Big banks are in the hot seat again due to a report released today by the Congressional Oversight Panel.
Despite promises to increase lending to small businesses, evidence has emerged that paints bank lending patterns in a pretty ungenerous light. The report says large banks decreased lending to small firms by 9 percent between 2008 and 2009.
The report has lawmakers calling for higher reporting standards when it comes to the health of small businesses. In a nutshell, it’s calling into question whether federal efforts to increase lending levels are helping at all.
All the chatter has some big names weighing in. Federal Reserve Chairman Ben Bernanke sounded off earlier today, according to Reuters.
“One of the key issues for us as we go forward is to create jobs in this recovery,” he said. “One of the keys is going to be overcoming the constraints on credit that small businesses are facing.”
There are lots of opinions about why big banks cut lending levels to small businesses. The investment tends to be riskier than with a large firm, and demand for loans can actually drop off during a recession.
But others say the attitude toward entrepreneurial lending is disheartening, and that alternatives borrowing methods are needed.
What do you think?
Know a small business we should write about? Contact Herald writer Amy Rolph at arolph@heraldnet.com.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
