Petition to Bring Cuestion Tequila to Your City

Cuestion Tequila, winner of 20 awards in 2011, is only available in a handful of locations in TN, FL and Alabama as of Dec. 31 2011.

Due to the post prohibition three tier system in the United States, Cuestion Spirits Company cannot independently sell without the support of either the State and/or a Distributor.

Please Sign this petition if you want to be able to try one of the best tequilas in the world in your city!

Online Petition by iPetitions.com

Gov. Haslam: TN to co-invest via INCITEinnovation and jobs-formation campaign on Venture Nashville

Although I'm thrilled to hear about these kind of initiatives in the Southeast, I would really love to see some in my home state for a change.

CAPCO all by itself, although great, is just not enough.

Gov. Haslam: TN to co-invest via INCITEinnovation and jobs-formation campaign on Venture Nashville

GOVERNOR Bill Haslam's new $50 million INCITE economic-innovation program will include co-investment for Tennessee ventures, new incubators, a push on both tech transfer and entrepreneurship, and a continuing role for Tennessee Technology Development Corporation (TTDC) and other allies, the governor said today.

Open Letter re: Supercharging Business Development in Alabama

I would humbly propose a vision. The vision is of a state in the heart of the Southeast that is an economic engine and a force in the global economy. That may sounds unachievable, but I firmly believe that it is within our grasp if Alabama can couple some measure of bold leadership with coordinated and efficient usage of current resources.

The strategic steps need to include solutions for two major bottlenecks in the high-growth company creation process by:

1. Increasing the number of investment ready high growth potential companies in Alabama; and
2. Encouraging investor participation in funding seed and growth stage high potential companies.

As a part of step one.

The state needs to use existing state resources to support the maturation process of quality high-growth potential companies.

Today, the Board of Alabama Launchpad is meeting to discuss the direction of that program and it is potentially a very important meeting in this business development process. Launchpad is a unique statewide organization that was established as a partnership among the state's research universities and the business community. The primary program run by Launchpad is an annual business plan competition that awards grants of $100,000; $50,000 and $25,000 for 1st through 3rd places respectively and it is a great starting point.

The reviewers and mentors already working with Launchpad are great entrepreneurial resources and their feedback is often worth significantly more than the prize money. However, Launchpad can be much more...

Ask almost any active angel investor or seed stage venture fund manager in any state and you will hear a lament about the typical sophistication and "readiness" of most startup businesses for outside capital. This is a huge bottleneck in the creation of high growth companies because regardless of the amount of capital available, it simply will not be effectively put to work if there are not proper risk/reward investment opportunities. Either the capital will under-perform or it will be put to work in other investments.

This is an opportunity Launchpad can grow to fill with a couple of steps:

1. Launchpad is expanded to include any innovative business, so that the entire state population can have the opportunity to participate.

2. A seed fund (or grant program) is associated to provide a stipend of $10,000-20,000 to the top 25 (approx. Phase 4) participants.

*this would be in addition to rather than replace the top 3 awards

3. Launchpad schedule is reworked to be a quarterly program rather than annual.

4. In exchange for receiving the seed funding, the top 25 participants agree to move company operations into the nearest business incubator for a three month program *(think TechStars on a state-wide basis).

Such program incubators could include:

5. During the three month program, mentors and advisors (many qualified candidates are already involved as judges) regularly meet with the participants in a combination of one-on-one company sessions, incubator-wide group sessions and program-wide webinars.

6. Following the end of the three month program all of the participants would come together for a graduation showcase of all the companies and the progress made by them during the term.


As a part of step two.

The state needs to implement a state tax credit that encourages increased investor participation with potential high-growth companies in Alabama at both the seed stage and growth stage.

Such a tax credit would be best if:

1. It is open to many industries and leaves the specific company and industry selection to the investing parties, so that profit motive may direct the investing activity without artificial manipulation.

2. It is targeted at seed stage investments (i.e. no previous 3rd party capital, less than 20 or so employees, less than $1 million investment, etc.)* because that is where the largest gap is located.

*the criteria need to be fully vetted to avoid unintended consequences

3. It is in the 20-40% range, so that the investor incentive is significant while not eliminating the need to properly evaluate prospective investments.

4. It is available for both direct investments into a target company as well as for investment into a qualified venture fund, so that those investors interested in participating, but without sufficient time, skill or interest may act through a qualified professional.

