Look, I’m pessimistic about many aspects of the economy. Anyone who has followed my coverage of the subprime crisis and stimulus-palooza over the last year knows that. But the out-of-control rumor-mongering from the panicked bailout peddlers (many of whom were “fundamentals of the economy are sound” Pollyannas just a few weeks ago) is ridiculous. The skies are gray, but they are not falling because of the bailout defeat.
I noted the “McDonald’s can’t get credit!” lie earlier this week. Now, the “Sonic can’t get credit!” scare story is making the rounds — and John McCain is leading the way:
Mr. McCain, the Republican nominee, told a business roundtable in Des Moines that the evaporation of credit was already making it harder to get loans for students at a technical college in Milwaukee and for Sonic, the drive-through burger chain.
“When small businesses and big businesses like Sonic franchisees can’t borrow, contractors don’t get the remodeling work, equipment makers lose sales, and restaurants go out of business,” Mr. McCain said. “It hurts the entire community.” (link)
Former GOP Rep. Ernest Istook e-mails: “Some are citing Oklahoma City-based Sonic Drive-Ins as an example of a credit crunch, with stories that a lender to Sonic’s franchisees (GE Capital) had stopped lending to them. However, Sonic’s own press release paints a very different picture, saying this was only a minor source of lending. People should therefore be cautioned against using this supposed example of credit crunch.”
Indeed. Here’s the press release:
Contact: Claudia San Pedro
Treasurer and Vice President of Investor Relations
SONIC COMMENTS ON GE CAPITAL FINANCING FOR FRANCHISEES
OKLAHOMA CITY (September 26, 2008) – Sonic Corp. (NASDAQ: SONC), the nation’s largest chain of drive-in restaurants, today commented on remarks in the media concerning GE Capital and the reported pullback it is making in financing for franchisees. Sonic clarified that during the past year GE Capital provided less than 10% of the lending to its franchisees. GE is just one of many lenders who finance Sonic franchisees and, in fact, many franchisees maintain access to other diversified sources of financing. Furthermore, Sonic has not received any notification from GE Capital, either directly or indirectly, that it will stop financing new loans to Sonic franchisees.
Sonic, America’s Drive-In, originally started as a hamburger and root beer stand in 1953 in Shawnee, Okla., called Top Hat Drive-In, and then changed its name to Sonic in 1959. The first drive-in to adopt the Sonic name is still serving customers in Stillwater, Okla. Sonic has more than 3,400 drive-ins coast to coast, where more than a million customers eat every day. For more information about Sonic Corp. and its subsidiaries, visit Sonic at www.sonicdrivein.com.
Someone alert Team McCain — and make sure that Sarah Palin doesn’t recycle her running mate’s misleading talking points during Thursday’s debate.
Leave the tall tales to Joe Biden.
Yes, some borrowers are feeling the credit squeeze — there’s no question that Main Street will feel pain — but as I pointed out yesterday and I’ll repeat again today, not everyone’s falling off a cliff:
Community banks aren’t yet feeling pinch of Wall Street meltdown