Bank of America severing some small-business credit lines

[Newsjock]

Source: Los Angeles Times

Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat.

The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.

Business owners complain that BofA's credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can't seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.

Read more: http://www.latimes.com/business/la-fi-credit-cutoff-20120103,0,3538902.story

[Hugabear]

1. It's a damned good thing we bailed them out.

These large corporate banks who took federal bailout money should be brought up on charges for FRAUD and THEFT. We knew it was a bunch of bullshit, but they did claim that they needed that money in order to continue lines of credit for small businesses. Instead, they gave themselves a bunch of fat bonuses, and continued to withhold credit. If that isn't the very definition of fraud, I don't know what is.

[Joe Shlabotnik]

6. Classic. How trickle down always works in reality n/t

[yourout]

2. Hmmm.....economy must be getting better and that can't happen until after the elections.

[tabatha]

3. If possible, those businesses should go to a credit union.

[bluesbassman]

4. You see, this is what OWS is all about.

The banks get what essentially amounts to interest free loans to bail them out, then turn right around and shaft small business.

Listen up politicians and Corporate America: WE don't want handouts. We just want a level playing field.

[lunatica]

12. And those bailouts come from, you guessed it. Our taxes. Money we earned working.

So in essence we work to pay for the bank bailouts, which keeps them in business and they, in turn, refuse to use our money to help us out. Not even with the added fact that we would be paying interest to them for lending us our money.

What could possibly be wrong with this picture?

edited for spelling

[Devil_Fish]

5. Probably because I severed BofA's line of credit by switching to a credit union.

BofA stock is now under $6, and doing a typical dead cat bounce. It won't be long before it's under $1. If I was a fat cat, I would be short in BofA right now, and I would clean up.

[a2liberal]

7. This is why

the government should have loaned directly to small businesses instead of subsidizing the banks to do so. Same think with Making Home Affordable... why subsidize banks to lower interest rates on a loan instead of just having the government make the loan? Good thing we stopped doing it for student loans at least. The whole "third way" model of subsidizing private industry profits so they can provide a service is stupid.

The exact same sort of thing is going to happen with insurance btw. I guarantee insurance companies will continue to kill people through denying life-saving treatments, despite now being heavily subsidized by a mandate (and monetary subsidies from the government through the low income subsidies)

[MedicalAdmin]

8. +1 for point about insurance companies.

I am sick to death ( inside joke) of pollyannas saying what a nice day it is while im picking chunks of sky out of my hair.

[Skittles]

9. those folk are in dire need of interventions

they appear to be either unwilling or incapable of seeing reality

[jimlup]

10. Yeah well BofA has been screwing me since '08

Those bastards - I'm tittering on the edge because of them. At least I have a solid income stream so that I can protect myself somewhat but they are really bastards. They raised my personal credit card rate from 9% to 24% and they've been trimming it down as I pay it off.

Bastards!

[lunatica]

11. Gee, that's what happened to us peons a few years back

The credit card companies got very nervous about all that debt out there and started doing the same thing to us. One by one they closed our accounts, except for telling us to either pay it back all at once or keep making monthly payments at higher interest rate. Not being able to use credit forced me into bankruptcy after my household income went down. It's been a struggle ever since.

Now they're doing the same to small businesses. At least for me I have a job. Small businesses going out of business, which they will, means others won't have a job.

[sarcasmo]

18. Yep, I remember getting those letters saying your interest rate is getting jacked up

and there is nothing you can do about it, and I think in the fine print it said, sucker!

[PA Democrat]

13. Who could have predicted this?

It's the failt of those small business owners. They should have become too big to fail. Are they too cheap to buy some politicians?

[sarcasmo]

14. BOA new slogan

How many people can we screw in a day.

[midnight]

15. What else can come of giving greedy people other people's money with no strings attached?

[FarCenter]

16. Since people have been moving deposits to credit unions, BofA has less money to lend

Lines of credit to small business are some of the riskiest lending that a bank does.

This appears to be a selective cutback to businesses that are in trouble already.

[DaveJ]

17. I see they're demanding 12% interest

That's not a bad ROI. Beats working for a living. I wonder if this might also result in higher profit margins for individual investors. j/k

[scuzati]

19. BOA recovery strategy

send the customers to the small banks who care, so it too can be a small bank soon.