Many smaller banks have relatively few sound loans on their books. They are under constant pressure to clean up their financials and/or add to basic capital.
Unfortunately, politicians in their area usually put pressure on bank examiners to allow these banks with questionable standing to make loans which ordinarily should not be made.
Unfortunately, banks are not making sufficient loans to small business even if they have the ability to do so, The truth is, they make more money these days by borrowing cheaply from the Federal Reserve and investing in government bonds.
This unhealthy environment is perfect for the likes of meddling politicians in Washington.
Solution? Supervise banks gingerly but independently of politics. Permit banks to make riskier small business loans and restrict their tendency to borrow cheaply from the Fed, in order to invest in
government bonds. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)
No comments:
Post a Comment