“Wall Street banks have cut back on small business lending… [by] more than double the cutback in overall lending.… [Small business] options just keep disappearing.”
-Elizabeth Warren, Chair of the TARP Congressional Oversight Panel,
quoted in Judd and McGhee, “Banking on America”
- Photo by Images Money
The Wall Street bailout of 2008 has radically altered the banking business. The bailout was supposed to keep credit flowing to Main Street, but it has wound up having the opposite effect. Small and medium-sized businesses have traditionally been the main engines for increasing employment, and they need bank credit for their working capital; but today credit to local businesses has collapsed nearly everywhere.
That’s why so many states—the total is now fourteen—are considering turning to state-owned banks to get local credit flowing again.