Smaller Lenders Stand Ready But Need Help
May 5th, 2008 | By Dawn R. Rivers | Category: Politics & PolicyLawmakers at a House subcommittee hearing last week seem to have uncovered the real problem with the SBA loan guaranteed program, which has seen an 18% decline in loan volume so far this fiscal year. First, a handful of large banks that happened to be hip-deep in the sub-prime mortgage mess were making 60% of the loans. They have had to pull back and retrench. And community banks and federal credit unions, which steered clear of the mortgage market fiasco and have no liquidity problems, can’t step into the breach for a variety of reasons including steep lender and borrower fees, caps on lending by credit unions, and dense SBA loan procedures that defeat the smaller banks. Pending legislation can fix much of this, if Congress will get its collective act in gear — preferably in time to produce some stimulative effect in the current economic downturn.
