By Staff
Johnny Mack Morrow
"When you get to the end of your rope, tie a knot and hang on."
That is a famous quote from Franklin Delano Roosevelt, a president who many Americans have been thinking about over the past couple of weeks.
The tumult in our economy and financial institutions has many saying we are in the most dangerous times since the Great Depression.
Roosevelt knew something aboutdangerous times, and it is a good time to think about how he dealt with things, because it certainly feels like we are at the end of a rope.
Unemployment is moving up nationally. Sky high gas prices are squeezing family budgets. Economic activity is certainly slowing, and most economists believe that we are in a recession. And a rising tide of bank failures has most of us jumpy.
Word comes this week that one of the South's largest banks, Wachovia, is being sold to the largest bank in the country, Citigroup out of New York.
The primary reason for the buyout is that Wachovia was on the verge of failure, with investors withdrawing money and the bank unable to raise new funds. While many folks don't have much sympathy for a bank in trouble,Wachovia hits close to home and has an impact on Alabama.
Wachovia bought one of Alabama's largest banks, SouthTrust, in 2004.
SouthTrust had been doing business in Alabama for more than 100 years, and employed thousands of people across the state and in their headquarters in Birmingham. Today Wachovia still employs thousands in our state, but those who were happy about the merger then cannot be happy now.
SouthTrust was bought with Wachovia stock, which has since plunged 80 percent since then.
News reports have Citigroup buying the banking operation for even less. It is a terrible thing when we see a great Alabama business sold and lessened, because these are our fellow citizens who had built up a strong Alabama-based business.
If we didn't have the FDIC there would be even greater chaos in the banks.
The Federal Deposit Insurance Corporation, one of Roosevelt's first efforts to bolster confidence in the nation's economy, guarantees the savings account of average folks like us.
Without it, every person who had money saved in Wachovia could have been at-risk, or even lost it when investors made a run on the bank.
What to do about the current crisis? Roosevelt has some advice.
"It is common sense to take a method and try it. If it fails, admit it
frankly and try another. But above all, try something," said Roosevelt to those who believed that the country would get out of the Depression on its own without government intervention.
Waiting, doing nothing, thinking that fundamentals somehow will save the day won't work now, just as it didn't work for Hoover.
As it turns out, much of what Roosevelt did to stamp out the Great Depression when the federal government gained a stake in failing private enterprises paid off for taxpayers in the long run. As the economy improved itself, the assets the government owned regained their value as were later sold for more.
Whatever the federal government does in the current crisis to right the financial system, they better strike as good a deal as FDR did in the New Deal.
Alabama is riding out the economic troubles better than most. Our houses didn't skyrocket in value like the bubbles in Florida and California so we still hold the value of our most important asset.
We have economic growth in most areas of the state while the country as a whole is losing ground. And state banking officials say the more than 100 Alabama-based banks they monitor are in very good condition, better than most.
It is right that we are angry about how Wall Street and the big mules messed things up and put us all in jeopardy. We have every right to be skeptical, and even enraged that government has to clean up after those who fought regulation and took millions for themselves.
But we need to put a knot at the end of this rope, just like Roosevelt did, and get ourselves moving again.
Roosevelt summed it up what our spirit must be to overcome our current troubles.
"The only limit to our realization of tomorrow will be our doubts of today. Let us move forward with strong and active faith."
Johnny Mack Morrow is a state representative for Franklin County. His column appears each Wednesday.