State loan program needs to be approved

The national economy is in tatters in part because of failing banks and frozen credit.
However, most regional banks have not been hampered by continual write-downs, since their balance sheets are not filled with collateralized debt obligations, credit default swaps and the other exotic instruments that emerged from Wall Street’s fever dream. And they claim they are willing to loan money to deserving businesses and individuals.
Unfortunately, in the psychology of the moment, the spirit may be willing but the credit is weak. Just like their battered brethren, local banks have tightened standards dramatically. That means that many businesses that a few years ago had no trouble getting a line of credit to meet payroll and day-to-day obligations are no longer able to do so. And the state’s economy is feeling the pain.
The huge economic stimulus package and the Troubled Asset Relief Program now being shepherded by President Barack Obama are designed to address the national problem. But that does not relieve local officials of the obligation to act locally.
Gov. Donald L. Carcieri and the R.I. Economic Development Corporation put together a coalition of local banks willing to lend $165 million to businesses in Rhode Island, if the state is willing to guarantee up to $25 million of that amount. Unfortunately, the legislature is dragging its heels, citing public unease. Steven M. Costantino, chairman of the House Finance Committee, says citizens are “extremely leery of bailouts or perceived bailouts.”
But this is not a bailout. It is an incentive to banks to get them off the fence to extend some desperately needed credit. Leadership is about making the case for what is required and getting it done. So how about a little leadership already? &#8226