Big Banks Reduce Their Small Business Loan Portfolio

According to a government report released by The Congressional Oversight Panel, the biggest Wall Street banks slashed their small business loan portfolios by 9% between 2008 and 2009, more than double the rate at which they cut their overall lending.

Elizabeth Warren, the panel’s chairperson, said, “Big banks pulled back on everyone, but they pulled back harder on small businesses." CNN reported that the TARP program infused billions of dollars worth of low-interest capital into the banks but did not impose any obligation on the banks regarding its disbursal.

The Treasury found that in seven months, the 22 biggest banks collectively slashed their lending by 4.6%. The report further said, “Unable to find credit, many small businesses have had to shut their doors, and some of the survivors are still struggling to find adequate financing."