Paul Yeager: Hello and welcome to The Iowa Journal. The dominant news this week is the proposed $700 billion bailout of the nation's financial sector. Details remain uncertain but the economic climate is getting harsher. Small investors have been pulling their money from retirement accounts. So-called hardship withdrawals are up 14% at T. Rowe Price and 7% for money managed by Fidelity. Des Moines based Principal Financial reports withdrawals from retirement accounts under its management are up 5% from a year ago and the withdrawals are for greater amounts. The economy has pretty much crowded out other issues in this election year. We'll examine one of Iowa's five congressional districts in a few moments. In the meantime, Iowa government agency heads have been cautioned to hold the line on spending and to temper requests for next year. David Pitt of the Associated Press follows the Iowa economy among other matters. David, let's talk about one of those other matters and that involves the president of the University of Iowa, Sally Mason. Last week there was a meeting with the Board of Regents about the U of I sexual assault investigation. There's been a couple of firings this week. Today the president was in front of the Regents. What happened?
David Pitt: Well, she basically discussed the situation, the firings of the two executives that you mentioned and she also went before the board in a private meeting for basically her annual review, the review of how she has performed as president. So, she explained a little bit more detail why the firings occurred and then went on to discuss what might happen next as far as implementing some changes.
Paul Yeager: Now, she's not fired.
David Pitt: No.
Paul Yeager: No, but her compensation was discussed.
David Pitt: Well, they basically kept her compensation at the same level, at $450,000 and she wasn't given a raise but they do have some incentive bonuses that she can earn if she performs to the level at which the board expects.
Paul Yeager: Are they very specific incentives or are they very general that she'll probably be able to pick those up?
David Pitt: She'll have a set of goals and if she meets the set of goals she'll be able to raise the incentive by $30,000 to a total of $80,000. So, there is potential for her to earn more if she meets the goals that the have set out for her.
Paul Yeager: You talk about raising money, there's been some talk about raising money out of Congress, the Senate and House both taking up bills about federal bailouts. It's been a big story nationally, internationally for that matter. What is the Iowa impact on what's been going on in Washington and in New York?
David Pitt: Well, I think initially some bankers were concerned about a couple of things that the federal government stepped in to do. One of them doesn't really affect Iowa banks as much, one of them does and the federal government has stepped in to fix that. And the thing that we're talking about involves Fannie Mae and Freddie Mac, the two large mortgage lenders that were government supported but now have been basically taken over by the government. A lot of smaller banks had invested in preferred shares into those entities, basically a safe investment they thought because it was government backed and they paid dividends to banks so it was a steady flow of revenue for them. But when the government took over Fannie Mae and Freddie Mac it basically rendered those shares worthless so some banks lost a lot of money. And so they are obviously going to Congress and saying we want involved into this bailout plan something to help restore our shares in Fannie Mae and Freddie Mac. So, that's one way the local banks were affected. Another way involved money market mutual funds and a government guarantee, the government stepped in to guarantee money market mutual funds which created kind of an unfair competition for local banks who had been offering CDs and their own brand of money markets for a long time so local banks were saying, look, you've all of a sudden created this unfair competition for us and we need you to kind of fix that and the government did step in and say, okay, we won't guarantee them in the future, we'll only guarantee the funds up until a certain point. So, it kind of leveled out the playing field a little bit again. So, the local banks are just stepping in and saying, hey, when you make these big changes and help bail out Wall Street don't hurt Main Street.
Paul Yeager: And don't forget about us. This week in Iowa there was a meeting you had covered, the Iowa Bankers Association got together. I would imagine they had a lot to talk about, maybe not so much publicly but amongst themselves.
David Pitt: Some of those issues and I think one of the big things they would like to say is that a lot of people were coming up to the local bankers saying, you know, our banking industry is in big trouble, you know, we keep hearing banks are being bailed out, banks are having trouble and they want to make the distinction that Wall Street investment banks are not the same as your local retail, your local bank on the local level. Those banks they are regulated differently, local banks have FDIC insurance for all of your deposits, the deposits that are in your local bank so you don't have to worry about losing those. Obviously there are limits to that but they just want to make the difference that just because we're hearing banking is in trouble doesn't mean your local bank is going to go under or you're going to lose your money so don't panic in that situation. And, by the way, they said people are not panicking but they are concerned and people are very much tuned in to what's coming.
Paul Yeager: It's something they're watching and they know that it's being talked about. One other thing let's quickly talk about politics in our final minute, David. Today begins the day that you can start to vote for the election. It was a strategy about four to six years ago that let's do this early election thing. Do we anticipate that's going to be the case again this time?
David Pitt: Yeah, I think we've already seen the campaigns really ratchet up their efforts to get people to vote early and to get those votes in the can I guess as it were.
Paul Yeager: Anticipating that's a big part of the campaign is what you're saying?
David Pitt: Right, I think in the last election it was something like 460,000 people out of the 1.5 million voters voted early so we're talking a large number of people and so far this year fewer people have sent in for their mail ballots but it's a significant number again this year.
Paul Yeager: And you can also vote right at your county auditor office. I caught some video out of Des Moines this afternoon that showed lots and lots of people in line so there's definitely an excitement there.
David Pitt: That's right and this is the first year that you can register at the polls, I believe, now you can register when you get to the polls and I don't know that they'll think that's a huge significant change because a lot of people have already registered.
Paul Yeager: That's David Pitt of the Associated Press, thank you so much for stopping by tonight on The Iowa Journal.
David Pitt: You're welcome.