MAY 2013 MAY MEETING:
MAY 17th John Felmy, Chief Economist American Petroleum Institute Washington D.C.
AMERICAʼS ENERGY ISSUES The Effects on You, Business & the Economy
INSIDE THIS ISSUE VOS: LEGISLATIVE UPDATE
SZYMANSKI: DEVELOPING AN EMERGENCY PLAN
GRACE MATTHEWS: INDUSTRY WHITE PAPER
PLUS: • INDUSTRIAL MARKETPLACE UPDATE • 5 MUST HAVE APPS FOR START-UPS • 809 SCAM ALERT
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IBA MEDIA LINK Lt. Governor Kleefisch fills in for Governor Walker while he’s in China. Let’s talk about Wisconsin exports! Click here to listen.
Executive Director Steve Kohlmann Heritage Printing / Cultivate Communications President Ann Barry Hanneman Simandl Law Group S.C. President Elect 2013 Steve Van Lieshout K & S Technologies VP. State & National Programs Jeff Hoffman Judson & Assoc.
Lt. Gov. Kleefisch on finding skilled workers.
Secretary John Weber Hypneumat Treasurer Casey Malek Kolb + Co.
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Membership / Sponsorship Heather Baylor Park Bank
Directors Bart Adams Kolb + Co. Larry Elton Advantage Leasing Richard Blomquist Blomquist Benefits
Healthcare debate hits the nail on the head.
Jason Kuwayama Godfrey & Kahn Tom Boelkow BSI Design, Build, Furnish
Click to play
Dave Drumel Staff Electric
We hear you.
Political Advocacy • Education • Networking www.ibaw.com / 262-844-0333 / IBAWOffice@gmail.com
Business Presentation Series MAY 17th John Felmy, Chief Economist American Petroleum Institute, Washington D.C. Mr. Felmy, American Petroleum Institute, Washington, D.C. John Felmy is chief economist of the American Petroleum Institute. He is responsible for overseeing economic, statistical and policy analysis of the Institute. He has more than 25 years experience in energy, economic and environmental analysis. He received his bachelor's and master's degrees in economics from Pennsylvania State University and a doctorate in Economics from the University of Maryland. Â Mr. Felmy is a member of several professional associations including the American Economics Association, the National Association for Business Economics and the International Association for Energy Economics.
Click here to register.
JUNE 21ST DIRK J. DEBBINK Chairman, MSI General VICE ADMIRAL CHIEF OF NAVY RESERVE COMMANDER, NAVY RESERVE FORCE (Ret.) Mr. Debbink is Chairman of MSI General, a design/build construction firm in Oconomowoc, WI. He has also recently retired as Vice Admiral, Chief of Navy Reserve, Commander, Navy Reserve Force in Washington D.C. Click here to register.
The View At 30,000 Feet Steve Kohlmann, IBAW Executive Director
It was a year ago this month that I took over
While I had been IBAW
general operations of IBAW. Not by choice mind
President for a few years I
you, but when the management company the
knew little about running
IBAW contracted with abruptly parted ways, there
an organization. I didn’t
were few options.
know anything about flying
a plane either. There’s an autopilot, isn’t there?
I received the word by email at 4:55 on a Friday
afternoon. If the news wasn’t unnerving enough
But the plane analogy fit and has served me well.
we were just a few weeks away from a large event
No need for food and beverage service, there were
with Governor Walker as our guest in which 350
more important things to worry about. Not flying
people had already registered.
into a mountain for example.
To give you an analogy, it was as though you were
So that weekend, I along with my main
sitting on an airliner at 30,000 feet and noticed that
cheerleader, supporter, spouse – and now co-pilot-
the pilot and co-pilot suddenly emerged from the
Sue, began frantically mapping out things we
cockpit wearing parachutes, opened the fuselage
needed to do in the short term. We had a big event
door, waved goodbye and took the leap. As a
coming up in a few weeks with the Governor and
passenger you would think to yourself “Well,
350 people. It would look pretty bad if we
that’s certainly doesn’t bode well”. I certainly did.
crashed and burned so we spent a lot of time
covering all the bases and learning how to deal
As the wind noise blew through the cabin I was
with issues and logistics in order to get an event of
curious enough to walk up to the IBAW cockpit
that size and scope done without drama.
and noticed the vacancy. When I contacted the IBAW tower (Board of Directors), over the radio
And we did it.
