As the Administration wrestles with how to get credit flowing to small- to mid-sized businesses, it encounters three significant problems.
First, government-guaranteed SBA loans--even in a more robust form--do not address the financing needs for the bulk of the small-to mid-sized businesses.
Second, smaller banks are under tremendous pressure from legacy problem loans. Problem loans negatively affect capital levels and liquidity, add regulatory pressure, and generally orient banks towards a "hunker down" or "play defense" mode. In addition, larger banks, despite announcements to the contrary, don't view small business lending as strategic and most non-bank lenders that historically focused on the sector still have no access to funding.
Finally, available TARP funds, which could help many banks feels more confident about lending, are so stigmatized that most bank management teams shun them.
The solution is to charter 100 new special "Business Banking Charters." These would be designed for banks that would aggressively participate in lending to small- to mid-sized companies. These new banks could be funded with a combination of private capital (from the hundreds of private equity firms trying to invest in banks) with a mix of TARP funds to make the private capital more attractive. They would have higher capital requirements to justify a concentration in business lending, they would have access to FDIC-insured deposits so they have a stable source of funds, and they would be regulated by a special group of examiners experienced in business lending so that they are properly monitored. As "business banks," they would be required to hold 80% of their assets in small- to mid-sized business lending activities--effectively the reverse of thrifts--which are required to have 80% of their assets in consumer loans.
New "business banks" would have no legacy problem loans and therefore solely focused on new loans, they would be attractive investments and attract private free market capital, and they would represent an entrepreneurial, free market solution to rapidly get credit flowing to small-to mid-sized businesses.
Robert Reich: Breaking Up the Big Banks, and Why Congress Won't Do It
Two ideas are floating around Washington regarding how to handle 'too big to fail' banks, but only one is supported by the Treasury and the White House. Unfortunately, it's the wrong one.
It's insane that the treasury give money to private banks, who then take interest before it gets spent by the us Government.
See my profile for more comments on money systems that work better than out plutocracy.
Who do you think you are fooling?
it's like taking all the regional FED banks and creating 50 FED banks in each state
you are funny, what are you?
British?
You have to go into a bank of some sort anyway to get a mortgage. Why must it be a private one that takes 15 years or more of your hard work for their profit? For doing what? Doing what the constitution states should be done by govt?
If a Public Bank lent you the money to buy a house with little or no interest, would you ever need to refinance? Nope. Can't get cheaper than free! Much more efficient. Lower cost.
Your tremendous savings could be used to buy stuff or services from Americans (especially if this were incentivized). This would create jobs galore! Since making money on money would be largely a thing of the past, the interest collectors (70% goes to top 1%) would be out of business and the distribution of wealth would spread more evenly amongst the spending class - AMERICANS!
No need to always grow the economy either since this necessity is also tied to compound interest.
The assumption we need compound interest is simply incorrect!
At the State level we need to encourage all governors to follow the example of North Dakota and charter a state owned bank. These banks can be capitalized with state assets, which then serve as the base for credit expansion under the fractional reserve lending process and create for each state a huge fund. Interest from loans would return to the Bank, since there are no bondholders or individual owners.
The Bank of North Dakota has for nearly 100 years, guided that state to solvency, budget surpluses, negligable unemployment, and a highly collaborative public/private banking system that does not in anyway need the Federal Reserve.
We never needed the Ponzi scheme perpetrated by the Federal Reserve, no nation needs a central bank owned by private individuals, who charge the government interest on "fiat" money. What a scam and what suckers we have been to allow it to continue.
By cutting the bankers out of the middle, we could cut everyone's mortgage in half, fix the toxic waste issue, stimulate housing and the economy, provide shelter, save enormous amounts of interest, a real ownership society, revive trust in markets, etc.
Each of us would feel this BIG TIME!
Who loses? The bankers that make money on money by cheating, stealing, fooling, bribing etc.