Sep. 23, 2008 at 1:11pm

Edwards: Bailout is a bitter pill

As Congress continues to move toward the passage of a $700 billion rescue plan for the nation's battered financial industry, Mike Edwards, president emeritus of Thurston First Bank, acknowledges the proposed solution is "a bitter pill to swallow."

Edwards served as the supervisor of Banking for the State of Washington and was an advisor to Alan Greenspan and the Board of Governors of the Federal Reserve System.  He also served as chairman of the Conference of State Bank Supervisors.

"Simply put, what happens in Vegas should have stayed in Vegas," Edwards said. "Financial institutions threw the dice, and they lost."

Edwards said the proposed bailout will forever alter the financial landscape of the nation, both locally and on the national level.

"I'm glad to see that Congress isn't buying it hook, line and sinker," Edwards said. "The action that the government is taking, namely a huge rescue, is unfortunately absolutely necessary to preserve the United States economy."

But it was a move that had to be done, he said.

"On the other hand, someone has to pay the piper. There should be provisions now as they're going forward with this legislation that if the government is going to intercede, and we're going to invest the taxpayer money in the salvaging the economy, there should be restitution in controls on executive salaries. The bill should provide that once companies call on the government, there will be limitations on executive salaries and no parachutes that allow executives to escape accountability."

Edwards said that if the bill is passed, it means the country will revert to an age of big government.

"If this is implemented, we will become more of a socialized nation," Edwards said.

Edwards has served as president of three community banks in Washington State: Prairie Security Bank in Yelm, which he started; Hood Canal State Bank; and First Community Bank. He is immediate past president of Thurston Economic Development Council of Thurston County and has served on the board since 1989. He said local banks were also likely part of the original subprime problem.

"Most of the institutions in our state have likely contributed to the problem, because if they're generating mortgages at all, they were generating subprime," Edwards said. "If they were fortunate enough to ship them out to Fannie Mae or Freddie Mac, they weren't directly impacted."

Edwards said the turmoil in the financial industry is leading to mega-corporations backed by U.S. taxpayers and foreign "rescue" dollars.

"I think this is akin to Sept. 11," Edwards said. "I don't think we'll ever return to the free market we were in before. The genie is out of the lamp."

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