(phone), the response was out of a scene from the movie, Airplane! : “Someone has to fly & land this
With much help from the Board and our
plane, can you do it?”
membership, the event went off without a hitch.
In fact, it was quite successful.
Sure, why not?
Over the next few months we became more adept at what we had to do to fly the proverbial IBAW plane. Website updates, registrations, invoicing, receivables, payables, legislative reporting and all the other little (and big) things it takes to keep an organization flying. It’s now a year later and we’ve learned a lot. Both Sue and I have come a long way since that Friday afternoon at 4:55. I can honestly tell you we are always thinking about IBAW and working on the next thing. We come home from our normal jobs and get busy on IBAW items of business, there’s rarely an evening that doesn’t involve some type of organizational logistic or issue. In short, we’ve not only kept the IBAW plane flying but have managed to learn how to turn left & right, climb & descend, refuel in flight, avoid other aircraft, and how to take off and land safely. There’s even been a few new acrobatics such as this magazine you’re reading, Business Behind the Scenes events, and the Roundtable Discussion with Senator Ron Johnson. Fun stuff. As with any safe and successful flight, we can’t do it alone. There’s been plenty of help from our ground crew (you) and our friends in the control tower (Board of Directors). There are also many members, and elected officials cheering us on. Most importantly there are sponsors who have supported and encouraged us to ‘Keep ‘em flying’. They get a special thank you from the flight deck. You know who you are. There’s a lot that goes on in the cockpit to fly & land a plane. When done right it looks easy. You may be a passenger on the IBAW plane and not noticed the change of flight crew in the cockpit. If that’s the case - fine by us. As we make our way through another month, I hope you have had an enjoyable flight. Thank you for flying with IBAW.
Legislative Update Robin Vos, Speaker of the Assembly
Improving Wisconsin’s business climate is the Assembly’s top priority, a goal we will pursue by changing the way state government operates. State Republicans inherited a fiscal mess. Democrats engaged in years of reckless spending when the economy was booming, with no eye to creating safeguards for leaner times put us in a precarious position when the recession hit. The previous administration continued to forge ahead by using gimmicks to fix the state budget, like raiding the transportation fund to shore up the general fund (a practice that was later declared illegal), while failing to institute any meaningful, sustainable reforms. Tough decisions are called that for a reason; easy solutions rarely produce the best results. By kicking the can down the road, the state was put in a position where we faced a $3.6 billion dollar budget deficit in 2010. The GOP-led legislature and Governor Walker made the hard choices to tackle the problem, and I’m proud of what we did. We are now focused on building on those roots by changing the state’s tax code, reviewing the state’s rules and regulations, and being stewards of tax dollars through responsible budgeting. A key provision of the Assembly Republican agenda is dealing with our complex tax structure. The Tax Foundation says that Wisconsin is one of the worst states in the country for our high taxes. The state ranks 39th in the nation for the heaviest income tax burden, and middle-income earners take the brunt. We’re beginning to address this issue through an income tax cut targeted at middle class families, but the code itself is entirely too complex. In fact, complaints about the complexity of the state tax code are some of the most common that I hear. You’d think that taxable income would simply be a percentage of what you make. But there are 70 additions and subtractions used to calculate income. There are 30 tax credits, too; many of which have only six or seven filers claiming them. On top of that, there are 48 deviations from Wisconsin’s income tax law to that of the federal government. This all increases the odds that someone will make a mistake, whether accidental or on purpose. That means taxpayers are unintentionally over or under paying, which just isn’t fair. To simplify the code, the Assembly has been engaged in a top-down evaluation of the state’s income tax system. That began last summer with a bipartisan symposium I chaired to bring together tax experts and legislators to find different ways to address the significant problems with the state tax code. Representative Dale Kooyenga from Brookfield is looking at ways to incorporate the ideas and solutions
we generated into the state’s tax code. I believe there are many changes we could make that would put businesses in a better position to create jobs in Wisconsin. We are also focused on reforming government. There are 1,768 chapters in the Administrative Code that govern a wide variety of things. From the distance between chairs in nursing homes to the way eggs are packaged, nearly every aspect of life is touched by these rules. While most were put in place with the best of intentions, many have not aged well and do harm to businesses looking to start up, relocate, or expand in Wisconsin--all without providing their designed protections. Despite its wide-ranging impact, the actual process of regulatory reform is pretty dry. Yet Representative Dan LeMahieu of Cascade has had great response from state business leaders about the little things that needlessly get in their way. That input is being taken into consideration as state committees go through the code, line-by-line, to streamline Wisconsin’s rules and regulations. These changes won’t matter, however, if we don’t rein in Wisconsin’s wasteful spending. Budgets ballooned during good times at an unsustainable pace, and audits have found waste, fraud, and abuse all across the state. We will get spending under control by finding and eliminating waste and fraud to ensure that the taxpayer trust is being respected. Assembly Republicans continue to push toward a top-down reformation of government. We are looking at the ways in which we raise and spend your money. Our approach is balanced and responsible for the needs of everyone in the state. In the end, we want Wisconsin to be a better state to live, work and retire.
