Americans must face the grim reality that the Obama stimulus package has not and will not create the millions of jobs promised. Yes, the TARP money has impacted the stabilization of the financial markets, but in the long run it won’t be enough to sustain it. When will this administration proclaim that, only through the business community (large and small), and the business community only, can the economy be truly stimulated and create jobs for the long term. Industry leaders are speaking vociferously on how this administration’s economic policies are severely undermining free enterprise in America. They’re hoping that the Obama Administration will have an epiphany sooner, and not later, before the crisis is insurmountable.
If President Barack Obama truly wants America’s financial community to help accelerate the recovery, he should stop publicly blaming it for the recession and unemployment. Instead, he should praise it for creating the most effective financial system in the world and make it his partner in the recovery.
Currently, the president is sending the financial community mixed messages. On the one hand, he is correctly reminding our banks that the government helped stabilize the financial meltdown by bailing them out.
As a result, the banks owe an extraordinary effort to help accelerate the recovery by increasing lending to small and medium-sized businesses. On the other hand, the administration's bank regulators are forcing the banks to tighten credit standards so they make fewer risky loans. In addition, the regulators are requiring banks to write down performing loans on their balance sheets that are collateralized with devalued property. This write-down reduces a bank’s capital and its ability to make additional loans. Therefore, it should not be a surprise that government policy is contributing to a reduction in bank lending.
The demand for bank loans by small and medium-sized businesses has also declined because of the toxic political environment in Washington.