After the banks were recovered in 2008, the small local lending banks continued to go bankrupt. It is those local banks that need focus and it is best done by the SBA (Small Business Administration) and not the conglomerate of wealth in the big banks.
If the New York Times wants to be revolutionary, it is time to look at the small businesses in the USA with a record low unemployment rate since President Obama was in office during his SECOND TERM. They need lending banks that are solvent and knows the local economy. Those type of banks would have at hand the ability to measure market share in a local economy and decide if there was enough room in that economy to support such an economic venture.
The US Small Business Administration (click here) has loans at the ready. They even have SPECIALIZED loans for Black Owned Business. Do the conglomerate wealth banks have that? No.
The only aspect of financing small businesses is to have local banks that know the terrain and the realistic estimate as to the viability of a small business venture. That type of specialty bank does not exist. It requires REAL management of a bank and REAL connections to local people. A banker that lives and works in the local economy that knows the pulse of potential for GROWTH.
The infrastructure set up for the Big Banks with big ideas of ruling every dollar on the face of Earth will never be able to customize a bank for a local economy and lend with enough confidence to people sincerely interested in providing more growth to a healthy local economy and/or revitalize the neighborhoods the obscenely conglomerate wealthy banks laid to waste in 2008!
May 15, 2017
By Hal S. Scott
Somewhere in the United States right now, (click here) an entrepreneur is having trouble getting a small-business loan for expansion. The reason? The bank is committed to keeping a large portion of its money in government debt instead.
After the financial crisis, the government, in the form of the Federal Reserve, the Comptroller of the Currency and the Federal Deposit Insurance Corporation, imposed liquidity requirements that force American banks with assets over $50 billion to hold huge amounts of government debt as liquid assets.
Those assets represent $4.3 trillion in government debt, or about one-quarter of all American banking assets. They include $1.75 trillion in bank deposits (called excess reserves) held at the Fed, $1.5 trillion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac (called government-sponsored-enterprise debt) and $560 billion in United States Treasuries.
American banks are truly awash in government debt at five times pre-crisis levels. If President Trump wants to follow through on his promise to increase lending to small businesses, he should start by scaling back these requirements....