MA N The FREE
BUSINESS
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5A 10, 2013 •
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The IBAW was recently featured in the Waukesha Freeman. Click to read the story.
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CPA Caucus Finds Significant UW Cash Balance Dale Kooyenga, Representative 14th Assembly District
Prior to election to the state assembly, I spent the better part of ten years working for a large international accounting firm. I specialized in the auditing of financial statements for large businesses, governments and not for profits. In 2010 three other CPAs were elected to the State Assembly and we formed a CPA caucus. The four of us rolled up our sleeves and as a direct result you will soon see reforms to our tax code, reduced bonding and overall more efficient spending. This past week it came to light that the University of Wisconsin System amassed a significant amount of cash reserves that were not easily identifiable on their balance sheet. The Legislative Fiscal Bureau (LFB) with guidance from the CPA caucus, made the discovery by reviewing the detailed financial statements of the UW System. We found that the UW System is doing remarkably well which confused us because the communication from the UW System over the past two years was mostly doom and gloom. In particular, many communicated that Governor Walker and the Legislature's actions were resulting in uncertainty and reduced resources. To look at the history of these tuition hikes in the UW System, from 2009 to 2012, the tuition balance nearly doubled to $414.1 million. At the same time, base resident undergraduate tuition increased 5.5 percent each year. Wisconsin is ranked number one for tuition and fees increases for resident undergraduates at Big Ten universities over the past ten years. The tuition increase was 134.7 percent. The UW System was publicly making statements that additional tuition hikes and nearly double inflation were likely for next year. After asking further questions, the Legislative Fiscal Bureau released a memo  highlighted over $1 billion in cashon-hand. After subtracting out federal grants and certain restricted gifts the UW system still has $641 million cashon-hand. The UW System should have cash reserves, but it appears the regents were not aware of the significant cash balance. Plus, there were no policies addressing what the appropriate amount of cash should be. The UW System has doubled the amount of cash-on-hand over the past 4 years. The UW System, over the last two years, proved that they can effectively operate within current levels of state support from the general fund and current tuition levels. Based on the CPA Caucus's due diligence, we are moving to freeze UW tuition for the next 2 years and maintain current levels of funding. The additional $181 million of state support and millions of additional bonding in this budget should be reexamined. View more about the CPA Caucus team at the video link here. Note from IBAW: Special thanks to the MacIver Institute for providing video.
PLAY
Industrial Overview Bill Harrison, Grace Matthews
Grace Matthews recently published their Industrial White Paper, providing an indepth analysis of the challenges and opportunities in the Industrial marketplace today. The White Paper explores the benefits of the oil and gas shale opportunity on manufacturing in the United States, examines the current fiscal crisis in the United States and Europe, and outlines how and why strategic acquirers are
http:// www.gracematthew s.com/ DefaultFilePile/ Public/GMIndustrialMarketing/ IndustrialWPFinal.p df Click art to read.
positioning for growth by remaining active in the M&A market. In addition, the White Paper provides case studies on recent transactions completed by Grace Matthews. The case studies outline how running a competitive process, delivering a compelling story, and finding the right strategic fit can add significant underlying value.
Grace Matthews’ investment banking practice is global in scope and well known for its strong track record of successful industry transactions dating back to the early 1990s. Grace Matthews has completed deals in industries such as construction services, scaffolding and hoisting, building products and materials, metals and metal processing, paper and packaging, chemicals, food ingredients, transportation services, equipment rental, engineering, and professional services. Grace Matthews’ three main practice areas are sell-side transactions (private companies, divestitures for large multi-national corporations and private equity-owned businesses); buy-side projects (typically for major multi-nationals); and financing, where we raise debt and/or equity capital to support private equity-sponsored management buy-outs or recapitalizations.
