How the Bailout Killed Local Lending—And How Some States Hope to Bring It Back

“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”

Broken Piggy Bank IOU, photo by Images Money
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.

Read More.

About the author

fluidideas@gmail.com

fluidideas@gmail.com

no Comments

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: