Joe Nocera fromNY Times today had a must read explosive article on the actual use of the bailout funds made available to the banks. I have personally witnessed at least 3 very good businesses struggling to get loans from their respective banks to support operations. All the 3 businesses have an excellent credit history, excellent corporate and community citizens who have never defaulted.
Naturally I was extremely puzzled and honestly distressed about the crisis they were all facing. Why were the banks reluctant to give them loans? I thought, naively perhaps, that the first installment of the bailout plan was intended to help banks feel secure about making loans. So what happened here?
Apparently in a recent conference call for employees, an employee from JP Morgan Chase asked the following question:
“Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?”
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