The Plight Of New York's Small Business Owners

If the senior Wall Street bankers and Washington decision makers who can move billions of dollars with a single conference call want to understand what is truly happening in the economy, they should sit down with small business people like Peter Elliot, the owner of a clothing store in New York City for the past 35 years. Peter prides himself on the craft of selling and marketing products made in America. He has built his business that way. He is the salt of the earth, a Veteran who retired with the rank of Captain in the Army, rugged but charming, salesman and proselytizer, southern gentleman and New York tough, all at once.

And he is seething with anger. Once he employed 29, now 14. Once he had a solid line of credit with a major bank, now they have cut it off - even though in 35 years, he never missed a payment, and was late - by four days - only once. Once he had faith in the basic decency of the leaders at the major banks and Wall Street firms that allocated capital and stoked the engine of our economy. No longer.

Just to be clear, his anger has nothing to do with the fact that he is now struggling. He is a survivor, and he has built a business over too many decades, seen too many peaks and valleys, had a life filled with the complications we all face, to be thrown off his game by any of those realities. No, it is rather the deep sense of unfairness about how the plutocracy has handled the crisis that eats at him. The sense that we have lost the basic sense of decency that used to define how we addressed issues of national crisis - with a common sense of sharing of both the upside and the down.

Peter grabbed me a few days ago as I was strolling past his store, bathed in sweat from a three-mile run. His store window, on Madison Avenue, was, as always, neatly bedecked with an attractive array of jackets, shirts, sweaters, ties, and assorted accompanying articles of clothing. Understand, Peter has built this store, and a few others, with grit, charm, and perseverance. Through ups and downs, he sold on thin margins, talked up the quality of his domestic products over mass produced imports, took raw college grads and turned them into effective salespeople before they moved on to the world of law or business. He told them that they would learn everything they needed to know to be successful if they could sell on the shop floor - how to read a customer, appreciate value, close a deal, massage an ego.

Once inside, he asked a simple question: How can they do this to me? How can a bank that has received tens of billions of tax dollars - whose very survival was guaranteed by a massive infusion of the tax dollars he and countless millions of others like him pay - how could that bank now rely on a pretext to cut his line of credit so he couldn't finance his ongoing payroll, acquire next season's merchandise, and pay for some expansion plans he had.

Their decision forced him to lay off half his employees and go to his vendors for help. His vendors, with whom he had a relationship for decades, all agreed to work with him - they understood the mutual interest in keeping each other going through the rough patch. But they all agreed - the banks were heinous institutions, and if they could get a pound of flesh out of them, they would. After all, these small businesses had all been playing by the rules, and it wasn't the greed of small business that had led the banks to create credit default swaps, pretend that sub-prime debt was really AAA rated, or originate debt that had no hope of repayment. It wasn't the small business owners who took out gobs of money in bonuses and back-dated options.

After venting the well founded anger that the small businessman feels towards the banks, Peter got more philosophical: "Who creates jobs?" he asked, knowing full well that the question spoke for itself. Yet they - the banks - are cutting off all the small businesses, while they keep shipping money overseas. Somehow dealing with small businesses and helping them through the downturn is too much effort, requires too much care and attention. Couldn't Washington have required the banks receiving tarp money and other assistance at a minimum to keep servicing their existing clients with good credit, rather than just stock-piling our tax dollars? No, they would rather send the money to China in vast piles, invest in mega funds that will build the automotive and aerospace sectors in Asia, fund factories in foreign lands where wages are $2/hour.

I am trying to employ our kids, Peter continued, selling clothing made in America. Yet all the banks do is make it impossible for us to compete. He shook his head sadly, as sounds from the construction of a new bank branch a block south on Madison Avenue - no doubt funded by stimulus money -- filled the air.

See huffingtonpost.com/new-york for more New York news and blogs

Comments

[Kaves]

Corporatocracy.

[Thomas Tewell]

Thank God someone who is someone understands and has a sympathetic viewpoint to the plight of small business versus the BIG BOYS. When will the public get it that these people dont give a rats' ass what happens to any one person, or the nation as a whole. They are financial and political players, swinging their weight behind only what benefits them. And whatever help comes their way, they will gobble it up and stuff it in their coffers, not in any way helpinh out those who made them theri millions in the first place.
It is time for all of us as Americans of the old school, and as human beings, to pull the rug out from under these people.
Boycott, switch banks, go small, do whatever it takes. Ruin these people ( as though that were possible).
And to answer someones question, NO , not all banks act like this. We are with a small, local rural, (Amish) bank who undestand, who don''t make risky or barely legal investments, and who are in the business to help out businesses, while still making an honest dollar. The good old solid way. Thats the way it should be, and if the economy holds together at all, I expect our business to make it thruogh all this, becauise of these HONEST bankers.
I wish the BIg BOYS in their Rolls Royces and Armnani suits had a tenth the integrity of some of the people I know.
Thomas Tewell

[tryandgetsomecommonsense]

2008 was a tough year for almost every small business in the USA - and businesses like mine are probably going to have to close our doors because the banking "rules" are now so stringent that I can't get a loan.

