The American International Group Inc. (AIG) bonuses from bailout money have folks all over the country outraged. That’s all understandable, I suppose, though Senator Chris Dodd should probably be the face of this issue.
But that’s a whole other story.
Personally, I didn’t favor any bailouts, which brings me to the recent changes for the Small Business Administration’s loan programs.
In a continuation of bailout mania, President Barack Obama and Treasury Secretary Timothy Geithner recently announced big changes for the SBA’s loan programs.
The plan will also require that the largest 21 banks—that received federal bailout money—will now have to detail their small business loans on a monthly basis. Additional banks may be required to do this quarterly. In other words, this measure is meant to pressure lenders to make more loans.
Now I think this is needed for many small businesses, but I am concerned about the part where lenders are being pressured to make more loans.
I can’t help but think of the mortgage mess where banks were pressured to make more loans. And we saw how that ended.
The reality is that there are many, many businesses that shouldn’t get loans – their ideas and people don’t have what it takes to bring things to the next level.
I’m proud to say I’ve had many failures as an entrepreneur. I thought they were all good ideas at the time, but the market didn’t support them.
When I was in that mode, I was sure I had great affiliate ideas that would be huge if only I could get some funding. But in retrospect, they were flawed sites, plans and ideas.
I sure hope the changes with SBA loans don’t work out to be bailouts of lousy affiliate ideas, and other companies that deserve to die quietly.
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Small business is the life blood of the economy, paying more taxes and creating more opportunity for workers. Big corporations pull the lease on their lap dogs in Washington, DC to get enormous tax breaks,, outsource overseas, and pull all sorts of accounting gimmicks to hide income. Now we learn the Bank of America is buying luxury planes and new hanger, complete with roof gardens, and the Citi Bank CEO is getting a 10M office remodeling. My observation about “too big to fail”,..no, too big to allow them to continue to drag the nation and the world economy down.
Entrepreneurs take risks. Like you, I have failed at many of my risks but had enough successes to offset the failures in the long run. It’s survival of the fittest ideas and does well in the long run. In the short run, though, there is pain.
Bailing out risks, while it sounds kind, makes our economy weaker. I believe in charity and assistance for people in need, I don’t feel that the people should collectively via the government bail out businesses. Such actions lead to bad ideas (and businesses) going long distances when they should have died and been replaced with a better idea that people (the market) could support.
And about the banks and lending . . . It is puzzling to me how bad loans got us into this mess and we’re hoping to loan (or borrow) our way out of it. Bailing out these guys is like paying the fox who killed the last set of hens to guard the new ones we replaced them with. Seems we need some loan paying off right now and wise investing going on. We also need to get out of the way of entrepreneurs by making sure we don’t tax and regulate them to death. We need to fire some people in government and big business and let the bankruptcy judges sort things out when there is failure. Otherwise we end up with the same loser leaders running the show with even more money to waste.
Thank God their was a US President and a few like minded individuals who pressured others to honor the “Emanicipation Proclamation” or else there’d still be a bunch of lousy guys still in in the business of owning Free labor..
Pressure certainly does have a place in American society in preventing a few lousy affiliates like AIG from running the country into the ground.
It seems our great American way is to get away with as much ruthless greed(not the same as prosperity) as it can at all costs.
I think that to pressurise banks would be wrong, but the banks need to start lending. They have been bailed out and rather than use the money back in the bank and generate new profitable business they are using it to hand out bonuses – the money should have had the condition that it was not used for bonuses. I realise that the banks need to make money but they need to build bridges with the public. Although I don’t agree with the banks being forced to give out loans they need to start lending again.
Agreed!
Anytime there is “pressure” to do anything, poor decisions are made. Have we not learned our lesson with the Mortgage fiasco?
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