Carroll County Times

Letter: County business loans a bad idea

My eyes deceived me when I read the July 15 Carroll County Times article entitled "County to offer small business loans. Reading further I discovered that government will lend up to $25,000 to start-ups denied loans by banks.

This means that government workers have a better understanding of potential credit risks than banks. If I'm not mistaken, this type of thinking led to the creation of Freddie Mac in 1970 to facilitate mortgages to minorities who had been rejected for loans through normal financial channels.

Subprime rates resulted and basically anyone, regardless of qualifications, with zero dollars down could afford a residence. Defaults occurred, leading to foreclosures resulting in the collapse of the housing market and the disastrous 2006 recession.

This bit of simplified history showed that not everybody possessed the necessary and stable funding to own a home. With this abbreviated analysis in mind, I question the proposed concept to allow elected officials or their designated employees to reject sound banking evaluations and judgments.

As a matter of interest and, according to my son, who works for a financial institution, banks are scrambling to initiate loans in order to revive the economy. If a key officer rejects an applicant, the individual or firm represents a true credit risk and a liability to the bottom line on the yearly profit and loss statement.

Since when do elected commissioners know more about the private sector economy than people actually working in the profession? More importantly, should government promote risky ventures or investments in the hopes of rejuvenating the local economy?

Or better yet, should responsible politicians spend money, regardless of merit, just because a government grant exists? Perhaps three of the commissioners who voted to locally implement this ill-conceived federal program should review the actions of the governors from Louisiana, Wisconsin, Florida, Texas and South Carolina.

According to CNN's Ashley Killough on July 9, these five Republicans rejected federal funding for one reason or another. Later in the same article, the following quote from Gov. Rick Perry appeared, "We have the best interests of our citizens, not the federal government."

Locally, only commissioners Robin Frazier and Richard Rothschild agreed with Perry. Hopefully, the other commissioners will evaluate future decisions based upon sound economic principals. Namely, government doesn't belong in the business of issuing loans in the private sector.

Jack Norris