The Post’s Jennifer Fermino today tells the story (click here for story) of Kevin McGrath, who couldn’t get a bank loan to expand his successful SoHo gym – and ended up borrowing the cash from his customers.
“If this was a year ago,” the bank told him, “it would have been a slam dunk.”
Facing similar woes is Kenny Lewis, owner of a Subway franchise in Queens, who’s been waiting two months for approval of a business loan – even though he has a stellar credit record.
Multiply these stories by several million and it becomes clear what the freezing of the credit markets – thanks to the Wall Street turmoil – is doing to the US economy.
It’s not just Wall Street, in other words.
That’s the message President Bush sent last night, warning that “our economy is in danger” and faces “a long, painful recession” – unless Congress quickly passes his $700 billion rescue plan.
In simply – yet clearly – tracing the origins of the crisis and outlining the necessary remedies, the president also stressed that this is not, as the demagogues say, a bailout of super-rich tycoons and feckless speculators.
“It is aimed at preserving America’s overall economy,” he said.
Indeed, he explained, a failure of the credit market would produce a “domino effect” sure to impact all Americans.
“More banks could fail, including some in your community,” he warned. “The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically.
“And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.”
That, as the president said in classic understatement, is “a distressing scenario” – requiring decisive action.
And, more important, he stressed that the $700 billion won’t simply be given away: It will go to buy essentially sound mortgage-backed securities, he said, and most of the taxpayer money invested will be recouped when markets return to normal.
Indeed, the administration’s initial moves already have “boosted confidence in money-market mutual funds and acted to prevent major investors from intentionally driving down stocks for their own personal gain.”
But that success stands to be imperiled – unless Congress acts quickly.
Earlier, Sen. John McCain announced that he was suspending his campaign and urged a postponement of tomorrow night’s debate with Barack Obama – saying the two nominees needed to be on Capitol Hill to take a leadership role in crafting a solution to the crisis.
Obama rejected the call, saying that presidents must multi-task, and that he can campaign and confront the crisis.
Eventually, however, he accepted an invitation from the president to join in a bipartisan meeting today of congressional leaders at the White House.
Which, as McCain understood from the get-go, is as it should be.
After all, one of them is going to be the next president of the United States. They are not disinterested spectators.
One of them is going to have to implement whatever Congress ultimately enacts – so why shouldn’t they be on Capitol Hill to lead this historic and critical debate?
And stay there until all disagreements are resolved and a final package put into place?