Stimulus: Do They Know How to Do Any Deal?
We Have the Administration we Deserve. We voted them in:
Several old friends have jumped on me concerning my hard negative descriptions of Nancy Pelosi and Harry Reed. They didn’t disagree with my basic outline of their ineptitude but said they were looking for me to give suggestions for solutions to our current misguided administration. They advised that they knew how weak this duo was but my Blog was becoming like a really scary movie. Where is the light at the end of the tunnel was the general question I have been challenged to answer.
I see no near term solution nor any short range end to our current adventure. It is an adventure and a mounted relief force is no where in sight. The “loyal opposition” seems to have retreated to a seemingly permanent somnolent state. The Obama assault on America is forging ahead without visible opposition from any thinking group of Republican legislators.
The dispirited group better get together with positive plans to slow down the current thoughtless expenditure on poor plans. Standing in opposition simply railing against the Geitner plan is not any kind of answer. A clear sensible plan to help the average citizen is needed now and the Republican Party has that responsibility.
Trying to get a handle on the Stimulus Bill funding process I have spent the last few days refreshing my memory on specific private sector projects which my company put together through the years. I paid careful attention to the due diligence aspects on both sides of the money involved.(borrower and lender) I looked at what we did to make sure that the project was viable and I carefully reviewed what was required by the lenders to get the project funded. I thought maybe the new group running the government didn’t know how to correctly structure the use of money in a deal.
The Stimulus Bill did not meet a standard of due diligence that was required in all of the projects that I developed. The projects I am talking about were financial peanuts compared to the money being shoveled out of the Treasury and The Federal Reserve recently. In today’s dollars the biggest project developed and built was only in the $50-$60 million dollar range. What we did to get the funding was somewhat different for each project but there were the same basic requirements to describe the amount and use of funds in every project.
I recall one project specifically that involved a city government, a Port Corporation a state bond issue and guarantees by the real estate division of a major utility. This was a project that had the kind of diverse requirements as those addressed in the Stimulus Bill.
I think it would be useful to briefly review some areas that the government might consider from responsible private sector procedures that “have worked” for the benefit of all parties involved.
In the project used as an example the city and the state were looking for the revitalization of unused port facilities to produce income from marine related recreation, retail activity and entertainment facilities. The port corporation was seeking income from the piers that were no longer applicable to their needs. The labor unions were interested in the jobs that would be created by the construction on the waterfront.
We were selected to design develop and build the project.. The process of selection was lengthy and expensive and might be of interest in another post. I have spent time recalling what took place once all parties has signed off on a Heads of Terms agreement and we got to the questions as to how the money would work and how I would use the funds. The State Guaranteed Bonds which were to be a major part of the financial package were designated for stimulus issues on a smaller scale but very similar to the goals of the Obama, Pelosi, Reid Stimulus Bill..
The final assembly of the documentation concerning the finance of the project took approximately 2 months after all parties had already agreed in principal on the issues having been discussed in 10 months of meetings. Top notch attorneys with heavy experience in construction, maritime , finance, bonds, real estate, insurance and union issues went to work developing the documentation needed to be sure that the use of funds was clearly outlined and agreed. The possible problems during the projected 20 month build out period were outlined. Remedies for failure of parties to perform their agreed part in the deal were outlined with time for correction delineated. for each of the potential problems.
I received a summary of the issues agreed by attorneys every 2 or 3 days for my concurrence. My staff worked around the clock to make sure that I understood the pertinent items concerning our performance requirements. The various parties did not always agree on an issue and face to face conversations were needed to come to a mutually satisfactory answer.
When the documentation was completed a settlement place and date was set. We all met in a major law firm that had a big enough conference room to hold the more than 30 people that would be involved. The settlement started at 9:00 am sharp and was completed about 8:30 pm. Lunch and dinner was served in the conference room and no one took more than a bathroom break until the deal was done. I sat at a table as did the city, state and financial representatives and signed agreements all day. Each element was presented by an attorney for signature with a review of the document with a clear written short summary of my company responsibility contained in that summary.
The deal was done, the project built on budget and the goals of the participants were successfully achieved.
The Stimulus Bill had about 1800 Pages assembled for review about 24 hours before the bill was passed. This bill was for nearly 800 Billion dollars. What was the difference between these two deals other than the money involved? The parties involved in my deal all had a level of personal responsibility to make the project work. In addition there was expertise at the table concerning every element of the deal. There was no one that didn’t understand the value of those millions we were placing into the economy of that waterfront. I am not sure that the political elements involved in the Stimulus Bill really understood the importance of taking the time to get it right
I listen to the pronouncements by our political leaders and have become convinced that they may not actually know how to do the deal correctly and are afraid or unwilling to take the time to structure something that has a chance of working.
It may take two years before we have an opportunity for a “do over” concerning current political inadequacies. I am confident that capable individuals will soon start to emerge but I do not yet see who will lead the “do over”.
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