Monday, July 28, 2008
Banks Not Lending? Blame the Shorts!
Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring.
So says today’s New York Times, and they back it up with some pretty gory detail.
Drew Greenblatt, president of Marlin Steel Wire Products, figured it would be easy to get a $300,000 bank loan to finance a new robot for his factory in Baltimore. His company, which makes parts for makers of home appliances, is growing and profitable, he said. His expansion would add three new jobs to an economy hungry for work.
But when Mr. Greenblatt called the local branch of Wachovia — the same bank that had been aggressively marketing loans to him for years — he was distressed by the response.
“The exact words were, ‘We’re saying no to almost everybody,’ ” Mr. Greenblatt recalled.
Mr. Greenblatt might want to consider doing what most public company CEOs are doing these days: asking the authorities to crack down on short-sellers.
That seems to be the most common response to the continued fallout of the sub-prime mortgage debacle which—if our memory serves—was not instigated by short-sellers, encouraged by short-sellers, or in any way facilitated by short-sellers.
No matter: CEOs today have learned a thing or two about pointing fingers from a Congress that recently invented a reason for high oil prices that had nothing to do with actual supply and demand considerations: blaming Wall Street.
Too bad for Mr. Greenblatt—and the rest of the country—that bankers at Wachovia and elsewhere weren't saying no instead of yes “to almost everybody” back in 2005 and 2006, when the sub-prime crisis was really ramping up.
If they had, of course, those same bankers could be saying “yes” to Mr. Greenblatt, and everyone else who needs credit, right now.
Ah, what the heck. Let’s blame the shorts instead of the bankers.
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Posted by Jeff Matthews at 9:17 AM