• Please. Stop Calling Credit Markets "Frozen"

      "In March 2009, President Obama vowed to address the drought of bank lending to small companies and announced an initiative to use $15 billion from the federal bailout to unfreeze the markets that finance Small Business Administration loans."

      More melodramatic prose from today's Washington Post: "White House moves to free up lending for small businesses."  "Unfreeze the markets." "Free up lending." Given such language, I would think that loans to small businesses have stopped. The market must be broken, right?

      ... lending to [small] companies has fallen. Federal data show that lending to small businesses by community banks declined by about $8 billion, or 2 percent, between September 2008 and September 2009.

      A decline of two percent. TWO PERCENT. That constitutes a credit "freeze"? Considering the rash of bank failures from 2008 - 2009 due in large part to bad loans made by banks, a decline of two percent in loans to small businesses strikes me as a prudent response.

      The Administration never actually launched that $15 billion initiative to "unfreeze the markets that finance Small Business Administration loans," the Post article continues, because:

      ... these markets recovered on their own, administration officials say. As a result, there was no need for a more expensive program ... While the financing markets for SBA loans improved, virtually all other kinds of small-business lending remained troubled. To address this broader problem, the administration in January proposed taking $30 billion from the $700 billion Troubled Assets Relief Program and offering that money to banks that lend to small businesses.

      So, a credit market recovers on its own, without government intervention, and the Administration now plans to address this "2 percent" decline in loans to small businesses by spending ... twice as much