Bank on it

Earlier this month, USA Today founder Al Neuharth visited the Great Plains Bank in his old hometown of Eureka, South Dakota. He apparently came away with a renewed understanding of the simple logic that seems to escape big city bankers: lending institutions should loan money only to the people who can afford what they’re buying and who will be able to repay the loan.

Neuharth wrote about this experience in Why our little banks don’t need bailouts.

With tons of taxpayer money now going to help bail out big banks that didn’t have the good sense to remain true to the above axiom, we’re confronted with another sad fact. Big banks are getting bigger, and their wallets will likely get fatter with our hard-earned tax monies that are simple subsidies.

We’ve railed about media consolidation, and there’s little reason to believe that huge bank consolidations are any less smelly. The last-minute takeover of ailing Wachovia Bank allows Wells Fargo to join Bank of America and JPMorgan Chase Bank as financial behemoths that will eventually stifle good local service. The corporate mentality of maximizing the bottom line at all costs will work to blur the judgment of these banks, and “local service banks” will become harder and harder to find.

Bank on it.

On the Ballot

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Lorraine Collins is a writer who lives inSpearfish and offers this view of some items on the ballot this November in South Dakota; she can be contacted at collins1@rushmore.com
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Four proposed amendments to the state constitution are on the ballot this November, all sponsored by the Legislature. One is likely to generate some heat and another is arguable, but the other two probably won't lead to much debate. The most controversial is Amendment J, which would eliminate term limits for members of the Legislature who can now serve only four consecutive two-year terms in either House or Senate. Read more...

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Bottoms up!

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I like this idea.

Until I belatedly read the Friday, October 3rd edition of the Wall Street Journal, I’d never heard of Thomas Peterffy. But then, I don’t recognize most of the names of financial moguls whose names adorn the pages of the Journal.

Peterffy is a Hungarian immigrant to the United States. He came here in the 1960s with little money and little knowledge of the English language, but he has fared well.

In full page advertisements in the New York Times and the Wall Street Journal, Peterffy outlines his plan to help solve our financial crisis from the bottom up rather than the top down.

I’m not an economist, but this plan looks plausible, and it certainly has greater potential to gain the support of American workers and retirees than the nebulous $700 billion “trickle down” bailout adopted by Congress. They were trying more to ingratiate themselves to corporate muckedy-mucks who contribute to their campaigns than assisting citizens back home.

Entitled Fix the Bailout to Help Homeowners, it’s worth the read.

Put on a happy face

In their September 24th edition, the Lawrence County News announced that it’s going to “provide a stronger local newspaper and web site for its valued readers.”

Under a headline stating “Weeklies change course,” the paper said it would cut its Saturday editions beginning October 25. While the story talked about “consolidating its resources in an effort to reduce expenses,” they didn’t mention layoffs.

The move should certainly save expenses, but I’m not certain how it’ll provide a “stronger local newspaper.” And they weren’t particularly forthcoming about what other kinds of “consolidations” will take place. They did concede that the Belle Fourche Post & Bee will soon be renamed the Butte County Post, but I’m not certain of its implications on service.

That these are difficult times in the newspaper business, there is no doubt. A week or two before the Lawrence County Journal fessed up to its plans, Lee Enterprises – which owns the Journal and several other weeklies, as well as the daily Rapid City Journal – said they were laying off people at three of their papers in Montana, including the Billings Gazette.

In August, news giant Gannett Company announced that they’re cutting 1,000 jobs nationwide, despite cost-cutting measures they’ve instituted over the past year or so. The decline in ad revenue has apparently been just too much for them.

I suspect we’ve not heard the end of the local newspaper woes.

The blame game

For the past many weeks, the media has been focused on the financial crisis that caused a flurry of activity in Wall Street boardrooms and the halls of Congress.

Big banks and financial institutions, fast on the heels of the sub-prime mortgage fiasco, have scurried to protect themselves, their Board members, their stockholders, and ostensibly their customers, from the consequences of a whole range of bad policies and practices.

Mostly, there’s been a huge blame game going on, especially in the United States Congress, which is wont to blame everyone of every persuasion – except themselves. Just who caused this financial mess?

Good friend Linda Vaught has shared with us a web site that does a remarkable job of sorting out the facts from a heap of rhetoric spewed out by politicians. It’s at FactCheck.org, an Annenberg project at the University of Pennsylvania.

It should be required reading for every politician.....and candidate.

The House of Representatives?

I’m disappointed with the $700 billion financial bailout passed by Congress and signed by the President. It seems to me that the fat cats on Wall Street and the big banks used scare tactics to get what they wanted. The House finally blinked this morning and passed the revised proposal, which still wreaks of greed, no matter how many sweet-smelling modifications they attach.

I remain perplexed about the provision to increase Federal Deposit Insurance Corporation (FDIC) protection from $100,000 to $250,000. Most Americans will never see six figures in their savings accounts, a fact that seems lost on most members of Congress.

The FDIC’s insurance fund is at a historically low level, according to the Wall Street Journal, with only about $1 backing every $100 of insured deposits. Isn’t this the kind of fast and easy voodoo economics that blew the bottom out of the mortgage market?

The three largest banks in the country are now even bigger (Bank of America, J.P. Morgan/Chase, and CitiBank) following the Wachovia and Washington Mutual bailouts. Many independent community banks are likely to be gobbled up by the big three. Does that really make anyone on “Main Street” back home feel better?

Perhaps most disturbing is the fact that House members largely ignored what their constituents were telling them to do – listening instead to the financial whiz-kids and geezers on Wall Street. Too many members of Congress, particularly the old timers, are beholding to financial institutions that stand to gain by the bailout. Take a bow Barney Frank.

And to claim they passed this bailout for the folks back home on Main Street is unbelievable.

Rushville native new BSA president

Rushville, Nebraska native John Gottschalk has been named President of the Boy Scouts of America. Late last year, he retired as publisher of the Omaha World-Herald, capping a successful journalistic career that started back at the Sheridan County (Neb) Star in the 1950s.

His father, Phil Gottschalk, was publisher of that small Nebraska weekly in Rushville, which had been founded by John’s maternal grandfather, Bill Barnes. The younger Gottschalk performed a variety of duties at the weekly, including back shop work. After high school in Rushville, he went to the University of Nebraska, majoring in political science and journalism. After graduating from the University of Nebraska, Gottschalk bought the Sidney (Neb) Telegraph in 1966 and later also served as Mayor of Sidney. He sold the paper in 1974 and went to work for the Omaha World-Herald in 1975 as an assistant to the president.

Reading through John Gottschalk’s community involvements and philanthropic activities takes more than a few minutes. His civic accomplishments are many and varied; he and his wife, Carmen, have even served as foster parents, caring for more than 100 infants awaiting adoption.

With declining advertising revenue and circulation figures, most major dailies in this country are struggling for their very survival. The Omaha World-Herald, under John Gottschalk’s leadership, has girded itself from many of the demons knocking at the doors of nearly all newspapers across the country and appears to be doing quite well, thank you very much.

John Gottschalk helped diversify the company, which still has the World-Herald at its core, giving it a robustness not realized by many larger papers. The World-Herald is the 53rd largest newspaper in the United States, even though it’s in the 75th largest metropolitan area.

The paper is the only major newspaper in the country that is owned by its own employees.

It still publishes both morning and afternoon editions – something that used to be routine in most cities – but has become a real rarity in the 21st century.

We’re sure that even the World-Herald is facing some tough times, but they’re faring much better than most of their counterparts, thanks largely to John Gottschalk.

I suspect the Boy Scouts of America will benefit from his leadership as well.