Business Planning Developing An Emergency Plan Steven M. Szymanski, Business Law, Tax
Recently, I attended a business function. The main speaker at the function was a business owner who owned and operated his successful business for over thirty years. However, in the thirty years of operation, the speaker never considered how the business would operate if something happened to him. The speaker had an epiphany when his close friend passed away suddenly. The close friend also was a successful business owner and when he passed away, there was little management to operate the business because the business was highly dependent on its owner. The spouse of the close friend was in the unfortunate position of trying to own and manage a business with which she was unfamiliar. The death of the speaker’s close friend changed the way the speaker managed his business. He had a special meeting with his staff and asked them how the business would successfully operate if he was no longer around. At first the staff did not have an answer, but after some thought and planning with the owner, the group developed an emergency plan for the business. The speaker gained some sense of comfort knowing that if he was no longer involved in the business, there was a plan in place to protect him, his family, his employees and their families. Unfortunately, many business owners do not plan for the situation in which they are unable to operate their businesses, whether by illness, death, disability or otherwise. However, having an emergency plan can be an important tool in protecting the owner, the owner’s family, the employees of the business and their families. Here are some thoughts to consider in developing an emergency plan for your business: First, consider the management structure of your business. Are you the only business manager in your business or do you have management team? Does the management team make decisions or does it report to you for decision making? Many small business owners are limited in the resources they can commit to management. In such a case, a small business owner might consider creating an emergency team of trusted advisors who have met with the owner, understand the business and the owner’s goals, and participated with the owner in developing a plan to be executed should an emergency occur. Second, consider whether your business’ information is organized so that it is reasonably accessible and understandable by others in the case of an emergency. When an emergency occurs it is important that the business continue seamlessly and that information necessary to operate the business is reasonably accessible and understandable by others. Information regarding customers, suppliers and vendors, including contact information, orders and outstanding contracts, should be organized so that it is
available and understandable by the people who will be managing the business in your absence. In the event that it is necessary to sell the business, this information may be asked for by the buyer in its investigation of the business. The easier it is to access and understand the information, the better. Third, if your emergency plan addresses a sale of the business as an alternative, have possible buyers for the business considered, e.g., internal management, strategic buyers? Have possible business brokers been considered to assist in selling the business? Has a possible purchase price for the business been considered? The answers to each of these questions can be reviewed by the owner in advance, memorialized by the owner in a letter of direction or discussed with trusted advisors. Fourth, a business owner should consider the message that will be given to the employees of the business. Employees are an integral part of maintaining continuity in the business and they will be expecting some guidance should an emergency occur. An emergency plan may be able to provide continuing management with that guidance. Developing an emergency plan can be a helpful tool in assisting a business owner plan for unexpected situations. It can also assist the business owner in identifying strengths and weaknesses in the current business that can be adjusted to make the business more successful in the near and long term. Steven M. Szymanski, Business Law, Tax sms@wbb-law.com, 414-270-2521
Quote of the Month “I hope I shall always possess firmness and virtue enough to maintain what I consider the most enviable of all titles, the character of an "Honest Man." - George Washington
Absorption Numbers Continue to Paint Healthy SE Wisconsin Industrial Marketplace Jeff Hoffmann, Judson & Assoc.
Q1 2013 - The Data - SE Wisconsin Vacancy rate is down to 6.4% , National bench mark is around 10%. - 12th quarter in a row with positive absorption. 821,758 SF of space absorbed in SE Wisconsin in Q1 - 2013. Kenosha County (vacancy rate of 7.85%), and Waukesha County (vacancy rate of 4.04%) led the way in Q1 with 348,860 SF and 333,931 SF absorbed. - Manufacturing space was the top asset class with 471,674 SF absorbed in the marketplace in Q1. This has pushed the available stock of manufacturing space down to a 5% vacancy rate in SE Wisconsin.
Q1 2013 – The Trends - Tenants continue to push for short term commitments due to continued uncertainty within their business units - Tenants are still driving very aggressive rates on “AS-IS” space. This has led to deterioration of landlord pricing on the leasing side. - Modern product has filled with very limited supply left. - While a pessimistic economic tone remains amongst users within the marketplace, the data paints a different picture. The Industrial Economy is growing. - Long term Capital commitment projects (New Buildings/ Business Unit relocations) have been limited.
