Wall Street Banks are in trouble because of the credit crunch following the financial crisis. While major U.S. financial institutions received billions in government bailouts, they’ve been refusing to make loans. President Obama is encouraging more small business lending. In fact, he met with Financial institution executives at the White House to discuss this really thing. One of the ideas suggested was to take a “second look” at loan applications. The second look programs are what came out of that. Many United States banks have begun working with it. 2nd look may really be helping, after nine months of observation.
Second look gains traction
The President challenged Wall Street banking institutions to take a second check out lending after his December meeting. He went a bit further than that. Obama asked within the meeting that bankers “explore each possible way” to increase small company lending, reports the Associated Press. He also thinks that they need to take a “third and fourth look” along with the 2nd look. U.S. Bancorp CEO Richard Davis, chairman of the Financial Services Roundtable, said he would present the idea to other members of the group, which represents the country’s largest financial businesses.
Old-fashioned lending
Nine months later, the Financial Services Roundtable claims nearly all its members have second-look products. Members contain Bank of The United States Corp., J.P. Morgan Chase and Co., PNC Financial Services Group Inc. and U.S. Bancorp. The second look program makes lending possible like it was back within the day. This is what the Wall Street Journal said. A lender has more to consider when it comes to choosing who can borrow so the relationships and track record of the borrower come into play along with the credit scores analysis and other industry driving data. Some banks search for credit history errors that hurt borrowers the very first time around, or ask about unreported sources of income that could lower the risk of a consumer loan. The Journal said the second look program may be having an impact. Last month’s Federal Reserve survey of senior loan officers showed the first easing of lending standards for smaller businesses since 2006.
Worth the second look that is taken
A second look costs more for the banks, however banking institutions are beginning to view a business opportunity, rather than merely avoiding risk. PR purposes is the reason why Alan Sherter from bNET thinks banking institutions are doing the 2nd look program. It isn’t at all for risk in lending. Also, the loans that are being made are unlikely to jump-start the small business engine that could reduce the joblessness rate. The second look may be great for a small local business that wants to just survive the economic recession and hopes to increase one day.
Associated Press
msnbc.msn.com/id/34416646/ns/business-us_business/
Wall Street Journal
online.wsj.com/article/SB10001424052748704062804575510302866961116.html
bNET
bnet.com/blog/financial-business/due-credit-banks-offer-second-chance-to-small-businesses-rejected-for-a-loan/7715
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