Lawmakers Bicker as Small Business Continues to Buckle

The Fight for H.R. 5297

Democrats & Republicans worked together to give big banks and big biz billions in bailouts, pushing our country into unprecedented debt. Still, this has not created the economic recovery or job growth that supposedly came with the high price tag.  It did not provide incentive for new hires, new locations or new products. Attaching no strings on all of that cash was a monumental error. It contained no provisions for small business capital.  So, now it’s time to help out small banks and biz and legislators can’t get it together.  Are they seriously putting politics acting on behalf of our country and small businesses?  The same businesses that might actually drive improvement in our economy and a decrease in unemployment are being given the short end of the stick.

All this political bickering is taking time and meanwhile, small businesses are dying on the vine. What will our nation look like when the number of small businesses shrinks while big business continues to consolidate and grow?  What will our nation look like when unemployment continues unabated?  A nation long admired as a hotbed of ingenuity, economic prosperity and the ability to live better than our parents did could begin to look like those countries that do not enjoy the freedom or possibility to chase dreams and prosperity.  What separates us, is our large proportion of entrepreneurs, small business owners and developers and a system designed to support them.  Their ability to access credit is essential to keeping our country strong economically, providing 2 out of every 3 jobs and the opportunity to live the proverbial “American Dream”.  The continued constriction of credit and lack of business debt relief will tighten the noose around the necks of small business and suffocate growth.

Consumers and small business have very limited access to credit.  The biggest companies have the biggest bank accounts borrowed from those same people who now find themselves drowning with no lifeline.  How long will our supposed representatives continue to play partisan politics instead of giving small business the same fighting chance?

The Small Business Jobs and Credit Act of 2010 comes up for vote on September 13.  Please contact your congressperson to get them on board and pass this bill so America can move forward.  Click on the link below for a search tool to help find your local representative:

Congressional Information

7 Responses to Lawmakers Bicker as Small Business Continues to Buckle

  1. M.D. August 31, 2010 at 11:17 am #

    Please….no more “help” from the government. Just because they stole billions from us small tax payers to save the BIG banks, financial houses and insurance companies, I don’t want them to take more from us in the name of “saving the little guy”. In the end, it is all coming out of our pockets anyways. Government is the only entity that will break your leg and then hand you a crutch saying “see…you can’t live without me”.

    Small Business Owner
    Drinks Distribution Industry

  2. Gary Youmans August 31, 2010 at 3:42 pm #

    I would hope that you would look beyond the idea that all govt is bad. HR 5297 will enable many small businesses to have access to capital that is not available now. The SBA lends to the small business community to give them that acess and there are enhancements such as lower or waived fees, higher guarantys to the lenders and additional dollars all of which are not avaiable now. In addition it will create for the community banks a program that will allow them to lend specifically to the small businesses that represent the life blood of our economy. This bill will not create a deficit will be funded by offsets to other programs. There will also be jobs created as this new capital is disbursed to grow the businesses. I recognize that the system has flaws, the same flaws that have delayed the passgae of this bill. In this case we have a bill that has the support of hundreds of trade organizations and is co-sponsored by both parties. I strongly support HR 5297 and I strongly suggest that you do the same.

    Pacific Alliance Bank

  3. Alexander Falo August 31, 2010 at 4:12 pm #

    I’m afraid I don’t have any concrete answers but I do know without a doubt that the only way to stimulate small business economic activity (assuming banks are lending) is to cut taxes and greatly lessen government regulation. Those are the issues I want our politicians to address. Our government is filled with people who do not have small business management experience, including the young man at the top.

    I like most of the items in the bill but am leery anything will happen during this congress.

