Business leaders at Harvard support US rescue plan
Captains of commerce converging on Harvard Business School for its Centennial Global Business Summit this week generally said they supported the emerging plan for the United States and other governments to stem the credit crisis by pumping $250 billion into financial institutions in exchange for ownership stakes.
"I think it's a better idea than just buying assets," Orit Gadiesh, chairman of the Bain & Co. management consulting firm based in Boston, said today. "We don't have many options."
"They're clearly doing something, and hopefully this will help," said Jamie Dimon, chief executive of JPMorgan Chase & Co., one of the US banks that will get a cash infusion under the plan.
Federal officials at first were reluctant to inject capital directly into struggling banks, focusing instead on purchasing risky assets that had frozen credit markets by making banks too nervous to lend to one another. But after world stock markets plunged in response to the initial bailout plan, they quickly followed British Prime Minister Gordon Brown and other foreign leaders preparing to capitalize banks.
"This is more in the line of what the Europeans are doing," Gadiesh said. "I give them credit for coming around."
With anxiety running high about the financial turmoil spilling into the broader economy, the free market ideology that defines Harvard-educated business leaders was muted this week.
"I've been a Republican all my life," Jeffrey R. Immelt (right), chief executive of General Electric Co., said on a panel at the Harvard summit on Monday. "I believe in free markets. But the notion that the government isn't a catalyst for change in this country is purely garbage."
Some dissenting voices, however, warned that government ownership of banks historically has dampened economic growth in other countries. "It's frightening for us to hear about the US nationalizing banks," said Anand G. Mahindra, managing director of an Indian-based conglomerate. "That's what Indira Gandhi did in 1966."
(By Robert Weisman, Globe staff)