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A stimulous bailout question

by TONI H / August 21, 2009 3:24 AM PDT

Maybe somebody can explain this to me since it's totally beyond my comprehension at this point.

On CNN news yesterday there was an interview with a successful restaurant/bar owner in NC who employes 35 people right now. He wants to open another restaurant/bar and start a chain in Fayetteville, NC which could employ 50 people. He applied to his bank for a small business loan of $150,000 (peanuts to start up a new restaurant/bar). The location is ideal, a building is already available, and the parking lot is large.

The bank turned him down (BBT) because he had an item on his credit report that made him too high risk. There wasn't any indication that this credit report was against him personally or if it with regard to the business. There also was no indication if it was because of a dispute or something (which is pretty common for a business if he refused to pay a disputed bill). In any event, he was turned down.

The part that is appalling to me is that although his restaurant made over a million and a half this past year even with the economy crapped out, and he hasn't had to lay off any of his 35 employees, the bank would refuse the loan based on one (or even two) bad mark on his credit.

The reasons this is appalling to me are 1) He is a successful small business man wanting to expand in order to employ even more people in an environment that our government keeps saying is finally stablizing 2) Not one dime of stimulous money has gone to small business owners and yet they are the foundation that our country builds on 3) The Feds NEVER asked for a credit history on any of the banks or insurance companies that got the bailout money to help the economy or they would have all been turned down based on being "high risk" 4) Very little of that bailout money has gone to lending money....but quite a bit went to banks being able to purchase OTHER banks and become even bigger 5) There are probably more reasons I could list but I'm too ticked off right now to think of them all.

Something else and it may be a different topic altogether, but during the depression, right after the crash of '29, FDR deliberately created huge job projects in order to not only get thousands of people back to work (TVA, etc) but the trickle down effect was successful because those projects needed a huge number of companies to supply the materials, etc. in order to complete, which put even MORE people back to work. Why is it so freaking hard for THIS President to understand that health care is NOT the priority, but JOBS are? We have roads, bridges, infrastructure up the gazoo that could use the money to get started and create jobs with a trickle down effect also.

TONI H

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RE: health care is NOT the priority,
by JP Bill / August 21, 2009 4:05 AM PDT
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but if there were jobs
by TONI H / August 21, 2009 5:34 AM PDT

more people would be again paying into the system....even if the govt raised the amount that had to be deducted from paychecks...and it would at least help to stabilize Medicare and SS. THEN they could work on health care reform...starting with slapping the insurance companies and pharmaceutical companies with a 'freeze' on increases for a specific period of time.

TONI H

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No bank has received a gift of money from the feds.
by Desperado JC / August 21, 2009 9:08 AM PDT

What they got was an infusion of funds to enable them to stay in business in spite of large potential losses on loans. They have to pay the money back to the feds. If they don't, the feds will own a large chunk of the bank.

The financial mess was created by the feds who insisted that loan standards be reduced, and that shaky loans be made. If the banks are now approaching credit with more caution and prudence, that is a good thing.

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I never said the bailout was a gift
by TONI H / August 21, 2009 8:30 PM PDT

However, a loan is a loan is a loan and the banks were in worse shape than anybody coming into a bank to apply for a loan and they got what they needed to stay afloat with no questions asked by the Feds....and no rules on how to use it. Some banks didn't use it as it was intended, which was to lend it back out to customers and infuse the economy with money, but used it instead to buy up other banks.

Seems like it was and still is a win-win for the banks...and it's their customers who now face stiffer standards than the banks themselves had to face in order to expand their businesses. Another case of 'have your cake and eat it too' since the banks have raised every fee they could charge their customers at the same time and are making billions just on the fees let alone any bank loans.

TONI H

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some like Goldman used it to buy back their own shares.
by James Denison / August 22, 2009 2:55 AM PDT

Helped keep bank share values falsely inflated.

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just curious Toni
by jonah jones / August 21, 2009 9:54 PM PDT

in the US of the 21st century, do you think "the people" are ready to
kiss the wife goodbye and "go build a dam" or "build a highway"?

is the American "mind set" able to absorb and accept the concept
(and act upon it)

jonah

,.

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I do believe that
by TONI H / August 21, 2009 11:09 PM PDT
In reply to: just curious Toni

The American people who are either struggling to hang on or have already lost the American dream through no fault of their own are very resilient survivors. They have already gone back to basics of growing vegetable gardens and canning (based on info I've been researching and price increases - supply and demand - for canning supplies even on ebay) and when kids are involved, the bread winner will do whatever it takes to support and provide for them. If our military families can adjust to being apart, don't underestimate the rest of the population. If the opportunity is there, just like with the Alaskan Pipeline project from years ago, people will show up in droves.

TONI H

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