The press in the US and UK runs stories about a dearth in small business lending. I have no doubt such exists. Too many anecdotal stories add up to a problem, and where else could one find out about problems in obtaining loans from ... lots of small businesses.
The answer is obvious. The mega banks and super regional banks are sucking all the deposits of the people to fund Wall Street trading operations. Or they fund purchases of securities. We know that Citibank, Wells Fargo, Bank of America and JP Morgan control about 40% of deposits. Do you suppose they make 40% of the small business loans ? No way. The same applies to the big regional banks.
For three decades the big fish have been eating the small fish to get bigger & bigger. Big banks have bought hundreds or thousands of small banks to get their deposits. Do they keep open small town loan offices. Nope.
The government's Small Business loan program does help ... A LOT. Recently one of my companies sold a property to its current operator. Where did he get the loan ? From a small bank via an SBA loan.
The answer to all this is so simple. Break up the big banks ... AND the super regionals. Or put a MUCH LOWER cap on their deposits, net of small business or home loans. This would force them to either forego those deposits or make loans using them.
See how easy it truly is to solve problems for the people, once one gets away of the DC racketeers and knaves.
Word of the Day
"Perihelion" - noun [$10] (plural - perihelia or perihelions) A Mencken Word
Perihelion means the point in the orbit of a planet, comet, etc. at which it is closest to the sun. (Opposite - aphelion)
Sentence: (From The Impossible H. L. Mencken, page 415) "If it has its perihelions of triumph and gloriy, it also has its nadirs of defeat and despair."