Thursday, May 21, 2009

Small Banks to the Rescue

There was another article in this weekend's New York Times that I found fscinating. This one was in the magazine, and concerned the health of smaller banks around the country, which have weathered the financial crisis much better than behemoths like Citigroup.

The story focuses on MidSouth Bank, based in Lafayette, Louisiana. MidSouth is so strong that it's taken out billboards around Louisiana announcing "We have $200 million to lend." Their problem is that they can't find anyone to lend it to - businesses are too wary of the economy to go heavily into debt.

This story points out a way that we might emerge from this downturn. Everyone understands that a big part of the recovery is getting the credit markets moving again, so businesses can grow and new businesses can start and people can find work again. But when they hear about the troubles at the major lenders like Bank of America and Citigroup, it's hard to see how we'll lend enough money to resurface.

Maybe it's banks like MidSouth that will pull us out of this. And maybe it's America's smaller cities that will create the companies that lead the way.

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