Little Loans

We've been discussing for a long time the necessity of getting the credit markets flowing freely again in order to have a fully healthy economy again. As the economy has gotten stronger in recent months, credit has indeed become more available. Mortgage rates, for example, have remained low, helping housing purchases to rise here in the Northeast 3.3 percent in this past July as opposed to July 2008.

But while people are getting loans, the size of those loans tends to be smaller than before the recession. A report by the Treasury Department surveying 22 big banks that received money from the bailout program noted that loan originations had jumped 13 percent in June but that total loan balances declined by 1 percent. So each individual loan must be significantly smaller than before.

The number of businesses seeking loans is also not heartening. More than half of banks said that demand for loans in April from small businesses was weakening, and about 40 percent of banks reported that demand from big corporations was also weakening. These are the types of loans that fuel business growth and that, in the end, will get the economy moving again.

You hear it said sometimes that the biggest obstacle to the recession is the mindset of the American people. Here's a situation where the challenge really is to change people's minds: The money is out there, and the economy is getting back on its feet again, and the sooner business owners recognize that, the better off we'll all be.