Conclusion

If both of these projects (Part 1 and 2) can be implemented, then Alabama could see the annual creation of 100 new investment ready high growth potential companies. If only 5% of those companies are able to achieve a successful exit, then Alabama could still be creating an annual addition of approx. $225 million* in new enterprise value to the state's economic base. Furthermore, those number would not include the economic effect of the other 95 companies and the "exiting" companies that choose to stay in Alabama and continue to grow, so the total economic effect could be many times the simple exit value.

*(5 companies annually multiplied by the $46 million median exit value in 2010 of venture backed companies...according to DJ VentureSource)

P.S. As always, take what you like and leave the rest.

Entrepreneurship and Taxes (link)

Scott does a good job of not just stating his opinion, but also attempting to make sure that his opinion has a basis in verifiable fact and he has some great points about our current Congressional decisions on the Bush era tax cuts.

Entrepreneurship and Taxes by Scott Shane

"The United States has an enormous budget deficit, which may require tax increases to close the gap. But we need to carefully consider the law of unintended consequences when raising taxes. Much evidence shows that higher taxes discourage entrepreneurial activity, including investment and hiring by small business owners. If we let the Bush tax cuts expire, we risk shutting off already weak small business hiring and investment. Is that possibility really worth the relatively small reduction to the deficit that we might derive from a tax increase?"

As an aside, Scott also has a good book out on angel investing too...think Freakonomics for angel investors. Of course, my favorite quote being:

"Particularly promising are angel groups, which pool knowledge and money for wiser and more productive investments. In groups, angels can rely on each other's expertise, share the labor of performing due diligence, and generally insure that their money is being placed--and used--wisely. Fostering the formation of such groups may be the single most important thing that government can do to boost angel investing."

This is a peculiar political year, even for Alabama...

This is a good start on explaining why I (and almost everyone I know) are completely frustrated by our political system at the moment.

This has been a peculiar political year, even for Alabama. James’s biggest opponent, Bradley Byrne, was attacked by a group called True Republican PAC, which ran an ad charging that Byrne supported the teaching of evolution.

Byrne, who has multiple degrees and was chancellor of the state community college system, indignantly denied the charges.

But wait, there’s more. It turns out that True Republican PAC was bankrolled by the state teachers’ union, which is angry at Byrne for trying to ban teachers from holding second jobs as state legislators. The Alabama Education Association apparently felt a good payback would be to spend $500,000 on a group that encourages people to vote against any candidate who believes there is a scientific explanation for the origin of life.

NY Times OpEd - Alabama Goes Viral

Death of Trust...Sex, Money and Abuse of Power (Part Two)

Last week we discussed some of the negative effects of a loss of trust, but the big question remains...what do we do?

There are a number of options:
1. Structural reforms - policies, procedures, etc.
Certainly, these are useful tools to prosecute the bad actors, but shouldn't we (and our leaders) hope to strive for a higher standard than simply the minimum required to avoid rebuke?

2. Oversight (internal and external)
*Peter Eigen believes that the best way to root out corruption is to make it known. Ted.com = Peter Eigen "How to expose the corrupt"
Again, internal and external oversight are great tools to root out the bad actors and even may carry significant incentive/disincentive value.

However, I'm not sure we can create enough external controls or even enough 3rd party incentives to materially change average behavior.

I have heard it said that "we get the government we deserve." I think there is a lot to be said for that because politicians and leaders are a part of the community that elects them, so they should represent many of the traits found in the electorate. Therefore, if we want our leaders to have integrity then integrity has to become something valuable to the electorate and each person has to work toward increasing their own standards of behavior. And this leads to #3.

3. Personal Integrity
http://www.ehow.com/how_4746291_restore-integrity-personal-work-life.html -

Integrity starts from within. If we are to have integrity in every day life, we must first master it within our minds. Each and every day, we wake up and begin the day long process of running thoughts, conversations and questions in our minds. In total, it's been estimated that we have 65,000 thoughts every day. Have you ever given thought to your thoughts? What do you think about in a given day and are most of your thoughts of a positive nature? Are they meaningful and productive? How much of your thoughts are negative? What thoughts do you act on?

