Big vs Small Bank Loans

Daily Business Report
Article Archives
US Economic Forecast for 2012 and the Election Year Cycle
Shop the Local Merchant Economy
Right to Work vs Union State Economies
Rational Tariffs Lower Irrational Trade Deficits
International Business - Davos Style
Banking, Housing and Mortgages
David Stockman's Viewpoint on the Obama Budget Disaster
Regulations Harm Small Business and Protects Corporations
Gas Prices as an Indicator of Energy Costs
Governments Acting as Venture Capitalists
College Education Economics
Industrial Wind and the Production Tax Credit
Medicare and the Ryan Budget
U.S. Corporate Tax Rate Consequences
Corporate Spying and Intellectual Theft
The Foolish Exporting Natural Gas Policy
A Matter of Time for a VAT Tax
Big vs Small Bank Loans
Bankruptcy Trends in the Post Meltdown Era
Money Center Banks and Stricter Financial Oversight
Electric Power Generation under NYS Article X
Growth in the National Debt
Advantages of Chinese Trade Policy
Unemployment as a Lifestyle
Immigration Hurts American Employment
Bank for International Settlements on Big Banks
Small Business Assault from Obamacare
Compound Interest and the Debt Bubble
The Federal Centralization Economy
Parking Offshore Profits Hurt the Domestic Economy
The Record of Olympic Economics
Financial Algorithmic Trading
Goldman Sachs Above the Law
The MF Global Magical Mystery Tour
Destroying Internet Freedom by Taxation
The Permanent Unemployment Economy
Jackals of Jekyll Island - Federal Reserve Audit
QE3 Blowing Up the Debt Bubble
Riots Over Rotten Apple Mania
Gap Between College Costs and Inflation
Counterproductive Minimum Wage Mandates
Derivative Meltdown and Dollar Collapse
Central Banks Game Plan: One World Currency
European Commission Single Supervisory Mechanism
Lunacy of FEMA Hurricane Insurance Subsidy
Taxmageddon Holding Hands while Jumping Off the Cliff
The Direction of Equities in the Obama Economy
Is it FAIR to Tax the Rich out of Business?
California Dreaming: Bankruptcy, Pensions and Taxes
Pay Differential - Private Sector and Federal Government
Long History of HSBC Money Laundering
Swan Dive of 2013 Economy
Federal Reserve May Pause Quantitative Easing
The Economics of Sequestration
The state-owned Bank of North Dakota
Chinese Takeover with Free Trade Zones
Low Interest Rates Impoverish Savers
Bond Bubble Expectations
Currency Wars - Race to the Bottom
Government Subsidizes and Bankrupt Companies
Economics of Gun Control
Refuse to Buy or Sell with the Federal Government
The Cyprus Great Bank Robbery
Keystone Pipeline Blockage
Move Over IMF for the BRICS Development Bank
Obama Budget Proposes Cuts to Social Security and Medicare
The Risk and Reward of Bitcoins
Farm Supports and Social Welfare
Internet and Sale Taxes Dialectic
The Warren Buffett House of Cards
IRS as a Political Hit Squad
Revenue Budget Projections
Google and the NSA Connection
The Roubini - Faber Debate
Hydrofracking Boom or Bust
Goldman Sachs - first learn, then earn and serve
The Federal Reserve after Ben Bernanke
Implications of a Pyrrhic Real Estate Rebound
The New Normal: Part-Time Employmentyment
U.S. & Europe Trade Deal Honeymoon
Detroit City Bankruptcy Blues
J P Morgan and Commodity Manipulation
Strange Business Success Ventures
Business of Evangelism Religion
NFL Marketing Machine
Privacy Gone on Offshore Assets
Chinese Banks Quasi Government Institutions
Forecasts of a Doomed Economy
Financial Meltdown Five Years After
Corporate Profits and Worker Unemployment
Renminbi Soon to Be a Reserve Currency
Rehypothecation of Collateral
IMF Proposal to Tax Bank Deposits
Transfers excluded, JP Morgan Chase is Wired
Insurance Companies Profit from Obamacare
Climate Change by Executive Order
Economics of Non-governmental Organizations
Why Business Franchising is a Bad Deal
The Business of the Christmas Season
China Becomes Largest Trading Nation
Obamacare as a Jobs Killer
Does a 100 Trillion Debt Total Matter?
Underground Commerce is the Real Economy
Technology and the Future of Jobs
The Japanese Debt Economy
Individual Wealth in Perspective
Inevitability of Financial Bubbles
Russian Sanctions Backfire
Is the Dollar and Equities Ready to Crash?
Economic Reality of a Wealth Tax
How stable is the Bond Market?
Are International Stocks Safer than U.S. Equities?
David A. Stockman - The Great Deformation
Chinese and Japanese Deflationary Economies
Euro Crisis Deepens
Russia's SWIFT Settlement Alternative
The Swiss will not have more EU QE
Business of Global Warming Fraud
Economics of NYS Southern Tier Secession
Fear of IRS Tax Audits Diminish
Where is Global Economic Growth?
Government's share of minimum wage increase
Economic Growth Is Impossible
Replace the Business Cycle with Permanent Poverty
Who benefits from the lifting of Iranian sanctions?
Who Wins in a Currency Devaluation War?
Labor Day when there is no work
Municipal Bankruptcies and more on the way
Undeniable Social Security Demographics
Grinch that stole Christmass
Business Mergers Soar in 2015
The Chinese Market Crash
Driverless Vehicles Powered by Artificial Intelligence
U.S. Banks Ready for Negative Interest Rates?
International Trade Sinks with the Baltic Dry Index
SunEdison Green Power Bankruptcy Inevitability
Another Record Collection from Federal Taxes
Absurd Valuations on Unprofitable Tech Stocks
BATR Index
Forbidden History
Reign of Terror
Stuck on Stupid
Totalitarian Collectivism
Global Gulag
Inherent Autonomy
Radical Reactionary
Strappado Wrack
View from the Mount
Solitary Purdah
Dueling Twins
Varying Verity
911 War of Terror


