Markowitz, Bartlett Debate State's Role With Banks

Tuesday, 08/03/10 5:49pm and Wednesday, 08/04/10 7:34am

Bob Kinzel - Montpelier, Vt.

(Host) Two of the Democratic candidates for governor strongly disagree about the best way to help stimulate the Vermont economy.

The difference centers on whether a governor should punish Vermont banks that don't make sizable investments in small businesses.

VPR's Bob Kinzel reports.

(Kinzel) To Democratic gubernatorial candidate Deb Markowitz, the issue is quite simple. She says many Vermont banks aren't lending money to small businesses and she wants to change this situation. In her new TV ad, she spells out the solution.

(Markowitz) "If there are banks that aren't going to invest in Vermont, they're not going to get our tax dollars not when I'm governor."

(Kinzel) Markowitz says that if she's elected, she'll sit down with all of Vermont's banks to spell out her new policy.

(Markowitz) "As the state of Vermont, we put $4 billion into financial institutions. As governor, I'm going to bring the banks together and decide, ‘If you're taking Vermont money, you need to be putting money back into Vermont's small businesses.' It's really as simple as that."

(Kinzel) One of Markowitz's opponents, Susan Bartlett says it's not that simple and she says that Markowitz doesn't understand how financial markets operate. Bartlett argues that new federal financial regulations have made it more difficult for banks to lend money to small businesses. That's why she wants to establish an expanded, state-backed loan program for these businesses.

(Bartlett) "Let's figure out what a constructive solution is instead of trying to bully somebody into doing something that, again, if you understand fundamental economics, obviously banks want to lend money to good businesses. That's how they make their money."

(Kinzel) But Markowitz says the federal rules are only a small part of the current problem. She says the larger problem is the attitude of the banks.

(Markowitz) "They are now extremely conservative. They're holding on to their money. There are better options than lending to Vermont's small businesses that are start ups. And that's not acceptable. ...We bailed out Wall Street. It's not trickling down to Main Street."

(Kinzel) Don't tell that to Dan Yates. He's the president of the Brattleboro Savings Bank and the current chairman of the Vermont Bankers Association. His bank operates three branches in southeastern Vermont. And he says small business loans are the bread and butter of his company.

(Yates) "We're not interested in the IBMs of Vermont. We're looking at who in Brattleboro, Springfield and in between that's a small business that has a good business that needs to borrow. We're anxious."

(Kinzel) Yates says banks may be hesitant to loan money to companies that don't have solid business plans.

He says he's concerned that if Markowitz's proposal is put into place, it will discourage smaller community banks from dealing with the state because they'll be unwilling to make risky loans to small businesses.

For VPR News, I'm Bob Kinzel in Montpelier

What laws, rules or regulations would you change or enact to encourage business to remain, grow or locate in Vermont and that dissuade them from leaving? How would those changes work?

There are a variety of issues that confront the business community and not all businesses have the same issues. The issues of a small retail store are totally different than someone who wants to produce ice cream or build high tech equipment.

I do not have a specific set of "rules" or "regulations" that can be changed to create a better climate for business in Vermont. I think the underlying issue is that of the climate and the attitude towards business.

We all need to work to change the attitude towards business. In Montpelier it often seems that one is either for or against business. You are for or against the environment. You are for helping people or against helping people. I reject that idea. The single best thing we can do as a state in order to have the environment we want, to help those who need our assistance and to maintain a high quality of life, is to create good jobs.

As Governor I would have business leaders sit with folks from the human services community and the environmental community and come up with some common outcomes. Then I would have them work together to develop strategies to reach those outcomes. As I travel Vermont, it has become very clear to me that we have a lot more in common than we have differences. Leadership is about finding these common ground issues and working together to make Vermont a better place.

There has been talk for years of permit reform and it hasn't happened yet. I don't think it will happen until the agency of natural resources does some consolidation of the number of permits they have to administer. As Governor, I would begin that process immediately. The issue in the room that no one really wants to talk about is stormwater. Until we have a real plan and have real conversations about this issue, it will remain an unspoken threat to development. If we don't deal with stormwater and indirect discharges, there is no way we will ever clean up the Lake.

