The banks need to get back in play! They're supposed to lend money, right?

• Author: Wiesner, Pat
• Position: [on] MANAGEMENT

Two men I know well own a business in a small mountain town. They have been there a number of years and have been good for the area, bringing business and pretty good success to themselves. They employ a dozen or so people and are active around the community. The business owns a few buildings.

Three years ago, the owners decided to put up another building. The bank they had been dealing with for four or five years said, "Let us finance it for you. You're a good customer, you have cash in our bank and you can use the money for growth." For reasons of their own the owners decided to fund the building themselves, and the bank said, "OK, you are still a good customer,-give us a chance next time."

Three months ago, the same owners said they now want to invest in some growth and asked the same bank to loan against the same building. They have a better balance sheet and income statement than three years ago; they have more cash in that bank than before. The bank said, "No, you are still a good customer, but the regulators will not let us touch a commercial real estate deal; give us a chance when things get better."

Shouldn't banks be helping us get out of this bad economy? Isn't loaning money the number one job of banks in any economy? I thought the bailout for banks was supposed to put them in a position to help the rest of the businesses in the country. What do we have to do to put the considerable ability of our banking system up as a positive force rather than definitely negative? Can't we get regulators that can tell the difference between a company that is healthy and growing and one that is "toxic" instead of avoiding all commercial deals?

The banks got a bailout after causing a lot of their own problems. Then they became a problem for the rest of business by not making loans.

Right now banks are looking good because:

* They have gotten TARP (Troubled Asset Relief Program) money to clean up their books.

* They are still making money on their credit cards.

* They borrow money from the Fed for nearly nothing and buy 30-year Treasuries at 5 percent. A...