100th Bank Failure Coming: Small Biz Loses in Recovery

While everyone has been focused on big bank earnings this week, I've been thinking about small banks. The FDIC expects that these institutions will continue to be under pressure from bad loans made in the boom times. Soon, we're going to see the 100th bank failure in the US. It may even occur this weekend and the implications are complicated, as MoneyWatch's Editor-in-Chief Eric Schurenberg and I discussed.

I'm particularly sensitive to the plight of small businesses in this country. As a former owner of a small firm, I know the day-to-day struggles that the little guy must endure. This recession has been particularly hard on small business and the contraction of small business credit only adds to the pressure.

Historically, small business has contributed to 50% of US GDP. And while small business job creation is disputed, it's fair to say that a lot of jobs emanate from the small business sector. Yet small businesses have most certainly ended up on the short end of this crisis, because the government has determined that only those organizations that are too big to fail demand attention. If as a society we buy into that notion, then we sure as heck ought to demand more from the mega-survivors.

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Comments

[Pearlswan]

A small business bailout is called a buy-out. Maybe that's why we don't see any help for small business? Perhaps its just a great time for the too-big-to-fail businesses to get even bigger by using all their bailout money to buy-out their smaller competitors or their supply-chain companies. As for workers, they can get bailed out in the US military where there are lots of jobs because there are lots of wars to fight so that too-big-to-fail coprorations can have free access to the world's resources in order to maximize profits for shareholders and bonuses for top corporate managers. It couldn't get any clearer to me. Everything happens for a reason.