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View Diary: Big Banks have abandoned small businesses (78 comments)

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  •  Ummmm - no (5+ / 0-)

    An SBA 7A loan is a Federally Guaranteed Loan, meaning the risk to the bank is essentially zilch.

    So yes, you can complain about big banks not lending to small business and big banks being too risky at the same time, because they're turning down loans which are guaranteed and would actually reduce their risks.

    If these banks expect to be bailed out, and they do, then it's perfectly fair to expect them to help stimulate and rebuild the economy they were largely responsible for destroying.

    It's never too late to have a happy childhood - Tom Robbins

    by badger on Thu Nov 17, 2011 at 04:33:56 PM PST

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    •  They're guaranteed 75% (if the other comments (0+ / 0-)

      in this diary are correct). So there's risk. Look, I'm sure if these loans were really safe and would really make BofA or Citi money, they'd make the loans. But they're not making the loans. The most obvious reason, IMO, is that they're trying to be more risk averse. I could give other plausible reasons. Perhaps, they're broke and laying off their staff, so they just don't have the people to process the loans right now. I don't know. But I don't think a bank's lending choices are something we need to scrutinize so heavily. The people making those decisions have years and decades of experience in making loans, and it's kinda arrogant to come in and think that you, as a blogger out on the internet, can do it better without having the finance educational background and the intimate details of the loans and the strategy of the companies.

      The obvious answers are wrong. That's why we aren't doing them already.

      by atheistben on Thu Nov 17, 2011 at 04:54:59 PM PST

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      •  So in other words (1+ / 0-)
        Recommended by:
        Actbriniel

        you were talking out your ass in the comment I responded too - you didn't know the loans were guaranteed. And your  "I don't know" is confirmation of that. You (and I) have no idea why they didn't write the loans, but your post about risk was pure bullshit.

        If we had restricted bank's choices, as Glass-Steagall did, we wouldn't be in the mess we're in now. The people you think are so credible at making financial decisions are the ones who made bets on unsecured CDSs, wrote billions in liar loans they peddled as securities, and are still pursuing thousands of fraudulent foreclosures because they couldn't even keep paperwork straight, and you have faith in their financial judgment?

        My business, on the other hand, has never gone bankrupt in 25 years. It has a better balance sheet and income statement, using almost any financial measure or ratio you choose, than any of the major banks. It hasn't required Federal bailouts or preferential tax treatment to be profitable.

        And in 25 years of business, extending trade credit to most customers, we have never had to write off a bad debt. We always get paid, sometimes late, but always get paid.

        So yeah, I think I know something about risk and extending credit, and as banks are creatures of the state controlled by banking laws and regulations created in an ostensible democracy, I think I have something to say about it, too.

        It's never too late to have a happy childhood - Tom Robbins

        by badger on Thu Nov 17, 2011 at 09:47:45 PM PST

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