Tim Fernholz says a jobs bill pending in the House will give Democrats a new opportunity to make the case for their economic policies.
Politics aside, the bill is trying to correct a problem that has hindered recovery since the financial crisis: Small businesses are finding it tough to get affordable credit to invest in equipment, hiring, and expansion. With economic growth slowing, banks worry that lending is too risky. Large Wall Street banks with the capacity to lend remain focused on trading and corporate clients; small banks, whose bread and butter is lending to small businesses, haven't been as effective in trading their way out of losses incurred during the crash. Today, most Wall Street banks have paid the government back for the aid they received through TARP, and then some. Many small banks, however, remain fragile -- 120, about one-sixth of the banks in the TARP program have missed deadlines to pay their debts -- and are unable to marshal the resources to drum up new business.
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