    Executive Vice President
    Chief Credit Officer
    Celtic Capital Corporation

  4. Todd Baker September 1, 2010 at 11:19 am #

    Government speding more using debt, issuing the debt into the worlds capital markets is definetely not the solution. They are infact injecting a depressant (debt) into our economic system rather than stimulous. The problem will only be solved by the US no longer exporting mounds debt to receive goods, but rather produce more goods in the US and exchange ‘real goods’, stabilizing the dollar and inceasing jobs in our country. The paper tiger we are seeing in Bonds is enormous and at some point.. when the rates return to the mean we will see significant risks of State and Federal defaults are excessive money printing by the Federal Reserve to bail out the poor accounting and abundance of obligations our Federal Government is undertaking on our behalf as taxpayers. This return to the mean is ‘laughed’ at by the CNBC pundits, but in fact any chart longer than 10 years will show it will happen.

    At this point it is ‘inevitable’ to some degree that their will be a sizeable bond default(s) both here in the US at the State and Federal level and in Western Europe. Its just a question of how bad it will be and how long the US Federal Reserve will ‘prop’ it up using the printing press.

    I would recommend Jens S. Parsons book “Dying of Money”. It was written in 1974 and highlights similar economic events we are seeing today. (French in the 1870’s, US 1774 to 1776 (the cause of the US Revolution) and 1920’s Germany, 1960’s US). Its a bit ‘dry’ but gets to a sobering point that we are simply repeating a policies that have already been tried and already failed.

    There are well over 6400 FIAT currencies that have failed in modern history. All of them are purely ‘Fiat’ based. Currencies that are at least partially backed by reserves lasted the longest (but eventually were converted to paper as the US has done in 1974, and then failed typically within 100 years after doing so. (Since the politician now has ‘no bounds’ to the use of the priting press).

    The book retails for $700 on Amazon, but a free .pdf copy is available on the Ludwig Von Mises Website or in the ‘library sections.


    Todd Baker
    Vice President
    California Bank & Trust

  5. Brian Woodall September 1, 2010 at 4:38 pm #

    All of the bailouts and “stimulus” packages to date have been completely misguided. They have focused on redistributing wealth instead of creating growth. They have focused on short-term politically convenient topics instead of providing long-term solutions.

    A viable solution would have been to direct stimulus money towards fixing our decaying infrastructure. This would have created long-lasting improvements that would benefit our entire country. It would have also solved much of the unemployment issue as the bulk of the jobs lost in the recession were construction related.

    Unfortunately, the opportunity to do something great was squandered, leaving the country saddled with a mountain of debt, expectations of higher taxes, still without a clear path out of this mess, and nothing tangible to show for it.

    At this point, the best solution is to overhaul the entire system – provide lawmakers incentives to do what is right for the long-term prosperity of the country instead of doing what works to get them re-elected in the short-term. Unfortunately, I think American apathy outweighs American outrage at the moment, making this solution unviable. I can say that the last thing we need is higher taxes and redistribution of wealth (which does nothing more than promote bad behavior). Instead, entrepreneurs and small business owners should be incentivized to start new busiensses and grow existing enterprises.

    Look to Japan’s lost decade for guidance – that is where we are headed. There is no quick exit at this point; and the longer that we delay taking our lumps, the bigger and harder we will fall when the next bubble bursts.

    -Brian Woodall
    Senior Associate of a Mezzanine Fund

  6. Joe Seigo September 2, 2010 at 11:13 am #

    I will not support this initiative, and encourage you to re-evaluate your position.

    We in the finance community were front row witnesses to several years of incredibly lax credit standards across most of the industry. The combination of easy money and the hubris of those that had made some “quick money” in industry roll-ups, company flips and other zero-value-added actions created a sense of invincibility across the industry. This was not confined to commercial lending, obviously.

    The subsequent crash and implementation of programs such as the Fed’s “quantitative easing” (0%), mark-to-model, TARP, Cash for Clunkers etc have served to distort markets even more, remove incentive for lenders to deal with problem credits, and reinforce the welfare state that arguably precipitated the problems in the first place.

    In my opinion, this legislation is yet another vote-buying exercise, this time by a congress that couldn’t pass meaningful legislation with a gun to its head.

