The Reality is

I spoke with a client who owns commercial property which he bought for development. He has only developed a part of it and is having a very difficult time getting tenants and now dealing with his bank. When the bank initially approved his loan, they gave interest only for several years. They accepted the land and improvements as collateral. He was the signator for his LLC.
His wife is not involved. He pledged no personal property. Now the bank wants his wife as a co-signator, $25,000 more cash and his personal property as collateral. He has always been current on his loans. As with all real estate investors these days his cash is limited. He asked advice.
I suggested that the reason for the change in the deal was probably the result of requirements by bank regulators. I pointed out to him that banks do not want to own more commercial real estate than they do now; they do not want to foreclose; they do not want litigation and they do not want short sales(YET). They do want to work deals out but are reluctant to say it publicly.
The US banking system is leaderless. Bankers do not know what to do. Politicians are calling for banks to lend more money and cannot understand why businesses do not want to borrow more money when the only businesses banks will lend money to are those who do not need money.
Regardless of what bankers say, as long as you pay them money, they will accept it. Even though bankers threaten, keep paying what you can afford. Do not listen to anything else. Tell them what you can do. You are not alone.
It makes no sense to pay banks money you cannot afford and face hardships caused by the banking system and government in the first place.

The Banker From Ipanema

I read and article in the Wall Street Journal today which suggested that a good solution to our on going irresponsible banking practices at every level would be the Brazilian approach.
In Brazil if a bank makes a bad loan the directors are personally responsible. Can you imagine how quickly this would tighten up our system. Banks would have to elect directors who knew what they were doing and pay attention to where the money was going before the fact rather than after the fact. Bankers pay would be based on performance which should be at a high rate but if they made mistakes,their compensation would be negatively affected. In order to make money they would have to lend money - prudently. Businesses would have to give banks all the information they needed to make a decision. Banks in essence would have to understand the business and act as the business' partner and make sound suggestions.
The best part of doing it this way would be that politicians would not be involved because the system would take care of itself.
The success of our economy will be to implement common sense approaches like this one for every sector. Government programs and intervention should only be based on need. We need a strong military. Indigent people need to have access to government funded health care. The areas where government programs and intervention are needed seem very apparent to everyone except politicians.

HELP

Help me understand a few things before I vote now and in November.

Federal Reserve Chairman Ben Bernanke and politicians say it's time for banks to lend small business money.

Banks say they have plenty of money for the RIGHT customers.(Bank to RIGHT customer - do you want to borrow $10 million dollars? Answer - No I don't need it) (Bank to WRONG customer - We can lend you $50,000 but our LTV ratio is 20%-80% and we need a 2nd mortgage.)

The Bank Regulators says it's time for banks to increase all of their reserves to cover all of the bad loans that were made over the last few years as a result of political mandates. Therefore, don't lend any money.

We hear there are valuable tax credits available under the new healthcare plan.
If we could borrow money to make money we would have taxable income and could take advantage of the tax credits.

In the current economic scenario, the government will have to increase taxes.
Consequently, business will have less money to invest in their businesses.
Consequently they will hire fewer people
Consequently they will produce less
Consequently they will have less income.
Consequently they will produce less capital.
Consequently they will pay less taxes.

I think I have figured this out on my own but thanks anyway