Negative thoughts are often expressed as complaints. People who complain also tend to make their grumblings known to other people who have no part in a positive and productive solution. People complain about their parents to their siblings, about their bosses to their co-workers, about their husbands, wives or significant others to their friends. They even complain about strangers to other strangers. Complaints are common, often in the absence of a solution to the issue or problem that sparked the complaint. But, if negative thoughts and complaints continue with no mediation or solution, they can manifest into self-destructive or aggressive behavior. Addiction, divorce, aggression, job loss, depression, misery; these are consequences of not having the maturity, responsibility and integrity to manage negative thoughts and difficult situations properly and act on a productive solution. I've read that if you aren't living with integrity, then your priorities, goals and values become sacrificed and you begin to attract people that make you feel bad

Interestingly, people with integrity don't complain much. People with integrity have the maturity to address their issues with the right people. They take responsibility to seek and take action toward solutions to their problems. They do what they say they will do. They have the willingness to create a plan (work and/or personal) and follow it through.

People with integrity are successful because they take control over their negative thoughts and replace them with productive, positive thoughts that manifest into great and powerful actions. If you identify yourself as a complainer, but want to change, you can. It is possible to restore your integrity

Maybe the ehow.com version is the way to do it, maybe another. Either way it is essential that we try.

I know it may sound hokey, but skepticism that runs rampant because of a loss of personal honor can rob societies of their very future. Therefore, it is in each citizen's best interest (and should be our responsibility) to make sure that we are doing what is right and true, so that standard of action may become expected of everyone again.

Thanks for your time and I hope this hasn't been too preachy, but I also hope it resonates, at least a little.

Best of luck on your journey, be good.

Death of Trust...Sex, Money and Abuse of Power (Part One)

Watergate, Monica Lewinsky, ABSCAM, Jack Abramoff, Iran Contra, Keating Five, Rod Blagojevich, Elliot Spitzer...Don Siegelman, Richard Scrushy, Bill Blount and Larry Langford.

Is there any question why many citizens have lost faith in the American political leadership? And that is only a glimpse of U.S. politics, unfortunately private industry and international leadership are even more scandalous.

So, why should we really care? Isn't this just good news foder for TMZ? Not if you ask anyone currently looking for a job or that is a victim of crime or simply anyone that tries to do things the right way for that matter. Furthermore, we should care because these are our leaders and they are supposed to exemplify the best we have to offer, not act like a common street thugs just looking for a score.

Empirically speaking, the results of this behavior leads to all manner of negative public effects, including but not limited to: higher transaction costs, undercut free market competition, hampered overall systemic efficiency, inefficient allocation of resources and a general sapping confidence in the political system which leads to higher risks and thus increases required potential returns for an enterprise to be viable.

Ok, so maybe it hampers the economy a bit...still so what? It's more than a bit, according to the University of Connecticut the economic impact of political corruption is significantly greater than that of the tax environment. So, we can cut taxes, provide incentives, etc., but it still won't overcome the negative impacts if our elected officials aren't following the rules.

And that is just the economic risk...Michael Spencer speaking at TED 2010 warned of the social and medical dangers caused by a lack of confidence in our leadership. (See: "The danger of science denial" Feb 2010)

If you are beginning to be convinced that ethics are important you may be asking how we begin to solve this issue and increase the likelihood that our public officials will act honorably.

If so, check back next week for Part 2.

One step forward and two steps back, Senator Dodd's Reform Bill does not attract

With all due respect to Paula Abdul and Cool Cat, I am not a fan of progress by way of "one step forward and two steps back."

The last couple of years we have seen unprecedented amounts spent to try and stabilize, then invigorate the national economy. TARP added $700 billion into our financial system and the Recovery Act added another $787 billion into tax benefits; contracts, grants and loans; and entitlements.

These measures may have had varying or arguable results, but they were extraordinary measures by any standard and we have started to see signs of a recovery.

It would seem that right now would be the time to nurture our fledgling recovery and make every attempt to ensure that it takes hold. In fact, I have written about and applauded some states' attempts to continue to foster new businesses by creating angel investment tax credit bills and we all probably hear many other programs to create jobs, etc. all the time.

Unfortunately, like a weed in the garden comes Senators Dodd's bill making it even harder to start a new company and specifically taking aim at the ones best positioned to grow into big companies. Provisions such as:

1. one that would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing.
2. a second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $200,000), and
3. the third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.

And despite an outcry heard all over the nation, from both liberals and conservatives, there has as of yet been no movement on the language or provisions and only a minor acknowledgment of the criticism.

This is a big deal...and Senator Dodd needs to hear about it until it gets fixed.

Letter to Senator Shelby

Senator Shelby,

I would like to express serious concerns relative to Senator Dodd's regulatory reform bill, specifically the provisions in Section 926, entitled "Authority of State Regulators Over Regulation D Offerings" (pages 816-819).

