Small Businesses Down on Outlook & Jobs Tax Credit

A national Index of Small Business Optimism lost 1.3 points in February, falling back to December’s level of 88 – out of 100 – and only 7 points higher than its lowest reading ever, according to the National Federation of Independent Business. The lowest reading on the NFIB’s index was 80.1 in 1980. “The persistence of index readings below 90 is unprecedented in survey history,” the NFIB said today in a statement.

Wells Fargo: We Re-Evaluate Declined Small-Biz Loans

The head of wholesale banking at Wells Fargo told a Congressional panel today that while the market for small business lending remains soft, it is improving with greater competition for “well-underwritten loan opportunities.”
David Hoyt also said that Wells Fargo is taking another look at small business loans it has declined as part of an effort to ensure that it makes “every good loan we can.”

Small Business Lending Still Grim, But Fed Official Hopeful

Bank loans to small businesses continue to deteriorate, and some lenders don’t anticipate much improvement for the rest of the year, according to prepared testimony by Federal Reserve Governor Elizabeth Duke. But Duke said she is “somewhat optimistic” that the tightening of credit is close to an end, and lending to small businesses will see increases later in the year — based on “some momentum” in spending by businesses and households, and the overall upswing in the equity markets.

“…Bank attitudes toward lending, including small business lending, may

Bank of America Strikes Back; Reports $758B in Credit Extended

In the midst of an uproar over the sector’s weak small business lending and its own alleged role in the financial crisis, Bank of America today struck back with a report on its role in the economic recovery that includes extending $758 billion in 2009. It provided more credit “than any other U.S. bank,” BofA said in the headline of its press release – one day after the New York Attorney General filed a civil fraud suit against the top lender and two former top executives alleging that the government and shareholders were misled in its 2008 merger with Merrill Lynch.

Regulators to Banks: Ease ‘Overly Cautious’ Lending

As long as borrowers’ qualifications are prudently reviewed, banks should move forward with lending to creditworthy small businesses, according to a statement issued by the Federal Reserve and other banking regulators today in an apparent response to growing concerns from the Obama Administration that lending has dried up. “…experience suggests that financial institutions may at times react to a significant economic downturn by becoming overly cautious with respect to small business lending,” the joint statement said.

Lenders in Hard-Hit Areas to Get Low-Rate TARP Capital

More than 200 community banks, thrifts and credit unions in neighborhoods hardest hit by the recession will receive low-interest capital to boost small business lending, the U.S. Treasury has announced as part of a new effort under its bailout program. The $1 billion initiative under the Troubled Asset Relief Program, TARP, targets Community Development Financial Institutions, lenders certified by the Treasury as providing more than 60 percent of their small business lending and other economic development efforts to “underserved communities.”

Obama’s Small Business Plan: $30B from TARP; Boost SBA

President Obama today formally launched his already-controversial proposal to re-direct $30 billion in bailout funds into community banks to bolster small business lending. “The more loans these banks provide to credit-worthy small businesses, the better a deal we’ll give them on capital from this fund,” Obama said in prepared remarks. The program would provide better rates on risk-related capital to banks that boost lending to small businesses.

Overseer Sheds Doubt on TARP Helping Small-Biz, Foreclosures

A somber and pessimistic assessment of the government’s bailout program has been issued by the official overseer of the $700 billion Troubled Asset Relief Program (TARP) – concluding that the fundamental problems in the U.S. financial system are still in place for another crisis. The report also looks pessimistically to the re-focused future role of TARP funds for increasing small business lending and helping desperate homeowners avoid foreclosures as outlined in recent weeks by President Obama and U.S. Treasury Secretary Timothy Geithner. But the “leverage” U.S. officials had over the major banks is now gone, putting in doubt the effectiveness of a new lending pipeline to small businesses.

Obama’s $30B Plan for Small Businesses May Not Work

In his State of the Union speech, President Barack Obama proposed taking $30 billion out of the bailout money returned by big banks and injecting the funds into community banks to generate more small business loans. But the plan will likely fall short in a lending arena where low demand matches low access to credit. Moreover, the small-biz bailout has already generated enough opposition to place it in doubt – particularly if a full vote by Congress is required.

Bank of America Chief: It’s About Managing Risk, Not How Big

The CEO of Bank of America, the nation’s top lender, said his institution is not too big and that the central issue for those seeking financial sector reform shouldn’t be size but how “you manage risk.” Brian Moynihan, who took over BofA’s top job on Jan. 1, told CNBC in an interview from the World Economic Forum in Davos that the U.S. government should continue to play the role of stabilizing the industry to avoid another financial crisis. But Moynihan said the answer is not in breaking up banks…

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