The New Majority

People who actually create jobs have only one thing to say to the dozens of banks that received hundreds of billions of bailout dollars: Show us the money.

So far only one really has. And we almost wish they hadn't.

In October, Bank of America received $15 billion under the Troubled Asset Recovery Program. Three weeks later, the Wall Street Journal reported BofA was finally starting to invest its windfall. That's the good news.

The bad news is, almost half the money went to China.

Yes, I know it sounds crazy. But less than a month after the federal government filled the BofA begging bowl with $15 billion, the bank invested $7 billion to buy stock in the China Construction Bank, one of the largest in China.

This is on top of billions already invested in the same bank for construction in Asia. All while pulling its money out of construction in America.

This is not something I just read about on the financial pages. It happened to me and thousands of other companies that depended on Bank of America, but who were abandoned by the bank just when we needed them the most.

Bank of America was until recently one of the larger lenders to homebuilders in the country. You probably remember its TV commercials about how it single-handedly turned gray and decrepit neighborhoods into colorful and happy places.

Most have gone back to gray now because Bank of America has been shutting down thousands of building projects mid-stream -- many with sticks in
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the air.

Our case is typical. We had thousands of homes in various stages of development, all funded with loans from Bank of America. During the 27 years my firm and I have done business with the bank, we have borrowed more than $1 billion to build more than 10,000 new homes.

We always paid off our loans.

Last year, when the housing crisis was just beginning its downward spiral, Bank of America started aggressively re-evaluating the property we had pledged to secure our loans. The bank told us that we would soon need millions of dollars in additional cash as collateral.

Then the bank told us it would not renew two of our loans, and it raised our interest rate. BofA told us to keep paying them; keep working; keep hiring sub-contractors. They were sure we could work something out. So that is what we did. Until the bank pulled the plug on us -- and other homebuilders across the country.

In an all too familiar litany, we have seen the tsunami sweep over America.

Over the last two years, 3,000 homebuilders have closed their doors. Today, one homebuilder is going out of business every hour. And 3 million construction workers have lost their jobs.

Foreclosures, construction unemployment, property values, confidence are all going in bad directions at record rates.

All the while, builders have been losing their property to the banks, which have no idea what to do with it. So its value plunges even more, hurting shareholders in ways they could not imagine.

It did not have to be that way.

Reasonable people may disagree about whether lenders are villains or victims in this catastrophe.

But surely those who say banks are merely victims could not have welcomed the news that BofA was sending $7 billion to China just a few weeks after getting a taxpayer bailout.

Ultimately, the civil courts will figure out if BofA and other lenders acted in bad faith during this crisis. Lots of angry business people say they did just that. I'm one of them.

But when we heard the same bank was shipping to China billions of tax dollars intended to repair troubled assets in America, we may have been unhappy. But we were not surprised.

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The author is president of Barratt American, a homebuilder in Carlsbad, Chairman of the New Majority San Diego and the former president of the California Building Industry Association.