I am the Executive Director of the Birmingham Angel Network, Birmingham's only Angel Capital Association chapter, and we are working very hard to increase the availability of angel capital to high growth start-ups in Alabama. These efforts even include the widely supported idea of creating a state tax credit for qualified angel investments. Unfortunately, increasing regulation requirements and increasing the standards for qualified investors will only make that goal harder to achieve, in a time when our state and national leaders need to be doing all they can to promote the creation and growth of new businesses.

While there are certainly reforms that are necessary and should be supported, these provisions will simply impede vitally needed areas of economic growth and we would ask that they be removed from the bill.

Sincerely,
Joshua Watkins
Executive Director
Birmingham Angel Network, LLC

Instead of Dodd's overhaul, why not start with repealing GLBA

Citigroup and the other mega banks started "too big to fail" in 1999.

Don't believe it. That was when the Gramm-Leach-Bliley Act (GLBA) was passed, after decades of lobbying by some of the largest financial institutions. It repealed part of the Glass-Steagall Act of 1933, thereby opening up the market for mergers among banks, brokerage firms and insurance companies.

The Glass-Steagall Act had previously prohibited any one institution from acting as any combination of an investment bank, a commercial bank, or an insurance company and had been working fairly effectively since the great depression by segregate essential banking functions and preventing "too big to fail" or the related systemic risk.

The history on GLBA (according to Wikipedia) is pretty bad, especially given the results, and it should have been forseen:

"Prior to the Act, most financial services companies were already offering both saving and investment opportunities to their customers. On the retail/consumer side, a bank called Norwest which would later merge with Wells Fargo Bank led the charge in offering all types of financial services products in 1986. American Express attempted to own almost every field of financial business (although there was little synergy among them).

Things culminated in 1998 when Citibank, merged with Travelers Insurance creating CitiCorp, the largest and the most profitable company in the world. The merger violated the Bank Holding Company Act (BHCA), but Citibank was given a two-year forbearance that was based on an assumption that they would be able to force a change in the law. The Gramm-Leach-Bliley Act passed in November 1999, repealing the BHCA and portions of the Glass-Steagall Act, allowing banks, brokerages, and insurance companies to merge, thus making the Citigroup/Traveler Group merger legal."

So, rather than creating an even bigger mess with a "systemic overhaul," why not just start by repealing the ill conceived legislation (GLBA) that got the "too big to fail" ball rolling in the first place.

Of course that won't happen because creating huge new legislation and ramming it through under threat of dire consequences is too big of an opportunity to shift the playing field for any legislator to pass up.

Citique/Analysis of Georgia Jobs Bill of 2010 (HB 1023)

I have had several people ask about the Georgia Angel Tax Credit bill since the BBJ article, so I thought this was as good of a place as any to cover it.

Georgia HB 1023 - Jobs, Opportunity, and Business Success Act of 2010 also known as the Jobs Bill of 2010 is designed to use tax credits, cuts and incentives to create, expand and attract new businesses. The bill has several parts, namely:

1. Creation of the “Year for Georgia Entrepreneurs”: Allows Georgians the opportunity to start a new business with no state fees.

2. “Angel Investor” Tax Credit: An income tax credit of up to 50% of an investment made in small or start up businesses with 20 or fewer employees. The income tax credit would be available 2 years from the date of investment. The total “Angel Investor” tax credit pool would be limited to $10 Million per year (adjusted for inflation) and dispensed on a first come-first served basis.

3. Quarterly Credit Towards Unemployment Insurance Tax: For each eligible employee hired who is receiving State Unemployment benefits, a company will receive a $25-125 quarterly credit towards their unemployment tax.

4. $2,400 Tax Credit for the Hiring of the Most Difficult to Employ: Any Georgia company which hires a person, in a net new job, who has been eligible to receive unemployment benefits for at least 13 weeks, can receive a tax credit of $2,400 after 24 months of consecutive employment.

5. Elimination of the Net Worth Tax: The net worth or intangible tax (held over from a 1930’s law and only retained by a handful of states) that taxes wealth accumulation is eliminated.

6. A Triggered 50 Percent Reduction of the Capital Gains Tax for all Georgia Taxpayers: Georgia currently has the 15th highest Capital Gains tax in the country and the 2nd highest in the Southeast, with two neighboring states at 0%.


My Thoughts -

I like the elimination of the state fees for creation of an entity, that is a small hurdle, but can be a big deal to small businesses and I think most businesses would be better served in a liability limiting entity rather than as a sole proprietorship.

