With the Congressional rejection of the Treasury bailout package lending from banks to small businesses has ground to a halt.
According to Forbes,”The Discover Small Business Watch index of economic confidence slipped to 74.6, down by 12.3 points from the prior month, representing the index’s second-lowest level since its inception in August 2006.”
The sharp drop comes as banks have stopped lending to one another, larges businesses, consumers, and small businesses. Financial companies have reached the point where they can no longer figure out who has the ability to pay them back.
On top of the credit crisis, business customers at banks which have been taken over, especially Washington Mutual and Wachovia (WB) should assume that there will be significant lay-offs at these firms. Sorting out customer service will almost certainly cause months of confusion and difficulty for clients.
If there is a time to move to one of the most stable banks like Bank of America (BAC), it is now.
Douglas A. McIntyre