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> Goldman Sachs economists in part blame the cumulative effect of regulations enacted since the Great Recession for reducing the availability of credit and rai

> Goldman Sachs economists in part blame the cumulative effect of regulations enacted since the Great Recession for reducing the availability of credit and raising the cost of doing business for small firms. Huh? Haven't small firms pretty much always been funded by personal saving of the founders, sweetheart loans from friends and family, and perhaps the odd bank loan secured by the personal assets (read: homes) of the founders? Banks aren't interested in lending directly to businesses until they are large enough to have concrete assets to secure the loans. And they never were.

jonwachob91 10y ago
I found this statement amusing too. Somehow, regulations enacted in the 40's took over 60 years to impact the industry? Seriously? The 80's and 90's, under the same regulations, where able to ignore those regulations and have tremendous growth and positive effect on the economy. Sounds like an economist who doesn't actually know what is going on so he's making shit up.
- gnutun 10y ago
  To be fair, the article was referencing regulations added since the Great Recession, so after 2008.
- ndonnellan 10y ago
  Great Recession, not Great Depression
  - muzz 10y ago
    that would be 2008, but the graphs start in 1977
rapala 10y ago
Depends on the industry. If your firm needs to buy heavy equipment for example, it's relatively common to get a loan for that from a bank.
- stult 10y ago
  Yeah but that's a secured loan. The machinery is the collateral.
snowwrestler 10y ago
Small companies access credit in all sorts of ways. Take retail for example. Quite a lot of small to medium retail operations do not (cannot) afford to pay upfront for all their inventory--especially for seasonal events. A retail store might double or triple their inventory on hand during November, in anticipation of the holidays shopping rush in December. So the stores buy on credit. The credit comes from their suppliers, not a bank--usually some type of payment terms like net 60 days. Of course it's not like manufacturers or suppliers have giant piles of cash sitting around either. Often they are also accessing credit themselves, in order to provide these terms to the stores which are their customers. If they are bigger than their customers, they might have more options for accessing credit from banks or other financial institutions. But it might be that they are also receiving credit their their upstream suppliers, who are themselves accessing credit from financial institutions. All this is to say: even small firms might be affected by the ease or difficulty of accessing credit from financial institutions, even if they are not accessing it directly themselves. > and perhaps the odd bank loan secured by the personal assets (read: homes) of the founders? Consumer credit has also changed. It's harder to extract value from your home now than it was 10 years ago. Banks have higher underwriting standards and are themselves subject to more regulation (from the CFPB for instance).
werdna123 10y ago
Well obviously we are supposed to deregulate the financial sector so Goldman Sachs can rake in the big bucks and collapse the economy again

jonwachob91 10y ago

I found this statement amusing too. Somehow, regulations enacted in the 40's took over 60 years to impact the industry? Seriously? The 80's and 90's, under the same regulations, where able to ignore those regulations and have tremendous growth and positive effect on the economy. Sounds like an economist who doesn't actually know what is going on so he's making shit up.

gnutun 10y ago
To be fair, the article was referencing regulations added since the Great Recession, so after 2008.
ndonnellan 10y ago
Great Recession, not Great Depression
- muzz 10y ago
  that would be 2008, but the graphs start in 1977

rapala 10y ago

Depends on the industry. If your firm needs to buy heavy equipment for example, it's relatively common to get a loan for that from a bank.

stult 10y ago
Yeah but that's a secured loan. The machinery is the collateral.

snowwrestler 10y ago

Small companies access credit in all sorts of ways. Take retail for example. Quite a lot of small to medium retail operations do not (cannot) afford to pay upfront for all their inventory--especially for seasonal events. A retail store might double or triple their inventory on hand during November, in anticipation of the holidays shopping rush in December. So the stores buy on credit. The credit comes from their suppliers, not a bank--usually some type of payment terms like net 60 days. Of course it's not like manufacturers or suppliers have giant piles of cash sitting around either. Often they are also accessing credit themselves, in order to provide these terms to the stores which are their customers. If they are bigger than their customers, they might have more options for accessing credit from banks or other financial institutions. But it might be that they are also receiving credit their their upstream suppliers, who are themselves accessing credit from financial institutions. All this is to say: even small firms might be affected by the ease or difficulty of accessing credit from financial institutions, even if they are not accessing it directly themselves. > and perhaps the odd bank loan secured by the personal assets (read: homes) of the founders? Consumer credit has also changed. It's harder to extract value from your home now than it was 10 years ago. Banks have higher underwriting standards and are themselves subject to more regulation (from the CFPB for instance).

werdna123 10y ago

Well obviously we are supposed to deregulate the financial sector so Goldman Sachs can rake in the big bucks and collapse the economy again