I would like to see some narrowing of the "qualifying business" definition for purposes of the angel tax credit, mainly to include some version of a related party exclusion. Otherwise, I think it is at serious risk of being somewhat wasted and used in intra-family gifting/estate planning strategies.

Also, the new jobs creation/hiring credit is probably a bit ill conceived, since I doubt many small businesses will let a $2400 tax credit (or similar stipends) drive hiring decisions.

Overall though, Alabama could well use a similar bill and it takes guts to make a proposal (any proposal) because it is some much easier to sit on the sidelines and complain. We should support those that are trying to come up with good solutions and applaud those efforts.

Pigs get fat and hogs get slaughtered...

I'm not sure who first used that expression with me, but it is one I have used a lot lately, especially when asked about our state bingo fiasco.

Why would anyone care what I think about bingo...because in a strange twist of fate, this Southern Baptist political moderate has been engaged to work with a couple of different bingo owners on some tax issues.  I can assure you that when I was in law school dreaming of one day being a big time corporate lawyer, I never imagined it would in any way involve me in the showdown between Milton and Bob.

Nonetheless, taxes are a tool of the state and here I am.

So, you ask, what is the deal down in Montgomery and what does it have to do with swine?  (insert a big grin)

The specific reason I use that phrase has to do with the bingo bill currently being proposed by the Sweet Home Alabama group.  For some reason, probably having too much to do with hubris and ego, the big bingo players took a lot of public sympathy and support due to job losses, etc. and rather than simply saying "Fine, if the governor thinks the old Constitutional amendments don't cover electronic bingo, let the individual counties vote on new amendments that would be more clear." That would have a lot of sense and probably been hard to oppose.  But nooooo, they had to swing for the fences and try to get a state approved monopoly out of the deal instead and in the process they may end up wasting all their public support.

So, there you go, pigs get fat and hogs get slaughtered.

The time may be NOW for Alabama to become a new economy leader

Interesting timing of my last post.  The 2010 Silicon Valley Index was just released and already national publications are pointing to it's rather shocking reference of Huntsville, Alabama as a potential competitor to Silicon Valley, due to Huntsville's strong position in Federal procurement.

See:  Business Week and Wall Street Journal Articles

Of course, that bold prediction can not come to significant fruition unless Alabama takes a more proactive role in understanding the oportunity that is available and providing appropriate resources and support.

Some of the challenges include:

1.  Shortage of seed/startup stage funding
2.  Lack of a large local biotech company to commercialize local medical university innovations
3.  Connecting the managerial and innovation talent to the opportunities
4.  National perception

There are certainly more challenges than those above, but those are some of the big ones.  But, they are not insurmountable if our local and state leaders (both public and private) really want to tackle the issues that can help drive Alabama forward.

Time for an Alabama Angel Investor Tax Credit and maybe more

Alabama's economy ranked dead last in Economic Dynamism according to the 2009 Astra report.   That rank was not much better in the other entreprenurial indicators.  This is despite ranking 21st in Federal R&D expenditures at colleges and universities.

To be sure Alabama has made some significant strides in economic development.  The auto industry has certainly been a good catch for Alabama's EDO.

Also, in February 2004, the Alabama Certified Capital Company Program (CAPCO) created six new private equity funds. As a result, Alabama had $100 Million in new private equity dollars spread between six funds which range in size from $11 to $20 million each. Then, in 2008, an additional $100 Million in private equity dollars spread between six funds became available. The result was $200 Million of new venture capital available to qualified businesses.

Why then, in a state that contains some leading science and technology universities, aren’t new innovative technology companies springing up at the pace of other states?   It’s because the new companies can’t find seed capital investors the way they can in other states.  Without seed capital for high growth startups, there are very few later stage high growth startups that can make use of the CAPCO investments.  The recent economic meltdown in the banking industry has only intensified this investment gap, as investment firms that used to look at earlier stage companies can now look at more established deals because traditional bank financing is not readily available.  
 
Some 20 or so states have already seen the need to encourage investors to fill this investment gap.  Those are many states where the government offers an Angel Investor Tax Credit — a tax credit that is given to people who invest in small but emerging companies.

• Minnesota is trying to pass a Angel Tax Credit (Link)
• ACA study on Investor Tax Credits  (Link)

If Alabama legislators want to really do something to encourage good organic economic growth in our state, they should look at what other forward looking state's are doing and provide some encouragement for our local investors to put their invesment dollars to work at home.

Is there a "Market Price" on toxic assets?