Q2 2013- The Forecast - Expect continued positive absorption. Waukesha County will fall below 4% vacancy this quarter. With a shrinking supply, rental rates will start to firm up. - The activity pipeline would suggest that businesses are still putting greater emphasis on fulfilling short term capacity needs with additional offsite space, as opposed to long term, new facility planning. - Long term capital will start coming back into the picture in the tail half of 2013.
*WARNING ALERT FROM AT&T* 809 Area Code Scam Submitted by Richard Blomquist, IBAW Board
Thank you to our good friends at AT&T for making us aware of a new phone scam taking place. The following is reprinted for the AT&T website. This long distance phone scam causes consumers to inadvertently incur high charges on their phone bills. Consumers usually receive a message telling them to call a phone number with an 809, 284, 649, or 876 area code in order to collect a prize, find out information about a sick relative, etc. The caller assumes the number is a typical three-digit U.S. area code; however, the caller is actually connected to a phone number outside the United States, often in Canada or the Caribbean, and charged international call rates. Unfortunately, consumers don't find out that they have been charged higher international call rates until they receive their bill. AT&T recommends the following tips to help avoid the 809 area code scam: •
Return calls to familiar numbers only. As a general rule, return calls from numbers that contain familiar or recognizable area codes. You may call your directory assistance or long distance operator to check the area code location.
•
Carefully read your telephone bill. Make sure that you only receive charges from your provider of choice. Ensure you thoroughly understand charges listed on your phone bill, have chosen to do business with all of the listed providers billing for those charges and have authorized additional fees invoiced. If your local service provider has changed, you will receive a final bill from the former provider and a notice of service disconnection.
If you believe that you have been scammed: •
Contact the carrier with whom the charge originated, whose name and toll-free telephone number should be printed on the same bill page as the charge in question. Often, the problem can be resolved with a single phone call.
•
If the carrier with whom the charge originated does not agree to resolve the problem, contact AT&T. AT&T will work with you and the carrier to help remove fraudulent charges from the phone bill.
Marketing Strategy: 5 Must- Have Apps & Programs for a Start up Business By Nicholas Putz via Cultivate Communications Blog Building your new business isn’t easy. In this economy — where profit margins are razor thin due to competition — you have to figure out creative ways to establish your brand while also promoting your start-up’s products and services AND balancing a costeffective, professional, and efficient way of conducting business. Many software tools available today would be AMAZING to have, but you just can’t afford them right now. What’s an entrepreneur to do? The first thing you should look for are creative alternatives to those pricey tools, platforms, and software programs designed for core business areas like Project Management, Customer Relationship Management, Social Management, Accounting, Creative, Marketing, and Content Management (e.g., Web Building). There is an upside to our economy being the way it is right now — It’s forced people to look for, create, and share affordable tools for businesses JUST LIKE YOU. Here’s my personal list of 5 must-have tools for your start-up business, at prices (some even FREE!) that are sure to fit your budget. 1. Basecamp (www.basecamp.com) — Basecamp is a project management and collaboration tool that not only offers you a free 60-day trial, but also integrates with a plethora of web applications to make collaborating with your clients a breeze. It has web-based calendars and drag-and-drop file sharing. It’s simple, intuitive, and best of all, after your free trial period is up, it’s completely affordable, with plans starting at $20 per month. 2. FreshBooks (www.freshbooks.com) — This cloud-based Accounting platform is an amazing tool for the budget-minded entrepreneur who does not fancy his/ herself an accountant. FreshBooks offers a free 30-day trial; however, this doesn’t mean you have to stop using it when the trial period is over. You can use the software indefinitely for up to 3 clients. When your business begins to grow, you can upgrade to 25 clients for only $19.95 a month. FreshBooks makes invoicing simple, and integrates with a large number of payment options both on- and offline. For someone starting out, FreshBooks is a no-brainer when it comes to wanting to professionally manage billing and accounting.
