David Poling – 2/6/09

This page was last updated on February 6, 2009.

Banks are holding America hostage; David Poling; Beaver County Times; February 6, 2009.

The Times failed to note Mr. Poling is mayor of Economy. In his letter “Are lawmakers true liberals?” (8/14/05), Mr. Poling told us he was a liberal and complained “elected legislators … may have shifted so far to the left that they have forgotten what it means to be a true liberal.” Mr. Poling’s wife, Mechelle, has written several letters herself.

Below is a detailed critique of the subject letter.

“I don’t think any money for banks should be included in President Barack Obama’s economic stimulus package.”

[RWC] Mr. Poling and I agree on this point, though we got here via different routes. I oppose the government bailing out business, period. As far as I can tell, Mr. Poling’s objection is only because a bailout didn’t work the way he expected.

“They’ve already received some $350 billion and haven’t done anything with it to help the economy. If anything, they’re hurting it.”

[RWC] As background, to provide for normal operations and protection against bad investments, loans, et cetera, financial institutions must maintain a given percentage of their assets as liquid assets, such as cash, gold, et cetera. The percentage varies depending on the amount of anticipated bad investments, loans, et cetera.

As Mr. Poling, a lot of people were surprised when the cash infusion didn’t result in a lot of new loans. The two major reasons for this situation were 1) the financial institutions used the cash infusion to shore up their reserve requirements, and 2) the uncertainty about the extent of bad mortgages forced financial institutions to become more conservative about how much they kept in reserve. When people like President Obama get into fear mongering (example: “an economy that is already in crisis will be faced with catastrophe”, 2/5/08), this increases uncertainty and only makes things worse. Our leaders should not sugarcoat the situation, but instilling fear is harmful. What happened to Mr. Obama’s message of “hope?”

“Prior to the bailout, banks lent money with open arms to people like me who own a business, pay their bills on time and obtain a stellar credit score.”

[RWC] That’s not what proponents of the bailout bill, including then-Sen. Obama, told us last fall. These people claimed we were in a credit “gridlock” and we needed the bailout to free up credit.

“Understanding business during a slow economy, I opted to refinance a business loan to a lower interest rate. The problem is that stingy banks don’t want to lend money at the lower rates.”

[RWC] Unless a borrower can’t make his existing payments and may default, why would a lender “refinance a business loan to a lower interest rate?” If rates had gone up, would Mr. Poling have considered himself “stingy” if he didn’t want to refinance at a higher rate?

“The last straw came when I opened a bank’s credit card statement informing me that the 8 percent interest rate was jumping to a whopping 18 percent on the balance.”

[RWC] I will be considered insensitive for this comment, but borrowing via credit card has always been the worst borrowing option by far, short of going to a loan shark. As a business owner and a person “[u]nderstanding business,” what did Mr. Poling expect?

“How is this stimulating the economy?

“Those of us with excellent credit report cards are being penalized by bank greed.”

[RWC] I don’t know Mr. Poling’s position on this specific issue, but as a good self-described liberal I suspect he supported the Democrat policies that encouraged giving mortgages to people who couldn’t afford them. Indeed, as an owner of a lawn and garden center, Mr. Poling may have benefited from the resulting artificial demand.

I find it interesting what people define as “greed.” In some circles in his political party, Mr. Poling would be considered greedy simply because he owns a business. Indeed, according to the definition used by a local leftist activist, Mr. Poling doesn’t qualify as part of the “working class” because someone else doesn’t sign his paycheck.

“A local car salesman told me last week that people are eagerly shopping for good deals on cars and trucks but getting them financed is becoming next to impossible.

“The government can bail out the automobile industry all day long, but if banks aren’t lending consumers money, what good did it do?”

[RWC] I guess this means Mr. Poling supported the bailout of Chrysler and GM and would support a bailout of Ford.

“The banks are holding America hostage from recovering from this nightmare our economy is stuck in. No more bank bailouts. They’re part of the problem, not part of the solution.”