Two stories this week on small business lending caught my attention. The first one was titled: Lending to Small Business is Declining Even Though Economy is Improving
Small businesses — more so than big companies — rely on bank loans to expand operations and hire. Small businesses usually help drive job creation during recoveries but credit clogs have hurt hiring.Lending has dropped from almost $700 billion in the second quarter of 2008, a period when the country was embroiled in a financial crisis, to $660 billion in the first quarter of this year. - Link
The next one was from the Wall Street Journal, Obama Urges Congress on Small Business Proposal:
A few thoughts:
WASHINGTON—President Barack Obama urged Congress Tuesday to pass legislation that would create a $30 billion fund to incite banks to extend credit to small businesses.
Mr. Obama outlined the proposal in February and it is part of a broad effort by the administration to spur small-business growth amid a lending slowdown caused by the economic downturn. Such efforts include several tax breaks and changes to Small Business Administration lending programs.The legislation will help the government "knock down the barriers that prevent small-business owners from getting loans or investing in the future," Mr. Obama said while speaking in the White House Rose Garden Tuesday.
The $30 billion would come from the Treasury Department and would go to small, community banks that want to increase small business lending, said Gene Sperling, counselor to Treasury Secretary Timothy Geithner, in a conference call.A few thoughts:
The banks that want to increase small business lending are the banks that want to invest in their community, our community, our nation.These banks, that want to lend to small business, are the banks that want to help small business perform their role in our economy: create jobs.
These banks are the banks then that received...less than 5% of the amounts we gave...Wall Street banks who:
- Did not want to increase small business lending
- Did not want to invest in our community, our nation.
- Did not want to invest in that part of our economy that creates jobs, affluence, stability, growth: small business.
I’m not a fan of bank bailouts or their recipients. I am even less a fan of the outcomes had we not done that.
I am a fan of free-market, laissez-faire, solutions.
However, what we have here are signs our credit markets are not free, do not operate on these principles of free-market, open competition. And what we have then is the illusion of both a free-market economy and a free society where the best solutions find an advocate, a customer and a community.
And what we have is an unsustainable recovery.