I do not pretend to have the answers, but I do know that I have an approach that is based on getting to real outcomes that work for Vermonters I know that working together we can create an attitude and environment that is business friendly, while protecting our environment and delivering the services to those in need. And we can do all this at a price we can afford.

A Realistic Jobs Plan for Vermont

As I have said for year, government doesn’t create jobs, the private sector does. What government can do is help create the infrastructure and environment that encourages the growth of wealth in our state.

As governor there are a number of things I would work to have implemented to help retain and create jobs for Vermonters. The one issue that we all agree upon is that the telecommunications-high speed Internet structure must be developed rapidly and it must reach all parts of the state. This will need to be a public/private partnership to support access for all Vermonters. This is an example of having lots of the parts, but no system. My administration will immediately assemble the parts that exist, the parts that are planned and all the partners to lie out the completion of an up-to-date system for all of Vermont.

I will implement the following ideas as rapidly as possible to grow jobs for Vermont.

I will properly fund the regional economic development organizations and the regional planning commissions. This is where local business folks come to get the information they need. I will make sure that each region had the connections with groups such as the small business administration, Epcore, job-training programs and the sustainable jobs fund. These offices need to be the one stop-shopping place for regional businesses. I will shift $1 million from existing money spent in the central office in Montpelier.

I will assemble a group of small retail business owners to work with state government to consolidate the number of licenses and permits they need to operate their businesses. If we want our downtowns to prosper, we have to make it easier for retail businesses of all kinds to thrive in our downtown areas.

Travel and Tourism is an important part of the Vermont economy. For years the dollars we have invested in this area have only been in marketing. I believe that the agency needs to have several specially trained staff who understand the needs of these special businesses to work with them on business plans and marketing plans so they can get through the good and the bad times. Travel and Tourism is a specialized business just like farming and we should begin to address their business needs, not just their marketing needs. One specialized position $100,000.

Many businesses have trouble gaining access to capital, yet we know that our banks have money to lend. The problem is not that the banks don’t want to lend money, but they have come under so much more regulation from Washington that they can take very little risk. I will work with the Vermont Economic Development Authority (VEDA) and develop a new program that would allow VEDA to work with these businesses and the banks to create lending programs that cover the risk that the banks can’t take. This type of partnership should open the door to lending from the banks and encourage significant growth. Potentially several million dollars to capitalize.

Vermont is a state of innovators and it is time we truly recognized this and turned this asset into real jobs and real wealth for our state. I will start an office of Innovation and Intellectual Property as governor. This office will work with all the regional economic development groups and teach them the basics of helping a business or an individual with an innovative idea get on the path of securing the intellectual property rights for their idea. This office will also help find sources of capital for innovators and will encourage the growth of innovation of all types all around the state. As innovation and the demand for assistance with applying for patents grows, there could be assistance from this office in the form of grants and loans to help inventors achieve their goals of getting their intellectual property and then starting a successful business. For several years I have worked with VCET (Vermont Center for Emerging Technology) to help grow this type of idea. VCET now has a small seed capital fund to help businesses that meet their criteria.

The industry that has been hit the hardest in this recession is that of the building trades. Just like the rest of the country the Vermont housing sector has stalled. From looking at numbers and talking with folks in the field, I think it is safe to say that this sector is suffering from an unemployment rate of at least 30%. If we really want to jump start the Vermont economy, this is the sector we should help. I propose borrowing $15 million a year for two years and giving the money to Housing and Conservation. The housing organizations around the state very easily turn $15 million into $60 million with the financial packages they develop. This would mean $60 million a year spread around the state to begin to address the issue of affordable housing. Every discussion concerning growing our economy comes back to the lack of affordable housing. This two-year program would get the building trades back to work and begin to address the shortage of affordable housing.

I believe that the above steps, combined with my plan for agriculture, will get our economy moving in the right direction and will provide job growth for a number of years. We can fund many of these changes by a reallocation of the existing dollars in the Agency of Commerce and Community Affairs. I feel that these dollars need to be at work in the field, not in Montpelier. There are many Vermonters who are eager to grow their business or to start a business; we just have to provide the right attitude and the right incentives.