Wall Street pulls the plug on small businesses and announces quarterly results.

By Trent McCandless

It doesn’t take an economic genius to know that the road to economic recovery begins with entrepreneurs.   The Troubled Asset Relief Program (TARP) was intended, according to Ben Bernanke, to be a bailout of the banking industry so that lending would open up to small businesses and entrepreneurs.

Bernanke told ’60 Minutes’ earlier this year that “I come from Main Street. That’s my background. And I’ve never been on Wall Street. And I care about Wall Street for one reason and one reason only — because what happens on Wall Street matters to Main Street. And if we don’t have stabilization in the financial markets, if we don’t take the steps necessary to make sure that credit is flowing again, then my father couldn’t get a loan to build his new store.”

Banks Quarterly Results

Unfortunately, signs are showing that Main Streets’ small businesses are still being hit the hardest–even at a time where some banks are gloating about multi-billion dollar profits.

JPMorgan Chase announced last week that it had posted $3.6 billion during last quarter—most of which was due to its investment banking division and not in lending. Bank of America, the nation’s largest brokerage house and consumer banking franchise, didn’t fare as well posting a $2.24 Billion loss in the third quarter of 2009. Bank of America did, however, post a $3.2 billion quarterly profit on July 17, 2009.

Despite these profits banks have still pulled the reins in on lending to small business and consumers.

“The original notion of the TARP was, we were going to help Main Street by bailing out Wall Street,” Sen. Mark Warner (D) of Virginia said in an interview last Wednesday. “We’ve seen Wall Street recover, but we have not seen Main Street reap the direct benefits.”

Senator Warners spoke to the Senate Democratic Caucus on October 14, 2009 in an effort to urge President Obama and the Treasury to open up lending to small businesses. A plan announced in March called for using TARP funds to purchase pools of small-business loans—despite the plan being ready to go the treasury has not given it a green light.

Overdraft Charges

Adding insult to injury, the FDIC reported late last year that the majority of major banks have stepped up the amount and frequency of charging businesses and individuals Overdraft Fees. The study, entitled FDIC Study of Bank Overdraft Programs found that banks had developed software in order to batch charges in order from largest to smallest–in other words if you have an available balance of $199 and make three charges of $1 each and then a fourth purchase of $200 the software will post the $200 charge first so that you incur four Overdraft Charges instead of one.

Sneaky, isn’t it?

The FDIC report also showed that the APR of debit cards was in the range of 1,067 and 3,520 percent. Unheard of, even with the worst loan sharks.

A Virgina small business owner, who wished to remain anonymous, stated “Starting last week I have to close my shop on Mondays, I just can’t afford to keep the doors open.”  She continued to say “people are spending less and my credit gets cut almost everytime I pay my bills.  It’s not easy out there.”

A call to Bernankes office to inquire about whether or not his father received a loan for his new store was not immediately returned.