Has there ever been a clearer indicator that market to market is broken....."It is unclear whether banks will sell the assets"

http://www.thestreet.com/story/10493886/1/treasury-100-firms-want-toxic-assets.html

Just ridiculous! Why we ever decided to throw real dollars after a phantom unrealized loss is beyond me, but I guess I am going to have to get over it because that is what we are doing.

A modest proposal or Why still Mark-to-Market????

I know I am not alone here, but since we are still in the grips of a credit crunch and economic downturn, I would like to make a proposal (or at least a post hock observation).

First a recap...

Way back in 2007, we began to have a freeze in the subprime mortgage markets and some writers began to foretell the economic turmoil that could ensue. (See -The Panic of 2007 - No Buyers at any Price) Since then, we have discovered that many Alt-A and subprime loan portfolios have much higher potential default rates on mortgages than at first expected, coupled with a realization that Moody's and S&P did a collective hatchet job in rating many mortgage backed securities, not just Alt-A and subprime. These deficiencies have lead quickly to a wholesale run on the overall mortgage backed securities ("MBS") market. Unfortunately for everyone, due to existing GAAP and mark-to-market requirements, our public institutions have been required to severely devalue balance sheets during the market freeze which has lead to a massive credit crunch, has left our venerable financial institutions either in ruins or gasping for air and threatens to crash the overall bricks and mortar economy.

So......what could or can we do about it?

Well, we could inject billions of dollars directly into financial institutions in order to re inflate balance sheets and make up for the massive write downs in securities portfolios due to the market freeze (See - TARP) and hope that financial institutions will go back to normal policy and not horde the injections in fear of further write downs due to continued market declines. ***this is apparently where we are

Or.....

We could recognize that real economic fundamentals are better than the markets are crediting, due to the widespread loss of confidence in rating agencies' scores as an effective measure of MBS safety. Meanwhile, mortgage defaults are still only about 3% and even those still have significant asset coverage, thus leading to sometimes staggering disconnects between market values and "intrinsic value" of many MBS. However, this disconnect creates some interesting options.

One, instead of replacing the lost balance sheet value with US government capital (see - TARP), the SEC and FASB could simply require companies to value portfolio at "expected realizable value" thus allowing them to adjust for short term market irregularities, so long as a given asset is not expected to be sold in that time frame. (See - Suspend Mark-to-Market Now, Gingrich 2008)

Second, the US government could create a "FDIC-like" insurance for the underlying obligations (ie - individual mortgages; See - Governmental "PMI") on selected classes of perceived at-risk MBS, whereby bond holders (or trustees) could petition the insurance for uncovered losses on defaulted mortgages. This should cure the default risk problems caused by the ratings agency malfunctions and thus re inflate the overall security values, while minimizing actual governmental capital outlays to situations of actual loss.

Humbly offered....

Gramm Leach Bliley Act and the Mortage Crisis

Ok, I will have to admit that this is about to be somewhat unfair to congressional men and women that passed GLB, since I have the benefit of hindsight. Nonetheless, I think I can safely say I have been on record since the beginning in condemning the repeal of the Glass Steagall Act by GLB.

Given that Birmingham is such a big banking town, I think we in Jefferson County have a sometimes unrecognized unique perspective. First off let me say I love banks, they have been great for our area and many individuals in our community. However, one of the reasons I love banks as an investment vehicle is due to their semi-protected status. Banks are so vital to our economy that they have to be protected, sometimes (such as is now clearly evidenced by the current mortgage crisis) from their own bad decisions. As such, it is appropriate for them to have additional oversight to minimize the risk of a necessary public bailout. GLB goes against that grain and allows many additional opportunities for companies with cross sector exposure to get into trouble, even while following all the rules. This is true even if you want to ignore the obvious enhanced risk for acting on conflicts of interest.

Applied to our current mess, GLB's repeal of the restrictions on cross ownership in the financial services sector likely would not have prevented the current mortgage crisis, but it may have added a few more barriers and thus created more opportunity to catch bad decisions before they got completely out of hand.

Nonetheless, even if Glass Steagall wouldn't have prevented the current situation it should scare the heck out of everyone. By allowing consolidation, GLB has opened the door for single source disasters to shut down or significantly damage our entire financial system. Banks are simply too important to our economy to allow the additional unnecessary risks created by GLB.

If our congressional elects have their wits about them hopefully they will see the current liquidity crisis as a shot across the bow and move to place some meaningful segregation of financial services back into the system.