Many commentators thought it was hilarious (if a bit scary) that Commerce Secretary Wilbur Ross suggested that furloughed federal workers should not need to go to food banks and charities, as they could just get loans against their income, knowing that it would would eventually be paid. While this may have made perfect sense to someone with as much money as Secretary Ross, it’s clearly out of the realm of possibility for most federal workers, and it’s worrying that the Commerce Secretary of the United States is so out of touch with the financial realities faced by normal working Americans.
While I have never met Mr. Ross personally, I did once work on a proposed transaction (which never happened) with people from WL Ross and Company. The proposed transaction involved several big banks and hundreds of millions of dollars moving around. A private equity manager could say that he needed a hundred million dollars of financing from the bank between the closing and the issuance of some bonds, and a representative of the large bank could respond that that would work for his bank with about as much consideration as you asking for whipped cream on a hot chocolate, and a barista putting on the whipped cream.
This is the world that Wilbur Ross lives in. But it’s not how loans or personal finance typically work, at least for most people.
Ross may be unfamiliar with the obstacles in place for working Americans, but the constraints on their situations are clear:
- Government workers make various amounts of money, but $45,000 per year, or around $1,500 every other week after taxes is typical.
- A $100,000 original fee is immaterial for a $100 million loan, but obviously prohibitive for a $1,500 loan.
- The bank executive is happy to direct his underlings to document and fund a loan for Ross or his company that is going to make the bank hundreds of thousand of dollars in income for a month. No one is interested in a loan which might earn the bank $20.
- Unlike Mr. Ross, the government worker probably does not know any bank officials who have the authority to commit the bank’s capital.
Secretary Ross may be very intelligent, but he is clearly out of touch with how our financial system works on the ground level. He’s lived for decades in a different economic stratosphere, where the day to day expenses and problems in most people’s lives simply no longer exist. Recently, he was criticized for missing an investment of between $50 and $100 thousand on his federal disclosure form. He explained that he had accounts under both “Wilbur Ross” and “Wilbur L. Ross” which he did not realize.
I can also sympathise with that. I have on my desk a letter I recently received saying that I had never cashed a check for $447 some years ago, and the money would be turned over the the state unless I contacted them. I finally called the 800 number and after dealing with their system, found that they actually had about $56,000 worth of stock of mine from my previous employer that had somehow fallen through the cracks.
My point is not to brag about my wealth, but to say that I recognize just how absurd my financial situation must sound to most Americans, who can’t even imagine losing track of $56, much less $56,000. The difference between Secretary Ross and I is not our level of wealth (although he is admittedly much wealthier than I am), it is our level of awareness. I recognize how fortunate I am, he apparently does not. Secretary Ross is just so incredibly out of touch with the majority of Americans, and his repeated pattern of statements like this one shows that despite pushback, he has no real interest in getting back in touch. A man like that can’t possibly properly represent the people’s interests in the halls of government, especially in a position as important as Commerce Secretary.