Published: October 01, 2008 01:15 am      

THE TONAWANDAS: Three area citizens, businessmen weigh in on Wall-Street’s woes

GM retiree Mark Britton, local eye-doctor/business owner Robert Zachary and WNY financial adviser Joseph Gutt don’t have a lot in common — except a disdain for CEOs getting golden umbrellas amid Wall-Street’s tumult.

On the subject of requests for Congress to pass a $700 billion bailout, no solid consensus.

On the Buffalo/Niagara area’s ability to ride out the economic storm of the century, despite record swells in government spending and hurricane force deficits — agreement.

Out from work but not out of the game

Britton, for one, doesn’t want a bailout. But his life preserver is leaking faster than his old ship — General Motors — is sinking, and the captain is being rowed ashore.

At his kitchen table Tuesday morning, with radio coverage of Congress’ proposed $700 billion financial bailout plan audible in the next room, the 47-year-old retired Powertrain worker is instead grappling with another 11-figure “freebie” handed out last week.

Passed by the U.S. Senate Saturday and approved by the House Wednesday is $25 billion for the nation’s big three automakers — Ford, Chrysler and General Motors. GM was his lifeboat and he’s not afraid to quote the American Dream in describing how his financial security is now being dashed to wreckage.

Captains of the auto industry euphemistically say the measure, which has moved forward rather quietly compared to the $700 billion now being discussed for the broader economy, should be referred to as a “loan guarantee.”

“There’s no difference between what they’ve done and what’s happening on Wall Street,” Britton said.

The 23-year veteran autoworker, however, has more than the average reason to be upset.

He has been on disability since 2007 with a cell disease requiring extensive tests and treatments. Thousands in medical debt has already piled up since the UAW took over the company’s insurance last year. The difference is more than dollars and cents, it’s a man’s life.

A mitochondria “workup” has been requested by his doctor. The $10,000 procedure is not covered.

He has three children.

“Before I didn’t pay one dime. Now my office visit is $100; my shots, that’s $75. So I went to that from having full coverage for my family.”

Britton doesn’t complain to the heavens about his disease, which affects the energy centers in his body’s cells, but criticizes the recently downgraded insurance that hardly covers his medical bills.

He doesn’t complain about the 30-year fixed rate mortgage he is still faithfully paying off, but rips the outsourcing, layoffs and recent bailout of the automakers, whose companies he said have done little but fire his comrades and cut their pay recently — and now are being kept afloat on his dime.

Of the bailout defeated in Washington Monday, he is in favor of the plan, so long as it’s not what he termed a “blank check.”

For Britton, it is not the harsh reality of toady’s economy, but the staccato uncertainty — the gut wrenching, ceaseless double standards that result from the nations’ institutions making bad decisions and getting a free ride while Americans such as himself, who has done everything by the book, raised a family and established his home, is being asked to pay for it.

He believes a gradual aid package from Capitol Hill could do the trick, but not all at once.

That’s what was included in Monday’s draft, which failed 228-205. Money would be released in pieces, with $250 billion going to Treasury Secretary Henry Paulson right away. According to the Washington Post, Paulson has said he expects the proposed money to be spent buying vulnerable assets at a rate of $50 billion per month.

On his fixed-rate, 30-year mortgage in the Town of Tonawanda, however, he has no complaints.

Housing report released

Bucking some of the country’s gloomiest real estate trends on behalf of the area, however, is a report recently released by California-based First American CoreLogic, a company which records data on mortgage and foreclosure activity as well as home prices and sales volume nationwide.

For the Buffalo/Niagara Falls region, the report states an increase in mortgage delinquency and the foreclosure rate less than half that of the nation as a whole for the month of July.

Delinquency on home-loans lasting more than 90 days rose 0.20 percent for the area from July ’07 to July ’08. Home prices, however, have jumped almost 0.50 percent in the same period, with Zip code 14092 representing North Tonawanda and parts of Wheatfield representing the highest home prices in the region. The median (middle number in a list) price is $139,250. Nationally, prices fell 7.7 percent, with a median price of $202,000.

Weathering the storm

Joseph Gutt, of Tonawanda-based J.J. Gutt & Associates, offered a similar analysis of the region as rather stable even as the house of cards falters elsewhere. The stock market, despite gains yesterday, warrants a conservative, cut-your-losses type approach, Gutt said Tuesday.

“Greed right now is governing the marketplace,” he said.

He has been advising his clients against selling off stocks, but promotes a feature in hard times whereby stocks are sold automatically if they decrease in value by 10 percent.

In the long run, he stressed age is the main factor in determining what risks to take, but that municipal bonds, even U.S. Treasury bonds ultimately will pay off.

“I had a couple of calls this morning. One lady, she was ecstatic. She called her broker and she actually was up $318,” he said. “She called around Christmas time and was bemoaning the fact that she wasn’t making as much as her peer group.”

On the subject of what many feels is a lack of oversight or even guidance by the Securities and Exchange Commission (which is able to police public business practices right into the board room), Gutt said it’s out of line. He used the analogy about the fox guarding the hen house when referring to SEC Chairman Christopher Cox’s role in not having done more.

“If I gave my clients the kind of advice they give their clients I’d have gone out of business a long time ago,” he said. “The average person is a follower, not a leader. If they’ve got somebody waving a banner they’ll follow them even if he’s got no backing for his predictions.”

Gutt, however, said housing appears stable enough, and the biggest thing he’s seen change recently in the local retail sector has been store owners buying less up front, keeping fewer goods in storage.

Of the bailout measure, the 79-year-old professional is in favor of such an unprecedented move toward favoritism by the government regarding big business, as long as it comes with restrictions.

The failed $700 billion bill did include a provision to cut back pay for corporate executives of whichever floundering banks and institutions participated. A handful of such executives made an average of $10.5 million last year according to a report cited by the Washington Post recently.

Overall, “I think we’re going to survive this a heck of a lot better than the Californians or the Texans where there is a lot of volatility in the housing market,” he said.

Finding a niche

Robert Zachary took over the business now called Brighton Optical in the Town of Tonawanda 40 years ago when he was in his early 20s.

“The biggest advantage in WNY is we have the oldest optical school in the country — Erie Community College,” he said. “Many opticians here are Erie grads.”

He said after so many years, and no current business loans, the nation’s financial crisis hasn’t hit him particularly hard — or minus general increases in the price of goods and services, not at all.

“I’ve been very fortunate. I haven’t had any really bad times,” he said. “I don’t think you’re going to find it’s coming to Buffalo that fast.”

One of the companies he gets his frames from now charges a gas surcharge, which he said appeared “all of a sudden” but Zachary takes it in stride and feels he is in a saturated market with a loyal clientele.

He pointed out that a friend who worked at the chain Pearl Vision in Walden Galleria, now closed, was paying nearly $16,000 per month just for rent.

“Independent opticians, a lot of us, we own our own property, we don’t have to charge an arm and a leg for glasses. Places that are high-traffic and pay big rent — that gets passed on to the customer.”

He wavered on the question of the proposed bailout, finally indicating he doesn’t think it is a good idea.

“There should have been more checks and balances, I think. I’m afraid of the big buyouts for executives — they don’t deserve a hundred million dollars for doing a bad job,” he said.

“If you don’t have it, don’t spend it.”

Contact reporter Neale Gulley at 693-1000, ext. 114.