Meredith Whitney: Small Business Left Out In The Cold In Bailout

wsj.com:

Since the onset of the credit crisis over two years ago, available credit to small businesses and consumers has contracted by trillions of dollars, and that phenomenon is reflected in dismal consumer spending trends. Equally worrisome are the trends in small-business credit, which has contracted at one of the fastest paces of any lending category. Small business loans are hard to find, and credit-card lines (a critical funding source to small businesses) have been cut by 25% since last year.

Read the whole story: wsj.com

Comments

[royevatom]

Thanks for the news but anybody with any brains new this was happening more than two years ago. The lenders have been killing small business with high interest rates and expensive loan packages. But real estate investment was so well funded you could get a loan easily, not because of the investment earnings or growth but because of quick profits on sale and re-sale as property values were inflating and refinancing became a way to acquire capital for whatever purposes.
If this Government doesn't come down off it's high horse and attack the problem of commercial loans for Small business, and Small business development you are going to see a disaster that will devastate this nation beyond any immediate recovery.
Cap and reduce interest on commercial loans, provide capital in long term investment funds backed by incentives for lenders NOW!

[kankankan]

How much you want to bet the bigs guys avoid the new regs and but they fall hard on small businesses.

Now we hear Goldman gets to cash in on CDS it bet on the demisre of CIT while taxpayers lose another 2 billion and small businesses go unfunded.

The US was formed when small businesses­/tradesman of the colonies were fed up with having to "compete" with Britishbig, sanctioned, crony companies/­monopolies­. The King's supported businesses got govt preferences while everybody else was squeezed via taxes, and unfair competition and the colonist got no say in this. Once again, our govt is not representative and the govt props up big businesses through crony capitalism, the rest of us our shut out. We can protest 99 to 1 against TARP and it still passes.

Can you imagine what we could have doen $700 bill spent on TARP: jobs tax credit to small businesses for hiring new employees, cheap money to viable but struggling small businesses, venture captial for entrepenuers, support of health care costs for new companies and entrepeneurs, money for new energy techncology start-ups.­..instead, this money went to banker bonsuses and so bad, big banks could buy other banks...what an economic black hole

[Gernuser]

To make matters far worse, consider what the US government has actually done to fix the underlying problems? Nothing

good articles; http://iamned.blogspot.com

The government has put the same punch bowl out that got us into the mess in the first place. More debt and consumption and don't worry about paying it back. (Berbnanke= Greenspan II)

[rissole]

Of course they were left out in the cold Meredith. Small businesses don't put money into the political coffers like big business does. And who ever head of Bill's Hardware Store getting a 6 billion dollar contract from the Pentagon?

[jsarets]

"Main Street represents the foundation of this country. Reviving it should take priority over any regulatory reform or systemic overhaul."

I was cheering along with this article until I got to this bit of loaded partisan demagoguery at the end.

Big banks won't lend to small businesses, with or without government intervention.

The only way this is going to work is if someone that people trust and respect takes to their bully pulpit and advises people to liquidate their private investment funds and national bank accounts and deposit their wealth in local credit unions or community banks.

Small banks lend to small business. Local banks lend to local businesses.

If we want jobs and opportunities where we live, then we must invest in our communities. If we invest in a diversified portfolio of financial media jargon, then the returns better be spectacular enough to compensate for the fact that we won't have any earned income because all the jobs went elsewhere.

[NO-LIE]

You get tired if hearing to big to fail ! There has been no plan for small businesses during these economic times. Seems like they are to small to save ! small business is the backbone of america and nothing has been done to save them !

[einstein10]

"Main Street represents the foundation of this country. Reviving it should take priority over any regulatory reform or systemic overhaul."

This article should be top story on the main page!

Mandate that the banks loan to small businesses. Mandate that banks lower all mortgage interest rates and credit card rates to 5% for EVERYONE!!

Watch the economy recover fast!

[topkatnc]

Yeah....and the harding working people in this country were left out of the bailout too...

[ImissBush]

mayb the shoulda donated mo$$$ 2 O
or b
2 big
2fail

[amdezurik]

or you could learn to spell and think

[ImissBush]

or u could try an original thought

[Peter007]

I run a small Real Estate Appraisal business. The recent changes put thru into law by Attorney General Cuomo in NY has allowed the large companies to prosper and cut wages of the small business people in my business in half. Appraisers are closing up shops all over the country. It seems the major Banks had a hand in writing the new regulations and although the customer is paying more, the appraisers are getting paid less. The difference is going to management companies set up by the major banks. The product ( appraisal ) is becoming a piece of garbage because of the new regulations. Speed and cost are a major factor. Quality is not. Major corporations write the regulations. They are written to benefit themselves with a fancy bow tied on it to fool the public into thinking they are getting better protection. Its a scam.

[Dbos]

Does the attny general make law in New York?

[kankankan]

big banks write every piece of legislation these days, TARP, home loan mods, etc...

[royevatom]

This is exactly why I think we are in BIG trouble. I don't want my lender appraising my property simply because it is a conflict of interest and I have had one battle with the lender over this issue when their appraiser was proven by me to have had multiple infractions and charges against him.
We are going to have a huge increase of people living in poverty and an increase in the working poor.
I don't think we can count on the Federal Government to do anything significant to avoid this.
The cost of living is rising so fast that I personally can't believe it and I don't see where it is going to stop.

[nogornc]

She has had it right from the beginning. She called the credit crisis quarters before anyone else - why isn't she Treasury Secretary?

[mrcontinental]

She's not from Goldman Sacks.

[Fabulousyogi]

Uhh. No thank you. I remember when she was pushing for social security privatization. By the way, she also worked on Wall Street.

[efmo]

All I can say to this article, is "duh-oh". And yet small businesses almost always march in lockstep with big business, no?

[jimrs]

Apparently some of you still don't get it..It's not left vs right, or dem against rep...
It is a corrupt system against the majority. Say what you want about incompetence
in america, you have to admit that the divide & conquer thingy is working just fine...

[Hdaryl01]

My advice to small business owners-GET OUT WHILE YOU CAN, CUT YOUR LOSSES NOW, IT WILL NOT GET BETTER.

Read iridium53's comment below. I can share a very similar story. Many, many others can share, or are currently living similar stories.

If you own a small business, and still have home equity, or a 401K, or a 529, or savings, or other investments, get out now while you still do. You won't if you ride it down. As the author indicates, this has been going on for over two years.

[grateful4thedead]

so meredith, what was your little july meeting with bair about? we saw it.