Financial Crisis, Bailout Has Ripples Past Wall Street
Companies in several industries are feeling the financial pinch.
Sept. 28, 2008— -- During the financial crisis all eyes, and many accusing fingers, have been leveled towards Wall Street. But Wall Street and Main Street's relationship can be far closer than it may seem -- a fact that is causing concern for many economic experts.
"Main Street is the basis of all of the economy, by which Wall Street trades and prospers," Art Cashin, UBS director of floor operations, told "Good Morning America." "Major failures could occur in a matter of days -- and not just banks and finance, but in brand names known all across the globe."
Dana Perino, spokesperson for the White House, recently gave a dire prediction.
"If no one in the financial community trusts each other to lend money, then we're going to have a complete and total financial collapse," she said. "And that's what we're trying to prevent."
In past decades, many industrial companies tapped into the profitable lending industry, but financial thoroughbreds such as GE and General Motors both have financing divisions that now could be hit by consumers defaulting on loans.
Both companies have taken a loss from the credit crisis. In fact, just about any company, in any sector, could feel the pinch.
"In towns all across the country, businesses are slowing down -- no new hiring, layoffs are occurring," Cashin said.
And according to some economic experts, a government bailout could be more damaging than helpful.
"It is very important when you put together a plan like this that you don't reward those who didn't behave well," said Paola Sapienza, associate professor at the Kellogg School of Management.
John Cochrane, professor of finance at the University of Chicago, is also skeptical.
"Perhaps they know something they have not told us, but before you go nuclear, I think we need to know if there is something really bad out there that you are not telling us about," he said.
But according to Wall Street traders in the thick of things, a bailout is essential.
"If we don't get something by the time Asian markets open Monday morning, then we could be in serious trouble," warned Cashin.
