Reporter's Notebook

THAWING THE ECONOMY

Bankers all say they are lending money, but all of the local business people I have talked to say they can’t get a loan. Owners of commercial properties that are fully occupied and have cash flowing can’t get a loan. Businesses with long, successful track records and expanding business demands can’t get a line of credit. Real estate developers with sizable high equity portfolios can’t get loans to finish projects started before the credit freeze hit.

The problem with the banks is that they are just as frozen as the market they portend to serve. Congress has said, “Here, take this money!” But it isn’t free and comes with many strings attached. Some of those strings bankers find too rich for the taking and so have declined the money or, in those cases in which they are “told” to take it, they have held onto it and hope to return it ASAP.

The real problem is the FDIC and its failure to deliver clear and concise rules and guidelines to the banks – guidelines that line up with Congress’ wish that banks free up credit for businesses and individuals. There are many viable projects and business plans just waiting for capital needed to move them forward and get the local economy moving as well.

Until the FDIC enacts and explains reasonable rules that the banks can rely on, it doesn’t appear that we will see the credit market thaw anytime soon. Hopefully the conflicting signals being sent by Congress and the FDIC will be addressed soon so the economy will warm up with the weather.

- Steve McDonagh can be contacted at smcdonagh@vbjusa.com