By Lloyd Chapman
President, American Small Business League
CIT has acknowledged that negotiations with the Obama Administration have broken off. It seems clear the Obama Administration has decided CIT is not too big to fail.
What about the roughly one million small and medium businesses that depend on CIT for financing, should they also be allowed to fail? CIT has been the nation's number one SBA lender for nine years and the top lender to women, minorities and veteran entrepreneurs for six consecutive years. If the officials of the Obama Administration have decided not to save the nation's top small business lender, doesn't President Obama have an obligation to CIT's customers? Shouldn't he take immediate steps to ensure those firms are not forced into bankruptcy as a result of his administration's decision not to rescue CIT?
CIT's customers have worked many years to build their businesses and create jobs for millions of people. They have done nothing wrong and they do not deserve to have their businesses damaged or destroyed as a result of an arbitrary decision on the part of Washington bureaucrats.
If President Obama does not want to save CIT he should immediately offer a viable financial alternative to CIT's nearly one million customers. He should take appropriate steps to ensure that CIT's customers have workable government backed financial alternatives. To simply leave those firms to fend for themselves and say that other lenders will fill the void is unacceptable.
If the Obama Administration insists on letting CIT fail and they refuse to provide CIT's customers with reasonable and workable financial alternatives, an avalanche of bankruptcies will likely follow. There will almost certainly be a reverberation through the middle class economy that will make the recession worse and extend its duration.
President Obama should also consider the nearly one million CIT customers along with all of the employees of those firms and all the families of those employees. Conservatively the average CIT customer has approximately 15 employees. According to the U.S. Census Bureau the average American family is about 3.19 people. That comes out to 47.8 million people that could be adversely affected if President Obama lets CIT fail and refuses to offer some help to their customers.
So far President Obama's economic stimulus plan is not working for the vast majority of Americans. The 27 million small businesses that employ over 55 percent of the private sector work force, create over 97 percent of all net new jobs and are responsible for over 50 percent of the Gross Domestic Product (GDP) have received less than 1 percent of the overall 2.5 trillion in economic stimulus funds. Unemployment continues to rise as Goldman Sachs, one of President Obama's top campaign contributors, is reporting record profits. Dissatisfaction with President Obama's economic policies is growing daily across the country and on both sides of the isle in Congress.
President Obama should take a closer look at his administration's policies involving CIT and the over 40 million voters that could be impacted by those decisions.
2012 will be here before you know it. Maybe John Kerry and Al Gore could offer some advice on the difference a few million voters can make on Election Day.