Sure I lost money last year -- but who didn't?

My business has had years where we lost money in the past 53 years we've existed -- and we've always pulled out of the recessions­...but this one is different. The "rules" are all stacked against us "little guys" and there's no bail-out waiting to help us.

Say goodbye to the local guy who gave good service -- within 12 months it will no longer exist.

Thanks Obama -- that wasn't the "change" people were "hope"-ing for.

[Pete2069]

This is the change that this Global Empire and our government is promoting.­.
The way the bail out was constructed for the banking corporations , the funding of the auto corporations was designed to stop any control of Americans on the future..

The criminals which caused these economical destruction have been rewarded and the Citizens paid for their criminal actions.

We are supplying not only this Global Empire with OUR money , but it is also being sent to help foreign countries which we lose EVERYTHING we have work for over the last hundred years.

[tryandgetsomecommonsense]

What can be done?

Consumer confidence is in the toilet becuase most Americans know INSTINCTIVELY that what our government is doing is NOT solving the root causes.

Those that have profited from this mess they DID see coming -- is an atrocity -- and will ruin our country.

[AntiClast]

really poignant

[gevan]

Are ALL the banks the same? Large and small, are they all acting the same in their business practices? One would think that there might be some competative practices between different brands. Is it wrong to think so?

[MarsAmbassador]

Good on ya, Mr. Spitzer! Now get back in the saddle and run for office again! Presuming you learned a lesson from your previous stint, that is. But everything I've ever heard you say since then in regards to fighting for the little guy and holding Wall Street's feet to the fire, makes me wish there were more Democrats like you. You're a Get It Done type of Democrat, which are few and far between.

[BillMelater]

Why do you think they went after him?

[BabyBoomer]

They went after him because he had the goods on AIG and the guts to do something about it, that's why. Hank Greenberg was laughing all the way to the bank when they got Spitzer. Greenberg was probably behind the "investigation" into Spitzer.

[Whitley2009]

Your Wall Street controlled banks are not cooperating with the rest of the country either. Many of us are removing our accounts from New York banks, and turning to local or regional financial institutions.

My family and I will never bank with a Wall Street controlled financial institution again. We are of the opinion that no person or institution on Wall Street can be trusted. It's a crying shame that these institutions are treating their own New Yorkers badly.

I sympathize with your situation, and I do not envy the hard decisions you New Yorkers will have to make during these declining times. Frankly, I feel we all are going to have to become accustom to a much lower style of life for many, many years. It is going to hurt.

[BillMelater]

Just us working stiffs. The rich will still become richer.

[Russycle]

Roger that. When my regional bank went belly up Chase bought them out and took over their accounts. I've opened an account with a local credit union and am moving all my business there.

[Swedishgal]

I think most people are moving from banks to credit unions, which are a lot better than banks anyway.

[BabyBoomer]

Thank you Governor Spitzer! As a small business owner for the past 30 years in NYC, your article was exactly right. My husband and I started our own business 30 years ago, working 100 hour work weeks to build our business and financing our start up costs with personal credit cards. As a start up, we established a relationship with Manufacturers Hanover Trust and took out small loans, paid them back on time and slowly built our business and the trust of the bank. In short, we did "everything right". Since then, despite three recessions and many other business challenges, we are still viable and holding our own. supporting 15 middle class jobs with health care. We have not relied on credit to grow or finance payroll, however, we need the existing lines of credit available to us as a cushion. Because of the crisis, we cannot raise our fees to our clients this year which was a scheduled year to do so. As a result, we are working with a tiny profit margin and therefore, we need access to our lines of credit to cover receivables as our clients are paying us more slowly. These are conditions that we did not cause. So, here we are, operating without the benefit of banking resources despite billions in bail out money to them for that very purpose. I'm with Bill Maher regarding President Obama. I'm hoping for a little more audacity.

[Swedishgal]

Maher gave such a great speech on that and he went after the Dems the following week, which was desperately needed also. I think more people are starting to think like we do, that Obama needs to get a set and use them to bully, if necessary, to get the necesarry bills passed without lobbyists input.

