Obama is now pressuring the banks to make loans to stimulate the economy. Yet again we have the government creating a crisis and then blaming the private sector.

The banks are in the business if making loans. They should not be encouraged to make reckless loans; that is what fomented the crisis to begin with. Fannie Mae and government pressure to extend housing loans to unqualified buyers was the core cause of the melt down.

Businesses are not growing and expanding because they cannot get loans, but because they cannot make money. Part of this is because of gross over building in the construction market, largely as a result of misguided Federal policy. Largely it is because of the uncertainty from the pending Union Card Check Bill, Cap and Trade, and the pending health care reform.

Tax increases, the expiration of the Bush tax cuts, threatened increases in the estate tax, and higher capital gains taxes are all major job killers. None of this is the fault of the banks.

The destruction in home values which was a common source of collateral for many small business loans, is a result of government policy.

Businesses do not borrow unless they perceive the risk environment to be favorable. Every step to take more of the profits makes the incentive to take a risk and create a job less favorable. If the president wants to know why unemployment is still high and business growth is so slow he doesn’t need a meeting with the banking industry, he needs a mirror.

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