Saturday, September 27, 2008

Wall Street crisis helps Main Street?

Via Marginal Revolution ... interesting
.... many smaller banks said they were actually benefiting from the
problems on Wall Street. Deposits are flowing in as customers flee riskier investments, and well-qualified borrowers are lining up for loans.
"We collect money from local savers, and we lend it in the local community," said William Dunkelberg, chairman of Liberty Bell Bank in Cherry Hill, N.J. "We're doing fine. There are 9,000 financial institutions out there, and most of them are small and most of them are doing fine."
Dunkelberg, a professor of economics at Temple University and chief economist for the National Federation of Independent Business, added that a recent survey of that
group's members found that only 2 percent said getting a bank loan was the great challenge facing their businesses.
Sure, but ultimately a) big banks have a greater share of deposits and b) small banks depend on big money-center banks for liquidity and risk-sharing.

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