3. DropBox (www.dropbox.com) — DropBox is one of those tools that has revolutionized how we share files with one another. The best part? DropBox is essentially FREE, with tons of storage; the ability to back up your mobile devices; and drag-and-drop convenience for sharing documents and files with clients, family, and friends. Being able to collaborate and share documents through the cloud on almost any device with DropBox has made complicated FTP file-sharing systems almost obsolete. DropBox offers creative ways to increase your storage space, too, by simply getting friends to sign up, install, and use the mobile app. It has an application programming interface to integrate with a number of applications so wide and vast, I can’t even begin to count. Be sure to get DropBox today! 4. Google Analytics (www.google.com/analytics/) — Let’s face it… If you have a website, you need to know how effective your website is and what its place in your industry is. Google Analytics has revolutionized how you manage the direction you want your website, your messaging, and your brand to go — and it’s FREE! There’s no reason you shouldn’t already be using this powerhouse tool to measure your website’s performance. The tools within Google Analytics are infinitely customizable to see the statistics you need to out-perform your competition. If you have a WordPress site, be sure to check out my colleague Mike Kissel’s post about adding the Google Analyticator plug-in to your site. 5. Gimp (www.gimp.org) — To really make anything happen with great design, you need expensive photo-editing software (like Adobe Photoshop). But not everyone can afford this expensive program when they’re just starting out. Fortunately for those of you trying to establish your start-up’s presence in the world, you don’t have to be pressured into pirating that precious Adobe software to get your feet wet. Check out Gimp’s features to see if this program might be an option for you.
If you use Gimp to build your business and get to the point when you can afford to buy a suite of Adobe creative products, please feel a little obligated to throw a donation their way for making it possible for you to get your start without breaking the bank. You can donate to Gimp here: http://www.gimp.org/donating/ I hope this list of useful apps and programs motivates you to grow your business in new and exciting ways. If you have any questions, feel free to contact me on LinkedIn, Twitter, or Google+.
April IBAW meeting with Dan Schwartzer, Deputy Commissioner of Insurance, State of Wisconsin Our speaker for the April meeting was Dan Schwartzer, Deputy Commissioner of Insurance for the State of Wisconsin. There’s been a lot of questions and concerns regarding the federal exchanges for the Affordable Health Care Act and this gave members and guests a very good opportunity to get an overview on the responsibilities and options business owners will face. His presentation followed up with a Q&A session.
Gift from Washington D.C. 7 Feet of Regulations... Senate Minority Leader Mitch McConnell (R-Ky.) stands next to a tower of over 7 feet of new Obama Care regulations during a recent interview.
The traveling prop is generally parked in a corner to keep from falling over and causing injury - which would require healthcare.
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Capital & Credit Watch: Mixed News on Small Business Lending Raymond J. Keating, Small Business Entrepreneurship Council
So, what’s the latest in the story on small business lending? Well, it depends on the angle or source of the information. For example: • The Wall Street Journal on April 12 reported some grim news from JP Morgan Chairman and CEO Jamie Dimon on small business lending. Compared to last year, the bank’s small business loan originations were down by 20 percent. Dimon was quoted: “Small businesses remain cautious about the recovery and fiscal uncertainty, and are not investing their capital. However, companies’ balance sheets are much stronger than they were before the financial crisis and small businesses remain well positioned to invest in growth once they decide to.” • According to the Federal Reserve’s “January 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices,” when asked about the demand for commercial and industrial loans among smaller businesses, 1.5% said substantially stronger, 24.6% moderately stronger, 63.1% about the same, and 10.8 percent moderately weaker. That’s a mixed, uncertain portrait of small business loan demands – which is not surprising for the reasons largely noted by Dimon, that is, caution and uncertainty about the recovery and fiscal situation among entrepreneurs. Finally, it is worth noting that it was revealed – not surprisingly – that a government small business lending program was used by many banks to exit the government bailout program known as TARP, or the Troubled Assets Relief Program. As reported by The Washington Post: “The Small Business Lending Fund dished out more than $4 billion to 332 community banks, credit unions and community development financial institutions to lend to Main Street businesses… Instead, 132 TARP recipients participating in the small-business program used about $2.1 billion they were awarded to exit TARP, rather than increasing lending, according to the report from the TARP special inspector general… Twenty-four of those banks shared $501 million in small-business funding but have not boosted their lending at all, while the remaining banks have increased lending by $1.13 for each $1 in funding they received, according to the report. By comparison, banks in the program that did not participate in TARP have lent $3.45 for every $1 they received in funding.” The lesson, once again, is: Keep government out of the lending business. Whenever government gets involved, it only winds up hurting the taxpayers, including, by the way, small business taxpayers. Why? Government directives, handouts and subsidies mean that politics wind up replacing sound finance and economics when it comes to where loans go. We’ve seen the hard way – with the credit and economic mess that came to a head in 2008 – that lending decisions based on politics winds up being incredibly costly, for the entire economy. Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
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