Bernanke: More Needed To Boost Small-Business Lending...Did Ben come up with this all by himself?

By TOM BARKLEY
Wall Street Journal

Federal Reserve Chairman Ben Bernanke urged banks and regulators Monday to seek out ways to ensure that small businesses get the credit they need to create jobs. Grandpa: how about taking away the free money option Ben and forcing banks to lend versus the daily manipulation of the equity market via their trading desks with your free money program.

"Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges," Mr. Bernanke said in prepared remarks to the Fed's forum on restoring credit to small businesses. Ben, please send me a photo of your 60 Minutes Green Shoots...

Declaring small businesses as "central" to tackling unemployment, the Fed chief said not enough is being done to ensure that financially sound companies can obtain loans. Grandpa: Ben, you gave Wall Street institutions banking authority in order for them to participate in TARP. After paying back TARP, you left the free money window open and for the record, Goldman Sachs is not a bank and neither are Capital One Financial, GE Capital or American Express.

Fed officials have become increasingly worried about the stubbornly high unemployment. The jobless rate edged down to 9.5% in June from 9.7% the previous month. But the economy shed jobs for the first time this year, with nonfarm payrolls falling 125,000 last month.

"The formation and growth of small businesses depends critically on access to credit," Mr. Bernanke said in the text of his remarks. "Unfortunately, those businesses report that credit conditions remain very difficult." Grandpa: well Ben, you and Hank Paulson crafted the scam of the century with TARP and making sure the big boys on Wall Street survived. Are you really out of creative options?

The forum is the culmination of a fact-finding mission the Fed launched in February to identify how to improve credit access for small firms, which account for about 60% of job creation.

Fed officials have hosted more than 40 meetings around the country with small businesses, bankers and community leaders to identify obstacles that have contributed to a continued contraction in lending.

Mr. Bernanke cited data showing that outstanding loans to small businesses have declined to less than $670 billion in the first quarter of 2010 from about $710 billion in the second quarter of 2008. Shocking, no one so that coming. The Wall Street "banks" make a lot more money manipulating the equity money than making "old school loans". HELLO BEN, you afford your Wall Street buddies 1/4% money and they buy treasuries at 3%. WOW, even a simple grandpa is able to calculate that return.

While major banks eased loan conditions for big firms during the first quarter, lending standards remained tight among the local banks that small businesses rely on, according to the quarterly Fed survey. Similarly, a survey by the National Federation of Independent Business found that the proportion of firms reporting tighter credit conditions over the past three months remained "extremely elevated," Mr. Bernanke said. Also deemed extremely elevated is your perception of the value you bring to this country!

Some lenders participating in the meetings viewed the current lending standards a return to more normal conditions following a period of lax standards. But Mr. Bernanke said "it seems clear" that some creditworthy borrowers and having trouble getting credit, even when strong cash flow is compensating for a loss in collateral. And you know this Ben because you held how many positions outside of a University?

"The challenge ahead for lenders will be to determine how to assess the credit quality of businesses in an uncertain and difficult economic environment," he said. They are banks Ben. How about the average American citizen assessing how to care for their family in an uncertain and difficult environment?

Lending to creditworthy borrowers is in their interest, Mr. Bernanke said, since "that's how they earn their profits." Ben, 1/4% expense and 3%+ on treasuries let alone the phenomenal market manipulation returns when one's cost of money is 1/4%...in their interest....PLEEEZE!

Meanwhile, he said regulators should continue to work with lenders to help improve credit availability to sound small firms. Blah, Blah and more Blah. Whay do you know about small firms and actually producing something Ben. Have you ever assumed responsibility for making payroll?

The Fed has been encouraging banks to ensure that credit-worthy small businesses can get the credit they need. Reacting to complaints that its own bank examiners are contributing to overly tight standards, the central bank is also conducting training programs with examiners to drive home the message that encouraging loans to small businesses that can repay is positive for the banking system. Encouraged! You bailed out their sorry behinds with no strings attached! The only message that has been driven home is that you have put the screws to the American saver  with your Princeton interest rate policy and placed our grandchildren in harms way.

Still, Mr. Bernanke cautioned against "one-size-fits-all solutions," saying that the meetings confirmed that each small business has a unique combination of local economic conditions and relationships with creditors and customers. Oh no, one-size-fits-all is not a viable option unless your address is Wall Street, then TARP funds flow to make sure we do not have a credit squeeze...oh wait a minute, you spent the day addressing a credit squeeze...you are a piece of work Ben.

He didn't make any comments on the outlook for monetary policy.