Tight fist of lenders, getting even tighter for businesses
It is incredible how the economic downturn seems to be one giant cyclical chain reaction. Foreclosures cause funds to collapse, collapse causes job loss, which causes foreclosures. Apparently we can expect the same type of trend in the realm of small business in the upcoming months. According to federal reserve data, hard hit banks have tightened up the amount of lending to the business sector.
Because of this pull-back by the big lenders, small industry has had to cancel plans for expansion, and in many instances, even had to scale back. According to Michael T. Darda, chief economist at the trading firm MKM Partners in Greenwich, Conn., “the rest of the year is shot.” Mmmmm, sounds like a really promising 6 months to look forward to. Although it isn’t like Wall Street is any stranger to exercises in breath-holding.
Even though it is pretty obvious that the fallout from the tighter lending practices will be detrimental to the market, it is hard to blame the big lenders given the fact that local banks are failing, right and left.
Author: Ted Swenson
