WSJ headlines and questions for April 11 2011

WSJ headlines and questions for April 11 2011 - paperwork...

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WSJ headlines and questions April 11, 2011. WSJ Headline March 31. Few Banks Seek Funds for Small Businesses Last fall, the Obama administration announced that it would set aside $30 billion for a program to revive small business lending. It was available to all banks with less than $10 billion in assets. Banks could borrow from the fund at rates of between 1% and 5% to make small business loans. Banks that increased their small business lending by more than 10% would pay the lowest rate and those that increased their small business lending by less than 2.5% would pay the highest rate. Only 7% of banks, 526, chose to participate and they have only requested $7.6 billion in funds from the program. Many of those that did not participate cite the heavy amount of initial and continuing
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Unformatted text preview: paperwork involved. The program was supposed to end on March 31, but the Treasury Department near the end extended the deadline to May 16. Questions: 1. Why did the administration push this project and why did they extend it? Didn’t we learn from an earlier WSJ article that the vast majority of small businesses say they had all the funding they needed? 2. Why have only about ¼ of the funds been borrowed? 3. Why would banks borrow from the Treasury at rates of 1-5% and fill out a lot of paperwork when they can borrow in the federal funds market, from the discount window, or liquidate excess reserves at lower interest rates and with less paperwork? 4. Do you predict that many more banks will participate, now that the Treasury has extended the program?...
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