Cantwell Fights For Community Banks
Source: KUOW 94.9
The Democratic senator says the federal government should help community banks the same way it helped Wall Street.
Cantwell: "My reason for being persistent about this issue is that when the big banks were in trouble, we acted almost overnight to help them, without little question, without little oversight and without a general design. Now it's been more than a year after the crisis and we still don't have a program designed for small banks."
Cantwell supports President Obama's proposal to use $30 billion in TARP funds to help community banks lend to small businesses. However, she says the President should implement the plan immediately rather than waiting for Congress to act.
Cantwell pointed to Danny Mitchell as an example. Mitchell used to own and operate Mitchelli's, it's an Italian restaurant in Pioneer Square. After 32 years of business, he had to close his doors last year.
Basically, his lending dried up. Mitchell couldn't get a loan, and the only credit options left had real high interest rates.
Mitchell: "Ultimately, we kept falling further and further behind and the payment demands from the various taxing agencies became overwhelming and we just couldn't continue."
Laurie Stewart says community banks are having trouble extending loans because regulators are asking banks to hold more capital. She's the President and CEO of Sound Community Bank, based in Seattle.
Stewart: "If I could hold $1 of capital and lend $100 before, just as an example, that's not accurate. Now they're asking me to hold, like, $2 of capital."
That means banks can only grow their balance sheets so far.
Stewart: "We're really being constrained by either specific requirements from regulators in some cases or our fear of specific requirements from regulators that means that we're kind of hoarding that capital and making fewer loans as a result."
Stewart says TARP funds would help increase lending at her bank.
At a recent Senate hearing on small-business lending, Cantwell said making more credit available to small business should be a higher priority than more stimulus spending.
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