President Bush, leaders from both parties and treasury experts on Monday promised that certain financial doom would follow if Congress voted down a $700 billion financial rescue, but the bill failed anyway. Now the business community is bracing for an atmosphere of tightening credit. We spoke with two area companies that felt the chill of the credit crunch long before this week's events. They say times are indeed tough, but they're not panicking yet. ideastream®'s Kymberli Hagelberg reports.
The bad news from Washington and television was enough to make John Barnes put in worried calls to his broker and his banker. First, Congress killed the bailout, then the DOW dropped 777 points. Then a TV finance guru added fuel to the fire.
Barnes: "A CNBC program talked about how a bank in Ohio might be in trouble. So we called our bankers and they reassured us that nothin's going on with the bank. It's just a reaction to the failure of the government to approve this bailout package."
Barnes is co-owner of Aluminum Coil Inc. He says the Avon-based has been dealing with the effects of the mortgage banking meltdown for more than a year, and has laid off employees in both Florida and Ohio. Business -- a portion of which is making parts for aluminum downspouting -- is off about 20 percent.
Barnes: "People just aren't going out building new homes now. We have a plant in Tampa, Floridia. Tampa, it was just on fire for a number of years. Now there's noboby building there."
Barnes says his 16-employee business falls somewhere between the Wall Street and Main Street politicians have been arguing about. But he stresses that the company has prepared for tough economic times -- at least for the immediate future, and, so far, hasn't felt any immediate repurcussions from the latest turmoil. For now, it's concentrating on customers outside the building trades, and has cut back on spending with the expectation that the building slowdown would continue through this year.
In Bratenahl, real estate broker Tom Crea also worries that slowdowns in mortgage banking and residential real estate are threatening to taint commercial real estate business. He says banks are are not just taking a tougher look at the buyers credit, they're scrutinizing whether the property will be worth the trouble -- if a loan fails.
Crea: "The trickle down effect may be coming. We're seeing the banks tighten up a lot more now. I do have one commercial property in particular that I'm finding very difficult to finance at this point."
However, Crea wants no part of the bailout before Congress.
Crea: " I'm kind of glad it didn't go through I think it needs to resolve itself. A lot of these large corporations if they can't stand on their own two feet after robbing the American people, they should go down."
Crea believes buyers will adapt to bigger downpayments and higher interest rates -- and he says, the economy will be better for the change.
Kymberli Hagelberg, 90.3