Bring Back Bankers: Get Gov't Out of Commercial Lending
Small business lending should be based upon the merits of the venture and the credibility of the entrepreneur. The banker’s judgment and relationship with the borrower are key factors in the decision to lend, in the allocation of capital, in the ongoing evaluation of risk, and in the venture’s ultimate success. A banker is the entrepreneur’s intimate partner, joined in the success or failure of the venture. It is in the bank’s interest to keep a close watch on a company’s progress and to maintain a friendly relationship for future loans, other services, and referrals.
The heavy hand of the federal government in lending is eroding this important lender/borrower relationship, and as a result what should be a valuable, economic symbiosis has been largely diminished. It has been supplanted with government guarantees, forms, and formulas, and limited by law, by the imagination of bureaucracy, and subject to the appropriation of funds by a grossly indebted national government.
Let’s face the fact that government has no incentive to be a good, instructive lender in a mutually beneficial relationship. If a bureaucrat makes a bad loan, it is a statistic. If a banker makes a bad loan, a job is at stake.
We need a plan to remove bankers from the endangered species list and to bring commercial lending back into the private economy. Let small business compete for private funds. The best will find capital and thrive -- with the help of a friendly banker.