Obama urges small US banks to lend, eyes red tape

[The Northerner]

WASHINGTON, Dec 22 (Reuters) - U.S. President Barack Obama urged the country's smaller community banks on Tuesday to increase lending to small businesses and vowed to help the process by doing what he can to cut regulatory red tape.

"The pendulum might have swung too far in the direction of not lending," Obama told reporters after meeting with a group of small bankers chosen from communities across the country.

"If we can get that balance right, there are businesses and communities out there that are ready to grow," he said.

With U.S. unemployment at a 26-year high of 10 percent, Obama has undertaken a fresh push to boost job creation on top of a $787 billion emergency government spending package he signed in February.

His meeting with community bankers followed a gathering with the heads of the country's largest lenders last week and follows a White House jobs summit staged earlier in December.

Read more: http://www.reuters.com/article/idUSN2211552820091222?type=marketsNews

[truedelphi]

1. In further remarks, Obama explained that those small banks in

Communities where there was a lottery could buy lottery tickets in bulk, and thus have some winnings with which to enable them to start the lending process.

He concluded with the statement: "Since my one hour meeting with the Big Banksters last week, I realize that their capital has been spent on the end of the year charity giveaways to the more destitute Executives in Big Banking, and thus the Big Banks just cannot be expected to lend to the smaller banks at this time!"

[LeftHandPath]

2. Its not 'available' credit that is the problem...

Its credit demand and credit worthiness of assets.

Obama insists that spraying ether in the ceased engine will get it running again, when what we really need is a new engine.

We cannot fix the collapse of a debt bubble with more debt. We still have too much debt, and until this debt unwinds, its not going to change.

Obama has to fire Summers and Geithner if he is to have any hope of getting good advice going forward. This charade is about to end badly as interest rates are now rising, cutting off any hope of reinflating the housing bubble.

Game over.

[Po_d Mainiac]

3. Exactly

The absurd attempts to "stimulate" have failed because they have been a backasswards approach. Encouraging more borrowing is just giving the drunk another shot of bourbon.

And please don't try to feed me the home buyer rebate or the C4C cool-aid. Most of the buyers just moved up their purchase, which will be reflected in future numbers.

Only jobs will create purchasing power. Income will produce purchasing power. But only after debt levels get inline with the ability to pay.

Where we need jobs is in the stuff that everyone has to purchase. The everyday needs that we as a nation were able to produce before the outsourcing boom. Things like the shoes on our feet, and the shirts on our backs. Things like toasters and light bulbs. Things like computers and cars. And when I say produce, that means all components.

What we have now is a Fed giving money away to banks that are "investing" in Treasuries. It's called a circle a jerk. They pocket shitloads of money and our grandkids get the tab.

As the world's appetite for US debt fades, interest rates will jump. Knock another 25% or so off home prices and you'll get an idea of how this is going to settle out.

Our new POTY (or should it be POTTY) thinks that all the shitty over-leveraging of the last 20+ years can be unspun in a few months. That is major BS! Thinking that the RE and CRE bubbles can be re-inflated and thus save the nation from a ton of pain just puts off the day of reckoning off a bit but increases the eventual pain.

[AdHocSolver]

5. Exactly! The only way to stimulate the economy: give people money to spend on American-made goods.

Economies are DEMAND driven. Demand is provided by people who have money to spend and want to spend it.

The notion that by lowering the interest rates you can "stimulate" the economy is utter nonsense. That notion is pure supply-side, trickle-down economics.

To stimulate the American economy, give Americans jobs to earn, NOT borrow, money, and give them the ability to buy goods and sevices from other Americans who will then have income to buy goods from more Americans, who can then buy goods made by other Americans.

An economy grows by the act of people earning and spending money within an economic region. An economy is the circulation of goods and services within a set of regional markets using money as a medium of exchange.

Getting Americans to borrow money to send to China while Americans get deeper in debt is craziness, and the reason the U.S. economy is collapsing. The government is committing the same stupid practices of the 1930's (before FDR and the New Deal) that sunk the U.S economy into the Great Depression. The New Deal worked because it gave Americans money to spend on goods and services produced by other Americans.

This statement is the most accurate and correct action to save the U.S. economy, and the ONLY action that will save the U.S. economy and enable it to recover:
**********
"Where we need jobs is in the stuff that everyone HAS to purchase. The everyday needs that we as a nation were able to produce before the outsourcing boom. Things like the shoes on our feet, and the shirts on our backs. Things like toasters and light bulbs. Things like computers and cars. And when I say produce, that means all components."
**********

Kick and Rec.

[sendero]

4. Exactly..

... the problem is on the demand side, not the supply side. Companies are not expanding into a dead market. One wonders what kind of kool aid these folks are drinking.

[AdHocSolver]

6. Let's give some recs to posts like this one to "keep it alive" and get some recognition.

Most of the threads about the economy that make any sense are in the "Economy" forum.

Yet, these threads hardly ever get beyond this forum to "enlighten" other DUers. This is unfortunate.

The only way to get greater coverage is to kick the better posts to the "greatest" page, since most people seem to equate the Economy forum with ingesting castor oil.

Thanks.

[girl gone mad]

7. This is what those on the left tried to tell him would happen.

Pity it wasn't Galbraith and Stiglitz who had is ear, rather than Geithner and Summers.

[roamer65]

8. The problem is the big "zombie" banks.

These banks are no where near solvent and their continued credit tightening is a symptom of their moribund status. They are constricting credit in order to preserve capital, since they have no idea how large the loan losses are on the horizon. Nationalize the banks and establish workable, uniform lending rules and the economy will improve very quickly.