Dear Hank [I want to be a bank]
Hank, I hope you don't mind this informal note requesting bailout funds but as a Charleston real estate agent, I would like to convert my business into a bank holding company and become eligible for an injection of capital from the bailout fund that you control.
After all, just about every other business in the country has their hand out so why shouldn't I. As you can imagine, the real estate business is a little tough right now, in fact, since Ben and you went down to Congress and scared the heck out of everyone to get $700 Billion with your end of the world scenario, the stock market has tanked, people are feeling poor and my phone has not been ringing quite as often as before. I would think $100 Million would be adequate initial funding.
Now when I convert to a bank holding company, to keep Congress off your back, I'll be happy to loan the money you give me as long as the borrower has a more than reasonable chance of paying it back. I mean, isn't that the prudent way to lend. I won't be leveraging the funds you give me by 32 or more times or repackaging the debt by selling exotic securities to collateralize it; instead, I'll loan the money the boring old fashioned way and keep it on my books. I promise not to go to fancy spas or take an exorbitant paycheck or bonus.
Right now, I am incorporated but privately held. I'm not sure whether it is required for me to be a publicly held company in order to qualify for the capital injection but if that is the case, I'd be happy to use Goldman Sachs to underwrite the initial public offering. Perhaps you could give me the name of someone good over there to use.
And finally, I know you are probably getting hit up by just about everyone these days. I just noticed where the National Association of Realtors (NAR) proposed a housing stimulus. Among other things, they want to have the government provide a $7500 tax credit with no repayment requirement to everyone who buys a house (unlike the dumb tax credit that has to be paid back in 15 years or whenever you sold your home currently being offered only to first time home buyers). The NAR would also like to have the government (taxpayers) subsidize home buyers with below market interest rates.
Now, I am a Realtor® but I don't agree with either of these proposals which would artificially stimulate demand. And after all, isn't that just the kind of thing that got us into this mess in the first place. While I hope there is something you can do to stabilize the housing industry, I just don't think these proposals are the right way to go. Think about this, it would be just like the government offering 0% loans if you bought a GM or Ford car.
Finally, the NAR wants to keep banks permanently out of real estate sales. So if I convert to a bank holding company, then I wouldn't be able to continue to sell real estate, now isn't that silly.
Respectfully submitted, Howard
PS: While this shouldn't be construed as a bribe or an attempt to influence your decision regarding providing funds, perhaps you could join me in this new business endeavor when you are looking for employment after the inauguration.
Photo courtesy of Flickr by swisscan.