Mark Warner sees “rocky road” for U.S. economy

By Brian McNeill
Media General News Service
Published: September 16, 2008

Former Gov. Mark R. Warner says America’s economy is on a “rocky road” but he supports the government’s decision to bail out Bear Stearns and take control of mortgage giants Fannie Mae and Freddie Mac.

Warner, a Democrat running for the U.S. Senate seat being vacated by Republican John W. Warner, said that he also backs the government’s choice to sit on the sidelines as Lehman Brothers filed for bankruptcy Monday.

“The challenge is, you do Bear and you do Lehman. The question is, when do you stop?” Warner said in a wide-ranging interview Monday morning with The Daily Progress.

Should the federal government next offer its aid to the nation’s ailing auto industry, as some have suggested? Warner said it is appropriate for the country to help preserve its domestic automakers, though he said he does not support massive taxpayer-funded loans.

In exchange for some form of government assistance, Warner said, car manufacturers could be compelled to do things such as invest in the development of highly fuel-efficient vehicles.

“There’s ways we can jump-start some of this activity without direct taxpayer bailouts,” Warner said. “But it’s going to take a little bit more creativity than we’ve seen.”

Warner declined to commit to supporting a second economic stimulus package to boost the nation’s lagging economy. In the coming weeks, he said, the fallout from the financial industry’s shakeup will be more apparent. If things go from bad to worse, such a package might be needed, he said.

“Give me two weeks to see what happens with the market meltdown,” he said. “I think we’re in dicey times.”

However, he added, the next economic stimulus proposal ought to focus less on consumer spending and more on investing in the nation’s roads, railways and broadband in rural areas.

“Start digging us out of this hole,” he said. “I think we’re about 20 odd years behind in terms of our infrastructure needs.”

Warner’s opponent in the Nov. 4 election, former Gov. Jim Gilmore, a Republican, did not return a call Monday for comment on his economic views.

Overly lax government regulators played a major role in bringing about the current chaos on Wall Street, Warner said. “There’s been a lot of folks who were asleep at the switch,” he said.

He added that CEOs often didn’t have the “foggiest idea” about the extremely risky financial products that were being developed by innovative — and reckless — people at their own companies.

“Everybody’s looking at next quarter’s profits,” he said. “Nobody was looking at how can you take a whole bunch of subprime mortgages, risk mortgages, package them together, and somehow come out with a AAA-rated instrument?”

To avoid a repeat of such an economic catastrophe in the future, he said, there must be more effective regulation of the financial sector.

Warner, a successful venture capitalist, added that the American economy would be better served if it had more congressmen with business experience, like, well, him.

“We need elected officials who can understand a balance sheet,” he said. “The lack of financial sophistication on Capitol Hill is appalling. Both parties. You’ve got to have people who can bring an independent view and at least have some background in this field.”