Officials from Microsoft Corp. to Office Depot Inc. and Schering-Plough Corp. said the government’s failure to bail out the U.S. banking industry puts the “entire economy” at risk unless a deal is reached soon.
“The various sectors of the economy are so intricately linked, we need to recognize that the entire economy turns on what happens here,” Microsoft General Counsel Brad Smith said in an interview after the House of Representatives voted 228-205 Monday against giving Treasury Secretary Henry M. Paulson Jr. the authority to buy troubled assets from financial companies.
Executives from across corporate America echoed the remarks, the first time Microsoft says it has weighed in on financial legislation. They called on lawmakers to put aside partisan differences and work to restore credit supplies and confidence to the financial markets. The Standard & Poor’s 500 Index tumbled the most since 1987 Monday and the Dow Jones Industrial Average slid 778 points, the most points ever.
The liquidity crisis has spread beyond Wall Street, threatening earnings at businesses from retailers to technology companies. The Treasury’s tool kit to protect the financial system is “substantial but insufficient” after the $700 billion bailout failed to pass, Mr. Paulson said Monday.
“It is a pity that this has developed into such a mess,” said Fred Hassan, chief executive officer of drugmaker Schering-Plough in Kenilworth, N.J. “The probability of recession has gone up.”
Fairfield, Conn.-based General Electric Co., with businesses that span real estate, consumer finance, aerospace, energy equipment, media and health care, has talked with leaders in the House to express support for the bill, a person familiar with GE’s efforts said.
Business officials expected the bill to pass, even with government leaders predicting a tight vote. That’s why companies didn’t speak up sooner about how important the legislation was, Microsoft’s Mr. Smith said.
“I absolutely cannot believe it,” said David Cosper, chief financial officer of Charlotte, N.C.-based Sonic Automotive Inc., the third-largest U.S. publicly traded auto retailer. “I don’t think the House knows what they’re doing. We need this, the markets are frozen, banks are being taken over — it’s a crisis. I think they’re leaving it in the lurch and going on a break.”
“This failure is an indictment of the entire Congress and its ability to accomplish the people’s work,” American Electronics Association President and CEO Christopher W. Hansen said. “It’s time to complete this unfinished, critical piece of business. U.S. workers and U.S. businesses can’t afford any more excuses.”
Lawmakers need to stop pointing fingers and assigning blame, said Robert S. Miller, chairman of Delphi Corp., the bankrupt auto-parts maker in Troy, Mich.
“We are witnessing a most unfortunate and untimely collision of politics and economics,” Mr. Miller said. “This is not just about Wall Street. It is affecting Main Street. Bold action is required before there is further erosion of confidence.”
The Senate may take up the measure this week, and possibly send it back to the House, House Majority Leader Steny H. Hoyer, Maryland Democrat, said Monday.
A resolution to the crisis needs to make it easier for businesses to get access to capital, said Steve Odland, CEO of Delray Beach, Fla.-based office-supplies seller Office Depot.
“Our sales have been impacted as our customers have been hurting for liquidity,” Mr. Odland said in an interview. “The global economy is at stake here. The ripple effect has been far and wide and action needs to be taken.”
Microsoft will reach out to other companies to step up pressure on lawmakers, Mr. Smith said. “We’re hoping it will get turned around. It needs to get turned around,” he said.
Other officials also expressed optimism that the government ultimately may pass a bill.
“It’s still very early for anyone to express an opinion,” real estate billionaire Sam Zell said in an interview. “I’m not sure it’s over, in terms of what Congress did.”
Mr. Zell said it’s important not to rush to make decisions, a sentiment echoed by Michael Burns, vice chairman of filmmaker Lions Gate Entertainment Corp.
“I’ll tell you one thing we’re not going to do: We’re not going to panic,” said Mr. Burns, whose firm is based in Vancouver and run from Santa Monica, Calif. “We’re going to wake up tomorrow and people will still go to the movies and watch ‘Mad Men’ and buy DVDs of ‘Weeds.’ None of that will change.”