2009 Industry News

Feds Action - A lesson to be learned
Posted: 2-25-2009
During the last great Banking crisis of the 1990's the Japanese government injected trillions of Yen into their economy. In their effort to limit the damage to a wider economy they developed a system they named the "Convoy System". This system had a simple strategy of having the strong institutions prop up the weaker ones. Now, the Bankers that received these funds were obligated to bolster their balance sheets by reducing costs. This resulted in downsizing, mergers, they reduced lending and closed Branches. Sound familiar! In the United States the big difference is that our problems unfolded much more quickly and our reaction time was faster. Unfortunately the Banks given their present situation are more concerned about preventing potential disasters than lending money. This policy opens the door for Loan Brokers to use their traditional non-bank lenders to service those Businesses who need funds to survive.