    It’s clear that many worthy small companies cannot get refinanced, but it’s also clear that there are many companies that have been spared liquidation due to the banks general unwillingness to “face the music”. We’ve pitched not less than 8 deals this year in my office where the bankers decided to simply hold onto the credit rather than face the reality they were seriously under water – by their appointed appraiser’s opinion, not ours. So this knife cuts both ways.

    This legislation is a bunch of business groups saying, it seems, “As long as you’re handing out cash, why not us?”.

    This is a rightful sentiment given ALL politicians propensity to throw around money rather than deal with problems. Frankly, while I believe the GOP has taken a “principled objection” posture, they would dearly love to throw the cash around just as much.

    I do, however, believe this will not solve anything for the following reasons:

    1) There are no mechanisms to ensure the funds actually go to small businesses that are actually struggling because of real credit access issues, rather than their own operational weakness or previous foolish decisions. This then becomes a money grab, not a targeted development program.

    2) There is an existing, well established system of SBA lending that already is a pretty generous program that guarantees as much as 90% of a loan. Why should taxpayers fill in the other 10% too?

    3) There is no real shortage of capital, but a reluctance to lend because of (a) existing toxic assets – yet to go through workout – consuming ‘regulatory capital’, (b) uncertain governmental directions regarding taxation, regulations and other obligations that will be foisted upon us all, and (c) a business community that seems to believe the “other shoe” has not yet dropped, and they’re preserving their capital. Being in California adds another layer, of course, but that’s a different discussion.

    4) Band-aids NEVER solve problems, just delay real solutions to the benefit of the few, and the political class who claim credit.

    5) By ‘jumping on the handout bandwagon’, we prove to the political class that we can be bought for a few shekels – arguably we’ve already proven we can, but for $32 billion are we prepared to give the congress support to continue the status quo, and support “bailout nation”? GM along got more than this, how can we expect this will provide any meaningful change in lending practices?

    I agree wholeheartedly that many changes are necessary, I simply do not agree this is a meaningful change.

    I would support a variety of changes that take away the welfare mindset, such as tax code revisions, elimination of market distorting subsidies (especially in consumer spending on houses, cars and energy), and meaningful changes to the way the capital markets work.

    We all suffer in this recessionary environment. But I am prepared to hold out for substantive change and a return to prominence of the American Free Enterprise system, rather than the current welfare state that is, in my view, ruining this country. This congress has had more than 4 years of near-absolute power to make changes, and what have we got?

    Let’s first change the power of the congress and senate to easily push destructive legislation through, regardless the “noble intent”. I personally believe there are strong people in both parties that have very good ideas, although I clearly lean to the side of personal responsibility. I would support any legislation that returns us to our roots of merit, self reliance, and a level playing field.

    This and other distortions of the marketplace mean “gaming the system” is the most important skill a businessman must have. That cannot be good for commerce, and that cannot be good for the future of America.

    I applaud your willingness to put yourself on the line for a position – that’s definitely a positive move forward. I’m active in promoting a “return to free enterprise” among my peers.


    Joe Seigo
    Century Services (USA), Inc.

  7. Larry Doyle September 2, 2010 at 11:56 am #

    Regrettably what too many peopel in Washington and in America fail to realize is that the large banks, which now dominate our landscape, remain chock full of loans which are badly overvalued on their books.

    While Washington may scream at the banks to lend on one hand, the regulators are screaming at the banks to increase their capital bases on the other. Many may believe the banks have sufficient capital especially in light of the relaxed accounting standards imposed on FASB by Congress and Wall Street. That may be true but it does not mean that the true reality of the situaiton will lead to the extension of more credit by the banks.

    Thus the question begs from where will the credit flow. While this legislation might have an opportunity to be improved better to start the process because America needs it. Without credit, there is no growth.

    Larry Doyle
    Greenwich Investment Management

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