions. I’m not necessary in favor of [the bill] in its current form. I don’t think there’s enough in the bill to address the real problems that exist on Main Street.”
—John Kanas, Former CEO, North Fork Bancorp
CKE CEO on the Consumer
“We’ve got a very solid credit agreement until 2012, so on the credit side we don’t have any liquidity issues. It could impair our franchisee’s abilities to build new restaurants and remodeling. But so far, it’s been early in the process. [As for rising commodity prices,] sometimes you have an impact, sometimes you don’t, depending on how you buy commodities.”
—Andrew Puzder, CEO, CKE Restaurants
The Crisis That Stole Christmas?
“There are certain retailers that have difficulties, but other retailers are doing exceptionally well. And all you have to do is look at the marketplace and see who’s doing well and who’s not. We try to work with everyone to make sure that they have good supplies to supply their consumers. Some retailers are seeing problems, but across the board, I would say that [the credit pressure is] not a case [and is not impacting businesses].”
—Neil Friedman, President, Mattel Brands
Healthcare, Bailout & Credit Crunch
“I would like to see it happen because all business requires credit, and credit requires confidence, and if this passes, I think it will stabilize things in general. Universal Health Services is in very good shape—we’re in fine shape financially. But what’s happening right now is unsettling for other businesses. I think anytime you have a situation like this, it’s a wonderful buying opportunity. We see this as a potential buying opportunity.”
—Alan Miller, CEO, Universal Health Services
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