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Small Banks Finding It Difficult To Access Bailout Funds

Posted By admin || 17-Dec-2008

According to an article in the Dallas Morning News, many small banking institutions are unable to access the government's $700 billion bailout fund. When the bailout fund was initially opened, it was publicly traded banks that had access to it. But now, nearly two months later, smaller banks are suppose to have access to the fund; but the necessary guidelines for access have not been released to the 3000 private banks, mostly partnerships.

Without access to the bailout funds many smaller banking institutions are at a competitive disadvantage during this credit and foreclosure crisis. While the big banks shore up their balance statements with government issued loans, the smaller banks must absorb the full shock of losses from the credit and foreclosure crisis.

This is something that many suspected would happen when this bailout was first created--the big guys getting rescued while the little man languishes. Many Americans bank at small institutions and these small banking institutions are being affected by the credit and foreclosure crisis and they have a right to access these bailout funds. The government should create a quota system that will insure that the smaller banks get their fair share of the $700 billion bailout fund immediately.

Categories: Economy
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