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The Guilfordian

The student news site of Guilford College

The Guilfordian

The student news site of Guilford College

The Guilfordian

Faculty and Staff hold Financial Panel for Community

“Oh f—.” These are the words printed on a fake cover of the magazine The Economist that Voehringer Professor of Economics Robert Williams presented near the start of a student-led panel entitled “Money for Nothing: Dire Financial Straits in a Global Economy.” Six faculty and staff made up the panel including Williams, Assistant Professor of Sociology and Anthropology Martha Lang, President and Professor of Political Science Kent Chabotar, Director of the Center for Principled Problem Solving Mark Justad, Associate Professor of English Heather Hayton, and Director of Institutional Research & Assessment Thomas Coaxum to discuss the effect that the dwindling economy has on Guilford.

Williams, who has studied financial markets since 1995, was summoned to begin the panel as many students hoped his expertise could offer some reassurance.

“I don’t know if I’m going to be able to reassure you at all,” said Williams. “If you study recent history you can see it’s a repeated pattern. This is a big one. This is the biggest one I have ever seen: probably the biggest one since 1930.”

Williams went on to explain that in a lightly regulated economy there is a pattern of certain investments starting to gather high rates of return. Investment banks then set up channels for capital, making it easier for banks to lend on that asset.

“Then ultimately they find that here is not enough income coming off that (asset) to support all of these claims on it,” said Williams. “And so the most exposed areas will start first and they’ll try to sell off the asset. The value goes down and pretty soon it reaches the light of day and everybody rushes to the exit.”

Williams explained that this scenario played out on an extreme scale with Fannie Mae and Freddie Mac, the mortgage giants who recently underwent a government bail-out.

President Kent Chabotar talked about Guilford’s financial stability. Chabotar stated that the endowment has been hit – instead of its usual $70 million value, the endowment dropped to $60 million. Traditionally Guilford only takes out $3 million annually for its $50 million budget.

Chabotar is hopeful that the CCE population, which makes up 40 percent of the student body, will not decrease significantly due to the financial crisis.

“The adult population in most schools tends to be less correlated with economics because adults go to college when the economy’s good and they can afford it and their company sends them,” Chabotar said. “They also go back when the economy is bad because some of them are unfortunately laid off and are worried about the future so they spent extra time trying to get that education protection.”

Guilford’s budget has been pleasantly surprised with unexpected funds. Before the start of the fall semester, Guilford planned on its “worst case scenario” budget, which had a gap of $3.5 million. However, due to higher enrollment, Guilford came in at its “middle scenario” budget.

Three weeks ago, Guilford also received gifts totaling $3 million and the phon-a-thon raised $31,000 from alumni and friends in one night.

Despite these relieving statistics for Guilford, the school is still in debt for $32 million and the two percent average variable interest rate spiked up to eight percent three weeks ago, leveling off at six percent. Chabotar also said that student loans could be in trouble.

“There may be fewer opportunities for students to get loans and the interest rates are going to be higher,” Chabotar said.

Seniors Becky Pittman and Lizzie Biddle organized the panel after lawmakers in Washington rejected a $700 billion bailout for troubled national banks.

“Lizzie and I were talking on the day that the House voted no for the first time on the bailout and with the markets crashing . and (we) really didn’t know what was going on,” said Pittman. “We thought it would be a really good idea for us to utilize our sources here at Guilford and ease our worry and confusion.

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