TUESDAY | Sept. 30, 2008

Every business owner in Los Angeles went to bed last night asking the same question, “Will the financial credit I need to operate my business be there tomorrow?”

Many citizens are not aware of the important role that credit plays in the day-to-day operation of a business. Credit provides the short-term loans that businesses utilize to pay their employees and deliver on the products and services they provide until their customers actually pay.

Contractors need construction loans. Professional firms need a line of credit to pay their employees until the client pays for services rendered. Retailers need to pay for the goods they display in their stores. Manufactures use credit to pay for raw materials. The landscaping company uses credit to buy the equipment it needs. And the list goes on and on.

Credit is also essential for most consumers. Customers who can pay cash for a home, a car or other major purchases are rare. These major purchases and smaller purchases as well keep Americans employed and when credit is not available, the jobs are not necessary. When the largest Chevrolet dealer in America said last week that it was closing its doors because financing was not available from GMAC, it sent a resounding message.

For most businesses in Los Angeles, the conversation in Washington, D.C. is not about bailing out Wall Street. It is about how to maintain the flow of credit from financial institutions that is essential to day-to-day operations and the jobs associated with every private sector business in America.

There is plenty of blame to go around for our nation’s worst financial crisis in 79 years. Since most of us don’t see ourselves as being part of the problem, it is normal for us to be angry. It has also become standard operating practice for elected officials to blame the members of the other party. We witnessed the futility of that strategy as we watched Sacramento point fingers during the recent negotiations on the state budget.

The bottom line is that America needs a financial plan to make sure that credit continues to flow to credit worthy businesses and consumers. As much as possible, the plan should be designed so as not to reward those that have placed our entire economy in jeopardy. Finding that balance is a complicated negotiation, but it must be the goal of everyone at the table. And it must be done soon. The rhetoric of the last week allowed everyone to vent his or her anger. Now it is time for Congress to take action. Contact your Congressmember today.

And that's The Business Perspective.

Gary L. Toebben
President & CEO
Los Angeles Area Chamber of Commerce

The Business Perspective is a weekly opinion piece by Gary Toebben, President & CEO of the Los Angeles Area Chamber of Commerce, produced with the input of Samuel Garrison, Vice President of Public Policy.

by Gary Toebben, President & CEO, Los Angeles Area Chamber of Commerce

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