Monday, May 05, 2014

ECONOMY - Did the Federal Government Protect Small Business During Collapse?

Note that there's an issue on what is meant by 'small business.'  This is also a story of the FDIC not ding its job of regulation, and of what happens when you turn over your job to the private sector.

"Small businesses left in lurch when local banks collapse" PBS NewsHour 5/4/2014


SUMMARY:  Did the federal government do enough to protect small businesses after the banks they relied on collapsed during the 2008 financial crisis?  Correspondent Rick Karr investigates what the FDIC did with the assets it took over.

RICK KARR:  Jesse Morreale has a lot of experience buying run-down buildings in edgy neighborhoods, fixing them up, and opening bars, restaurants and clubs in them.  It’s his business model and his passion.

JESSE MORREALE:  I see, for instance, a building like this as an opportunity to contribute something to the community in addition to myself.  As the businesses around me are growing and being more successful, my businesses are more successful.  This is basic economics.

RICK KARR:  Morreale’s been lauded by the City of Denver for helping to revive a few neighborhoods there.  He started out rehabbing old theaters when he was a concert promoter.  That’s when I first interviewed him.  He bought this building in 2008 and opened a couple of restaurants on the ground floor.  He dreamed of converting the upper floors into a luxury hotel.  But as the restaurants started to attract crowds the hotel project ran into trouble with city inspectors and his business plan derailed.

RICK KARR:  Your company was wounded, but was it a mortal wound, in your opinion?

JESSE MORREALE:  Absolutely not.  It was a distress period.  Manageable issues, curable issues.

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