It's no surprise that someone who named his company FreeMarkets Inc., as founder and CEO Glen Meakem did, is a foe of the gargantuan financial bailout bill that President Bush signed into law Friday. Meakem, who calls himself "an economic conservative" and is active in Republican politics, sold his innovative business-to-business Internet company to Ariba Inc. in 2004 for $493 million. Now 44, he is the co-founder and managing director of Meakem Becker Venture Capital. I talked to him by telephone on Thursday evening, the day after the Senate passed a pork-stuffed version of the $700 billion "rescue" plan that its proponents hope will free up the country's frozen credit markets so banks can start lending again.
Q: Are you a pro- or anti-bailout person?
A: I'm against it. .... The bottom line here is that this crisis was caused by the government. They've only worsened it. They've done some regulatory things that are intelligent to try to address it, but there's been a lot of other stupid things done. This bailout package has some good things in it -- keeping 30 million people from paying the Alternative Minimum Tax. That's a good thing. Taking FDIC insurance on bank deposits from $100,000 to $250,000. There are good things. But there's just a whole sea of bad stuff in this bill. And it's $800 billion of new spending and it should be defeated.
Q: Should the market be allowed to fix the credit crisis and is there any simple way to do that?
A: Yes, the market should be allowed to fix the problem with intelligent regulation and perhaps a much-scaled-back government intervention.
Q: What is the single biggest or most important economic problem that needs to be addressed right now?
A: I think the government in the last week has already done the two key things. The SEC modified the mark-to-market rule (The act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value), which is great. And the Fed has stopped worrying about inflation and is now worried about liquidity and deflation and they are injecting massive amounts of money into the financial system. Not bailout, give-away money, but hard loans that banks have to pay back. So I think they've already done the two key things. I think the reason the market dropped (Thursday) so much is that the market's worried that the bailout bill will pass.
Q: Do you still think, as you did on Sept. 16, that the credit crisis will work itself out in six months?