Tuesday, March 30, 2010

Credit still shorting small biz

Government bank examiners are the real problem for banks that want to loosen up credit, make loans to small businesses, and push America along the road to economic recovery, small business owners and bankers told USA Today recently. Illustration: Queensboro.wordpress.com

I was given a printout of the article by Dan Wiesner, my old boss and CEO of Wiesner Media, as I visited with another old boss, Pat Wiesner, over my business plan for RobertSchwabPoet.com.

The article, printed Monday, reports the comments of several bankers from around the country and several more banking overseers from the government who try to explain the dilemma facing small-business owners who are being turned down for loans. The small businesses are being told by local banks that federal bank examiners are discouraging lending even as President Obama chides the banks to make more loans.

The story mentions that Washington officials are trying to convince examiners in the hinterlands to loosen up a bit, but the officials also concede that examiners' caution has been elevated by bank failures across America because examinations failed to catch poor lending practices in the recent past (remember New Frontier Bank in Greeley).

The story quotes business people who were turned down for loans last summer, which might suggest there has been time for the banks to reverse course and become a little more friendly toward successful business owners' new requests for credit.

But the ship of state takes a long time to turn, and despite the instantaneous nature of the Internet, it still takes bureaucrats a long time to get the message. As I wrote Sunday in this blog, economic recovery in America depends on the prosperity of its small businesses. It shouldn't take bankers and government bureaucrats this long to absorb new information.

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