Bank Bailouts Didn’t Help Small Businesses

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Big banks that received taxpayer help after the 2008 financial meltdown have been less willing to lend than smaller banks, according to a new government study.

Bloomberg Businessweek reports on a new Small Business Administration study that reveals banks propped up by taxpayer cash were more takers than givers…

Small business loans outstanding dropped 18 percent, from a peak of $659 billion in 2008 to $543 billion in 2011, according to Cole’s analysis. TARP banks cut their lending to small businesses by 21 percent in that period, compared to a 14 percent drop at other banks, according to the paper.

The U.S. Treasury invested more than $200 billion in 700 banks through the bailout program, including $25 billion each to the nation’s largest lenders, including Wells Fargo (WFC), JPMorgan Chase (JPM), Citi (C), and Bank of America (BAC). Citi and BofA received other aid as well. Treasury has noted that its TARP repayments have turned a profit for taxpayers. A Treasury spokeswoman did not respond to an e-mail seeking comment.

Yes: Banks that didn’t get a bailout have actually lent more money to small businesses in the past four years than banks that did.

Stacy Johnson

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