Area economists, bankers and Realtors support the government's proposed $700 billion plan to rescue troubled financial firms, but caution it won't be a quick fix.
"I think a speedy response is absolutely essential because we're dealing with the trust in the financial system," said Robert S. Rycroft, an economics professor at the University of Mary Washington. "Trust is something that can be lost quickly, and have a big impact in a short amount of time."
Major action is necessary to get the overall economy moving by making credit available, said John McClain, deputy director of the Center for Regional Analysis at George Mason University.
"Businesses need to get money to expand and add jobs," he said. "There needs to be available credit to do that."
Congressional leaders are debating the rescue plan put forth late last week by Treasury Secretary Henry Paulson. It would allow the government to purchase distressed assets from banks, freeing up the financial institutions to make loans for homes, cars, businesses and more.
Glenn E. Kinard, regional president for PNC Bank in Fredericksburg, said time will tell as to whether the plan works. But he said he's relieved that the government is looking for solutions.
"It's a snowball rolling downhill right now," Kinard said of the country's current financial system. " I don't know how close we were to hitting the wall last week."
William Young, CEO of Fredericksburg-based Virginia Partners Bank, said he's fundamentally opposed to the government stepping into the banking sector so dramatically. But he thinks it had to happen to avoid financial meltdown and restore confidence.
Melanie Thompson, co-owner of Century 21 AdVenture in Spotsylvania County, said lawmakers should include a component that helps homeowners avoid foreclosure.
Soaring foreclosures have flooded the market with houses, depressing prices. Thompson said the government should act quickly to help restore the nation's credit markets, which should help the real-estate market by making it easier for buyers to get mortgage loans.
Professor Rycroft cautions that whatever plan Congress adopts could turn out to be something the country later regrets because mistakes are unavoidable in legislation this enormous. But he said shoring up the financial system is crucial and should help the average person.
Rycroft noted that the government's plan could bring jobs for Fredericksburg-area workers. The government entity created to buy, manage and sell the debt would most likely be located in Washington.
"I think most people will feel lucky to live in this area," Rycroft said. "We're less recession-prone than other areas of the country."
But that doesn't mean there won't be some tough times and belt-tightening ahead.
"We did not get into the current quagmire overnight, and it will likely be some time before we get out," said Gene Bailey, president of the Fredericksburg Regional Alliance.
Rycroft thinks the economy will stay slow for another nine months before improving. The financial landscape will have likely changed by that time.
"Hopefully there will be lessons learned that won't put us in this position again," McClain said.
--Business editor Howard Owen contributed to this report.
Cathy Jett: 540/374-5407
Email: cjett@freelancestar.com