[PR one]

Just like Elliot Ness took on the crooks like Al Capone, That is why we need Elliot Spitzer to ONCE AGAIN take on the mob of Wall St. Please come back, we need you.

[Overd0g2]

Not to mention the government taking 70% of their income.

[wolfgangmo]

What country do you live in?

I own a small business and my margins are so low that I almost don't pay taxes.

Go back to free republic, the adults are having a conversation.

[mauibob]

I'd be hesitant to make a loan to a business that has gone from 29 employees to 14. There is more to this than we are being told.

[zanzig]

As I read it, he went from 29 employees to 14 BECAUSE he didn't get the loan.

[PR one]

some people read thru the eyes of Carl Rove and then spin it from there.

[Angus24]

None of this is really complex. Capitalism is a giant Ponzi scheme. The concentration of wealth prevents the circular flow of money. The circular flow of money is what keeps economies going. No money in the system equals no flow. Think of it like the Colorado River and Hoover Dam. As the dam holds back the water (money) the flow of the Colorado below the dam slows to a trickle. That's the supply side.
The demand side also dries up because the people who are paying loans, credit cards, etc. are maxed out and cannot afford what they already have. The need for more profit drove the banks to lend to people that wouldn't pay back. The housing market tanks and all the foreclosures happen and the rest is history.
They need to let the weak fail and the strong survive.

[Ference]

As citizens facing rough times it is important to remember that while small businesses may not be receiving fair treatment from large banking institutions, they can still rely on consumers at a local level. The support of local businesses is essential for a stable economy.

Beyond that point, small business owners who have a personal connection with their clientele should not shy away from encouraging those people to write to their Congressmen about positive changes that can be brought about for small business.

[norkas]

New York City has caused innocent hard working business owners here and globally to suffer and go out of business because of the multi billion dollar fraud they covered up.

1. A group of about 30 - 40 diamond wholesalers were bribing the GIA for better grading reports and they were able to make profits of 30% - 200% and more .

2. The multi billion diamond fraud that was conducted for over 10 years bilked consumers out of billions of dollars with fraudlent diamond grading reports that the GIA passed off and criminlas paid them off for.

3. Treated diamonds that are worth a fraction of the price of natural color diamonds were given natural GIA grading reports that caused wholesalers to pay oftem more then 400% more then what they were woth and cost the consumers billion because many of these diamonds were woth 400% less then what they paid for.

4.No diamond manufatcure could compete with these criminals when they were buying and bidding on rough diamonds to manufacture for their livings . Those criminals that were bribing the GIA for better grading reports were able to pat 25% - 50% and more the same rough that honest businessman.

5. The criminals made billions of dollars through fraud and bribes and no one can compete with them today and many decent hard working peoples business have collapsed or are holding on a thread.

[norkas]

Elliot Spitzer would of never allwed the diamond fraud to continue. As the cover up with the feds was taking place someone would of gone to Elliot Spitzer and shpwed him the PROOF of the fraud and cover up of the FEDS and i know for a fact this would of been taken care off and a RECALL for diamonds would of taken place so consumers could get their monies back if they were defrauded and businessmen could compete again.

Sorry about the misspelling. Elliot Spitzer when to the same Feds at the southern disctrict in NYC on the AIG matter telling them he wanted them investigated long before AIG blew up. They told Elliot Spitzer they will take care of it and nothing happened and it cost tax payers 100,s of billlions later.

These were the same Feds that some people went to about the multi billion dollar diamond fraud and they made sure there was no recall or convictions and the criminals have put many out of business and consumers have no idea if they diamond was bribed for the grading or treated.

We need Ellit Spitzer badly in NYC nad i will support him anyway i can because he truly knows the massive corruption that takes place here and is not afraid to tacle it.

Elliot Spitzer thank you for your years and please consider of jumbing back in we need you

[NL207]

And what exactly did Governor Spitzer do in New York to help small business while he was in office.?

The most important thing that could be done for these businesses is to reduce the crushing taxes they face in New York. The next most important thing is relief from New York's onerous workman's comp laws and regulatory structures.

Spitzer did nothing about either of these problems.

[Merckx]

And yet, that is not is what is killing these business. It is the lack of access to capital.
Try reading again.

[wolfgangmo]

Again?

He should try reading it the first time.

[PR one]

If the federal regulators would have done their job as Spitzer did, we wouldn't be in the financial mess we are today. As N.Y. AG. He went after the CROOKS in wall street. While the cr___s in Washington were benefiting with the political contributions. This small business owner complaint is not about high taxes but with the multinational banks and Wall St. Those that if they would pay their fair share of taxes then the small business owner would not pay as much.

[Paramendra Bhagat]

A sad story indeed. These are tough times.