In what he called a “spirited” dialogue with area residents, U.S. Sen. Richard Shelby (R-Ala.) warned several times to “hold on to your pocketbooks” and said Americans are right to be fearful about the economy.

Shelby visited Covington County Saturday at the LBWCC-MacArthur conference center in Opp.

Shelby, a former chairman of the Senate banking system, said that in the past he questioned then-Federal Reserve chairman Allen Greenspan and others about the banking-sector issues that are now causing huge problems in the American economy.

“We’ve got to let some of those banks fail,” Shelby said. “If the Fed keeps printing money (to bail out banks), pretty soon a $100 bill will buy you a Coca-Cola.”

Shelby said the economy “hasn’t hit bottom” and its improvement is predicated on the banking system.

“We’ve got 8,000 banks in this country, many of them small community banks that are strong,” he said. “Some of the largest are suffering from a lack of liquidity and are not making loans.”

Shelby said the country has to clear up issues like the almost-failed AIG.

“We (the government) own 80 percent of the stock, but we don’t have any influence on who runs the company,” he said. “AIG was a blue chip company until 2002, when it opened a London office to insure against the likelihood of default, without the money to back it. We’ve got ourselves in one heck of a bind.

“If the Fed were on top of things, we would never have let these banks do that,” he said. “Now we’ve got to try to restore trust.”

Calling the current economic climate “scary,” Shelby said, “hold on to your pocketbook, or whatever you’ve got. We don’t know what next week will bring under the Obama regime.”

Asked if part of the problem is that companies get too big to exist, he said he wouldn’t say GM and Chrysler are too big to exist.

“But they ought to exist on their own,” he said. “The bigger they are, the harder they are to close up. They’re so big, you can’t close them down, but it’s breaking the treasury to hold them up.”

He said government shouldn’t regulate business in which taxpayer money is not involved.

“Where your money is involved is a different story,” he said.

Quizzed about gun control in the wake of the recent shootings in Geneva County, Shelby said he is a gun owner who has “voted against any initiative to try to control our guns.”

He said he believes there will be a movement to regulate ammunition under the Obama administration.

Another push will be for the card check bill that changes labor law, Shelby said.

At present, workers win recognition of a union by first collecting the signatures of at least 30 percent of the employees requesting a union. Once those signatures are verified by the National Labor Relations Board (NLRB), a secret-ballot election is used to organize a union.

Under the proposed Employee Free Choice Act (EFCA), also known as the card check bill, organizers would collect the signatures of at least 50 percent of the workers and a union would be automatically formed.

Shelby said if this bill passes, “you’ll see the biggest exodus of companies. They’ll be going to China, India and everywhere else.

“This will be a tough fight to win,” he said. “This is the biggest no-job bill in this country.”