Big vs Small Bank Loans

If your Main Street business needs capital and seeks a loan, your prospects are slim to none. It is evident that the real economy has never recovered from the collapse of the financial system. TARP was a temporary rescue of the large money center banks. For the local community banks, the massive give away has strings attached and penalties to be paid. Not much consolation for a small business endeavor that is desperate for cash and an improved business environment.

The Wall Street Journal reports in
TARP: Billions in Loans in Doubt,

"Hundreds of small banks can't afford to repay federal bailout loans, a top watchdog will warn Wednesday in a report that challenges the government's upbeat assessment of its financial-system rescue.

Christy Romero, special inspector general for the Troubled Asset Relief Program, said 351 small banks with some $15 billion in outstanding TARP loans face a "significant challenge" in raising new funds to repay the government."

Slow economic activity results in the inability to service previous debt loaned by small banks. Without a meaningful recovery, the harsh reality existing is that a run on bank defaults will begin. Even under this bleak threat, local banking has continued to do the yeoman’s work to keep essential businesses operating.

Contrast this effort with the utter neglect and absence of the mega banks from engaging in their chartered purpose of making commercial loans. The too big to fail cabal has miserably failed the domestic economy. If you believe Frontline’s Astonishing Whitewash of the Crisis you will never appreciate the ruthless nature of the Big Bank culture.

The PBS Frontline series "Money, Power, and Wall Street.", Part II is worth viewing to understand the methods used to conceal the systemic abuses of the post Glass-Steagall era. The first two parts of the four part series recently aired. "The first segment is particularly troubling. It heavily cribs from the Gillian Tett book Fool’s Gold." The critique concludes, "So thus far, we have some populist decorating of a profoundly pro-Establishment account."

The negative review based on a viewpoint that concealing the rudimentary problems of the speculative mortgage scheme gamble is no solution for resolving the horrific consequences of mixing investment banking with making commercial loans.

When the Fed bailed out the Big Banks, the money went to cover the losses from derivative speculation and trading. These exotic financial instruments are all smoke and mirrors. The Big Banks charged off huge sums. Still much of their toxic assets remain on their books in one form or another. Compare these losses with the more responsible management from credit unions and community banks. (see chart)


Low Fed funds benefits money center banks as a lifeline because they were the financial institutions that booked the largest bets. The intentional bailout that rewarded irresponsible behavior is proof positive that the banks that are the owner of the private Federal Reserve, dictate financial policy to the Treasury.

Many small banks forced into participating and accepting TARP funds are paying a heavy price. The complicity of Congress in the effort to diminish community banking expressed in a
Congressional TARP Report Critical of Community Bank Business Lending is very revealing.

"While large banks have successfully exited the TARP program and returned to "high-risk behavior", the report said that "after 3½ years, community banks have an uphill battle to exit TARP because they cannot find new capital to replace TARP funds."

The net result translates into withdrawing the ability and willingness to support main street businesses with fresh credit. The WSJ article continues,

"The struggling banks are unlikely to find any help on Capitol Hill. Rep. Scott Garrett (R., N.J.), a TARP critic, called the plight of the small banks another example of how "ill-conceived" the rescue was in the first place.

"It was not thought through as to how it would be implemented... it was not thought through how they're going to extricate themselves," he said."

The money centered banks view small business as incidental to the global economy. The corporatist culture creates a total infusion of big banking and transnational companies into a virtual crime syndicate. The domestic economy that keeps the declining middle class employed suffers dramatically under this model. Ordinary citizens relegated to the mercy of government "safety net" programs, experience a lower standard of living. Independent enterprises fail, because credit withdrawn from the small banks, results in diminished lending.

Small business produces most of the employment. Access to credit is a necessary requirement for cash flow needs and prudent growth. When the large banks ignore the financial needs of employer owned businesses, community banks lack the liquidity to fund and support their needs. This is a designed policy to wreck the national economy.

The Federal Reserve lends to the money-centered banks at next to zero, while their trading desks scheme to rebuild their balance sheet. In the process, avoiding direct lending, as too risky, becomes the excuse. Lavish salaries and large bonuses enhance the moneychangers, while the local merchants go out of business because they cannot fund their operation.

Those who defend an internationalist corporate centered economy, view our neighbors as collateral damage. Main Street is unnecessary to the titans of global capital. Bankruptcy and foreclosures of the little people are simply statistics to the elites.

Costly credit card and revolving loans is a sure path to the poor house. Entrepreneurship is impossible without access to money. As long as Wall Street targets community banks for extinction, the prospect for small business is bleak. Forget about a broad base economic recovery. Future bailouts for the influential banksters are inevitable as long as this inept abandonment of local communities continues. This David vs Goliath saga is an essential struggle against the Philistines. "Too Big to Fail" is a formula for national suicide.

James Hall – May 2, 2012

Discuss or comment about this essay on the BATR Forum

a free speech forum open to the public

This site  The Web 


tumblr page counter