As local businesses fail, some say bailouts are unfair; others call them necessary

Keith Hull is not a happy camper.

On Friday, Hull laid off his last two employees at Rocky Mountain RV. He will close his lot in Garden City next month. As he prepares for the auctioneer to sell every camp trailer, tool and fixture after 15 years in business, he's had the surreal experience of watching the federal government fund massive bailouts of large financial institutions.

"I am just absolutely infuriated when I see Main Street businesses in such a lousy condition while our government is using taxpayer dollars to bail out insurance companies and banks and the whole works," Hull said. "It's unbelievable."

Hull said the economy must weather corrections, particularly in times of excess like the easy-money lending practices of recent years. "I don't expect anybody to bail me out. If I can't make it, then I should fail. But that should go for everyone."

Hull's hostility is widespread, according to GOP congressman Bill Sali, who resisted President Bush's plan for $700 billion more in relief. Congress and the Bush administration reached a tentative deal on the bailout Saturday night.

"This does not have public sentiment behind it in any way, shape or form," Sali said last week. "We got one person who called and said this was a good idea and 320 saying, 'Don't do this!'"

Polls show a country divided and confused, with support for bailouts varying depending on how the question is put. But many agree that it's unjust when Wall Street gets help while Main Street suffers.

"Absolutely, it isn't fair," said Don Reading, a Boise economist. "Main Street businesses are failing and functioning all the time - sometimes due to their own fault, sometimes it's not their fault at all. But since they're small, they don't matter."

Boise State University economist Don Holley said big financial institutions get help because their failure would trigger a catastrophic collapse of the entire economy. "We'll be in depression, not recession, depression," Holley said. "Unemployment would probably exceed 20 percent. It would be the 1930s all over again."

John Hale, managing partner of accounting firm KPMG's Boise office, said allowing Fannie Mae and Freddie Mac and insurer AIG to go under "would have tipped over a lot of other businesses. With an RV dealership, you're talking about a few salesmen, a couple mechanics. There's not a lot of people downstream or upstream depending on his sales."

But Hull fears bailouts will delay the necessary retooling of the economy and ultimately cause more damage. "You gotta let 'em fail and let the chips fall where they may. And then you pull out of the rubble and you make something else. If they keep doing what they're doing, this country's going to collapse."

Hull's competitors in the hard-hit RV business also report steep sales declines. Some have laid off workers. A second dealer in Garden City, Roger's RV, closed in June.

Nationally, deliveries of new travel trailers, motor homes, camper vans and truck campers fell 10 percent in 2007 to 353,500, according to the Recreational Vehicle Industry Association. Through July, shipments were down 20 percent from the same time last year. Should that trend continue, 2008 will be the worst year on record after almost 30 years of expansion.

But the RVIA isn't asking for a bailout and supports the president's plan for more federal support of big financial institutions, according to spokesman Kevin Broom. "It's not fuel prices, it's tight credit that's our biggest problem," Broom said.

Dealers report that fewer than one-third of credit applicants are getting approved, down from 90 percent in recent years, Broom said. "You get people who want to buy and can't."

George Mustard, owner of American Way RV and president of the Treasure Valley RV Dealers Association, said his business is down 40 percent from 2007. He has laid off nine employees, leaving five on the job. Mustard supports bailouts for the financial industry.

"The credit crunch is going to kill all of us," he said. "If you're trying to sell anything that you gotta have credit for, it's drying up rapidly."

Chris Bohnenkamp is in another tough big-ticket business, Bohnenkamp's Custom Weld Marina in Meridian, a retailer and service center specializing in jet boats.

Bohnenkamp said banks have gotten so tight that two weeks ago he had a customer with a sky-high 770 credit score turned down for a $64,000 boat loan. The man, who is 67, was denied because he's retired, though he has an $100,000 annual pension.

Bohnenkamp didn't lose the sale: "He paid cash." But the anecdote illustrates how calcified the system has become. "If the government does step in, it will definitely help the economy and help the banks loosen their belts for folks that deserve it."

Bohnenkamp said he's still selling to high-end customers but the "everyday, 40-hour-week employee isn't coming in here buying boats. It's just not happening."

He's cut prices by as much as $3,000 below cost, shedding interest payments and hoping buyers will become service customers. Bohnenkamp hasn't laid off any of his 14 employees, but has added a metal fabrication business to keep them busy building sled decks for pickups to haul snowmobiles and ATVs.

Idahoans registered about 97,000 RVs in 2007. Figures for 2008 were not available, but Barry Lesh figures the 20 percent decline in sales of new models is about right for Idaho. Lesh runs Lesh's Travel Center, a family-owned shop in Garden City started by his father in 1969.

Lesh has his doubts about whether Bush's latest bailout will work and has a hard time stomaching aid to bad actors. "We're basically rewarding malfeasance," he said. "My concern is they'll just be free to do it all over again."

Still, like the economists, Lesh sees no alternative. "Something's got to be done. Otherwise, it's going to take us down and the rest of the world, it seems."

Meanwhile, Lesh will live under the rules that apply to sectors of the economy that aren't "too big to fail."

"In terms of RV dealers, capitalism will take care of itself," Lesh said. "If you've been wise and saved your money, you can weather the storm. If not, it's going to take you out."

Dan Popkey: 377-6438