The Building Tradesman Newspaper

Friday, April 02, 2010

Bankers hold construction industry hostage

By The Building Tradesman

Not a week goes by where I am not approached by a consortium or an individual corporation that has concrete plans for the construction of some type of major facility here in the United States. In recent weeks, most of these proposals have centered on the construction of energy-related facilities (both traditional and renewable). But, there have been many proposed manufacturing facilities as well. And let me assure you, these are not “fly-by-night” organizations, either. These are stable companies and, in many instances, reputable household names.

Now, you would think that such occurrences would be cause for celebration. After all, the U.S. construction industry is currently saddled with an unprecedented unemployment rate that is approaching, or already exceeding, 30% in some areas of the nation. The fact that there are so many projects being planned would suggest, at the very least, that we have turned the corner and are on our way to economic recovery.

Unfortunately, there is just one small problem.

These projects are currently unable to secure the financing needed to get them off the ground. In every instance, these companies talk of being refused financing, or of being offered terms so outrageous to make it impossible for any company to realize a profit on their investment.

But upon closer examination, we find that what is really playing out is a nefarious strategy on the part of Wall Street and the Big Banks – akin to a primal game of “chicken” – that is having devastating effects on the job prospects and economic security for millions of Americans.

Here is how the game is being played. It is no secret that Wall Street and the Big Banks are not fond of current attempts by Congress to re-institute stringent regulatory reforms upon the financial industry. They are especially irked at a proposal to establish an independent Consumer Protection Financial Agency that is ostensibly designed to prevent banks and investment houses from engaging in the abhorrent practice of ripping off consumers on the one hand, and investors on the other. In other words, the type of unregulated activity and behavior that got us into this mess in the first place.

As a response, these titans of finance have engaged in a sort of brinksmanship with the Congress and the White House. “Back off on financial regulatory reform,” they seem to say, “or the credit spigot stays off.” It’s the Wall Street equivalent of saying “Play by my rules…or I take my ball and go home.”

Only in this instance, the employment and economic security of millions of Americans hangs in the balance of this repulsive game of “chicken.”

Banks have made numerous missteps throughout this financial crisis. They have misused taxpayer money; they have imposed punitive interest costs on consumers; and they have been insensitive in the payment of outrageous bonuses while significant numbers of Americans struggle to put food on the table.

But nothing compares to this latest stunt.

It’s time for Wall Street to place the interests of the nation first. If we can get the construction industry on its feet again, the multiplier effect will have the American job machine humming in short order. When that happens, we all win. And yes, even the banks.