From the Front Lines, CEOs on the Credit Crunch
CNBC.com Writer
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
