TARP Verdict: Bailouts Failed to Help Small Business
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The bailout “a bait and switch”. The U.S. government asked banks “to lend that money to small businesses and they didn’t do it. They shored up their capital position.”
from Bloomberg BusinessWeek,

A new report commissioned by the Small Business Administration confirms what a lot of business owners felt in the four years since the financial crisis: The government bailouts for banks did little to relieve the credit crunch for Main Street companies.

In fact, banks that took taxpayer money during the financial crisis of 2008-09 cut their lending to small businesses more than other banks did, according to the paper by Rebel Cole, a DePaul University economist.

Small business loans outstanding dropped 18 percent, from a peak of $659 billion in 2008 to $543 billion in 2011, according to Cole’s analysis. TARP banks cut their lending to small businesses by 21 percent in that period, compared to a 14 percent drop at other banks, according to the paper.

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