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Bank lending to small business drops despite TARP
Professor Elizabeth Warren, chair of the Congressional Oversight Panel that oversees TARP.
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TEXT OF INTERVIEW
Steve Chiotakis: The Congressional Oversight Panel's released its latest report on the Troubled Asset Relief Program, TARP. It says Wall Street banks cut back on lending to small business by 9 percent since the bailout. The $700 billion in government help was initiated in part to open up lending. Harvard Law Professor Elizabeth Warren is chair of the Congressional Oversight Committee, she's with us now from Washington. Professor, good morning.
Elizabeth Warren: Good morning.
Chiotakis: Is there something specific that banks don't like, or is there a reason you think they're reluctant to loan to small businesses?
Warren: Part of the problem is that it's more expensive to loan to small businesses in the sense that you can't do it just straight on the numbers -- you know, let's look at a credit score. You actually have to look at a business plan to do that. And that means large banks have gotten out of that business to a signfiicant degree and left it to intermediate-sized and small banks. Now it's good for intermediate-sized and small banks to have some business there, but on the other hand they're the ones who are also being hit by other aspects of the recession. You know, they're going to have to be dealing with the serious commercial real-estate losses, and that means they may not be in a position to lend to small businesses.
Chiotakis: So Professor, if small businesses generate, what, two of three jobs in this economy, doesn't this fly in the face of the necessity of bailing out the banks in the first place?
Warren: Well you know, that's really the irony here isn't it? Remember, in the fall of 2008, Secretary Paulson went to Congress and the American people and said, we need this $700 billion bailout, because if we put the money into the banks, that's how it will make it on into the real economy. And the evidence shows that simply didn't happen; we put the money into big Wall Street banks and that's where it stayed.
Chiotakis: If you had a bullhorn and were on Capitol Hill right now, what would you be saying into that bullhorn?
Warren: I'd be saying, "Real economy, mortgage foreclosures, unemployment, small-business lending." That stuff is tougher and grittier, but that's where we get pay-off. We've got to invest in the real economy here, in folks who get up every day and go out and make things happen. Because if that part of the economy doesn't recover, America doesn't recover.
Chiotakis: Professor Elizabeth Warren, chair of the Congressional Oversight Panel. Professor, thanks.
Warren: Thank you.
About the author
Steve Chiotakis was the host of Marketplace Morning Report until January 2012.
May 17, 2010
Mr. Timothy Geithner, Secretary of the Treasure
U.S. Department of the Treasure
1500 Pennsylvania Avenue, North West
Washington, D.C. 20229
Dear Secretary Geithner:
I am a UCLA Grad student in Film. I have a case pending against Bank of America with the Office of the Comptroller of the Currency (OCC) # 01131055 submitted by my Congressman Adam Schiff. Please, refer to my letter of May 17, 2010 to Bank of America CEO and President Brian Moynihan.
I have been waiting for a loan modification under President Obama’s Home Affordable Modification Program (HAMP) since before its inception (under Countrywide Mortgage) more than fifteen months. There are serious bank misrepresentations in this regard which I have brought forth to the OCC.
I am NOT in default and have always paid my mortgage on time and in full. However, now my payments are about $600 higher due to a bank impounds and phantom charges – some of which include unwarranted late fees. They have reported me to credit bureaus without reason and my credit has been affected.
I have spoken to dozens of BofA “negotiators.†The list and the runaround never end.
After the bank bailout, which was expeditiously conducted, I believe that your office may have created a program with no teeth in it so that people like me may be protected against bank ineptitude, chicanery or outright fraud.
Can you, please, look into this matter for me and in your capacity as a fellow human being, allow me the opportunity to speak to someone who will advise me clearly in this matter.
I remain, most truly yours,
Migdia Chinea
Enclosure.
Stonewalled by everyone - More HAMP Transperency NEEDED!!!!!
Why is it that no one is reporting the fraud that President Obama's HAMP program is? Is it liberal press bias? Is the general press giving Mr. Obama a pass for fear of being labeled politically-incorrect?
He appears to talk much, but nothing he has offered has had any teeth to it -- for example, the health case program which charges insurance companies $100 a day for denying coverage to pre-existing condition patients. Please, take a look at the fine print on the proposed new legislation. Tell me -- in the face of serious and expensive medical treatment, such as cancer or whatever else, what do you think insurance companies would rather do -- cover the high cost of patient coverage or pay the paltry fine? Pathetic.
I've been in this Home Affordable Modification Program (HAMP) pursuit for over 14 months with no end in sight. I've paid my mortgage in full and on time to avoid creditor problems (my credit has been rated 850). Yet Bank of America has reported me as a NO PAY and has given me no fewer than 12 names as "negotiators" in my case. I'm now paying $600.00 more per month in mortgage payments due to arbitrary bank impounds for taxes and home insurance and phantom charges to handle same that the bank has imposed on my account. With much misleading misinformation bordering on fraud on the paperwork, by the way. Pathetic.
I've been trying to get a competitive mortgage rate to reduce my mortgage payments and perhaps an extension in the 30-year loan. Then, I get these calls from Bank personnel with no forwarding numbers who give me conflicting information. The matter, which has been referred to the Office of the Comptroller of the Currency (OCC), is in bureaucratic bank and governmental limbo. I've sent numerous letters to Bank of America CEO/President Bryan Moynihan. He responds through pleasant-talking people that cannot be further contacted. My Glendale Congressman Adam Schiff's office is simply ignoring me and has had the gall to call me a "spammer" for submitting relevant information about HAMP. This is pathetic.
Can we deal with the micro bank issue for a change and leave the macro situation aside so that regular people can understand?
Please, help me use my pen as my weapon of choice to help expose this unreported and underanalyzed travesty that is seriously affecting my health and my studies.
I sign my name so that everyone knows I'm not afraid -- Migdia Chinea -- currently a UCLA Grad Student in Theater, Film, Television and Digital Media. Specialization Screenwriting.
