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Expert: Bailout Was Necessary

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Oct 3, 2008 8:42 pm US/Eastern

Expert: Bailout Was Necessary

Reporting
Stacy Smith
PITTSBURGH (KDKA) ― The head of PNC Financial Services says his company is making the right moves to survive the nation's economic crisis.

But at the same time, in an exclusive interview with Anchor Stacy Smith, Jim Rohr he says the bailout bill passed today was something his industry had to have.

"I think we do need a bailout package for Wall Street, not just for Wall Street but for Main Street," Rohr told Stacy.

That's because Rohr says, the crisis has dried up the country's financial liquidity, making it almost impossible for students to get loans for college, and more difficult for some people to get mortgages or money to buy big ticket items like cars.

"This liquidity package -- and that's what it is – is in order to get these securities and funds flowing so that banks can get back into the lending business," said Rohr.

Rohr says don't expect the bailout bill to create an instant economic turnaround.

"It's not like it's going to be a panacea where we'll see the day after tomorrow tremendous liquidity across the country, but it will work its way into the system over time. And more importantly the financial system will have confidence that the money is coming in which will make a great deal of difference"

Rohr says PNC is in great financial shape compared to many other banks, after making the decision in the late 90's not to get into the subprime mortgage business, and selling their remaining mortgage business in 2002.

"That was a business we thought was volatile and low-return so we got out of it," said Rohr.

Rohr says Pittsburgh is also in better shape compared to the rest of the country during this market meltdown.

"We didn't have the big run up in housing prices and housing values that they had in California and Florida. People were more disciplined in borrowing here and as a result we haven't had the 30 percent free-fall in housing prices like they have in Las Vegas and 25 percent in LA."

He says the jobs outlook is also strong here at a time when unemployment rates elsewhere are climbing. In August employment in the Pittsburgh region hit an all time high, job growth is higher than the national average, and unemployment is below the average.

Rohr predicts going forward the government will more tightly regulate financial markets to prevent a repeat of the meltdown. He also believes there will be more consolidation in the financial services markets, with banks buying out other banks not only because of the current crisis but because technology is changing banking into an on-line activity. Rohr said that PNC would be interested in buying additional banks, although he wouldn't say if any deals are imminent.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

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