Did we fix banking, or not?
Over the past 18 months, a great deal of attention has been placed on the banks, the providing of capital to those banks, and the health and wealth of Wall Street. Banks have started to pay back their “loans” and have started demonstrating the ability to profit.
But was this only to benefit the banking industry? No. The real reason is that the banking industry is an important enabler for the rest of industry. The banking industry provides the ability for many businesses to function. But has the fixing the banking industry improved the flow of funds to industry.
The answer appears to be ‘no’ but yet there is very little news about it. This hurts small- and medium-sized businesses perhaps more than anyone, which is perhaps why there is little news about it. CFO Magazine reported about it in Small Consolation.
Yes, the banking industry gave loans that it shouldn’t have given. It should be tightening up it’s loan criteria. But I personally know of many businesses, particularly in manufacturing, that are profitable and ready to grow but unable to get a loan just to operate their business. In September of last year, 9,361 small businesses closed their doors. Here’s an example of someone struggling from the article:
Doherty lost a $15,000 line of credit and a corporate credit card, and the rate on an existing card rose from 9% to a whopping 30%. He has had to lay off three employees, his growth plans are on hold, and he still needs money. “It’s truly not a lack of work, it’s a lack of working capital,” he says.
What can you do? Well, I’m no expert on how Washington works. But let people know, including your Congressman, that the problem is far from fixed. Banking is not yet working as it should.
I would love to here your experiences, and more importantly your suggestions.