Risk Rap

Rapping About a World at Risk


SMEs are too big to fail (TBTF)

During last weeks Senate Banking Committee meeting with Bernanke and the Treasury Under Secretary, Chairman Dodd made an interesting almost off hand comment on the Feds move to pump liquidity into the credit markets. To paraphrase Dodd, he observed that the liquidity being pumped into the markets is going to prop up the capital ratios and balance sheets of banks. Its not like its going to small businesses.”

He said it. Or something along those lines.

Give us credit (pardon the pun), we are astute enough to know that if bank’s have a strong balance sheet they will be in a position to provide credit and other funding products to small and mid-size businesses (SME). But Chairman Dodd raises a sore subject that will certainly command much more attention as the banking crisis continues to play itself out.

Little has been said about the impact of the crisis on SME’s. But if you measure the extent of SMEs contribution to the nations economic development, job and wealth creation and as a principal source of tax revenue the needs of SMEs must be a central tenet of any proposed recovery strategy.

As the banking sector realigns and reconfigures this is a great opportunity for community banks to fill this pressing need.

Risk: SME, Banking, Community Banks, Credit, Political

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April 11, 2008 Posted by | banking, credit crisis, SME | , , , , , , | Leave a comment