Upset by what they see as government bailouts of banks that still aren't lending money, several small broker-dealers are floating the idea of getting government money to smaller firms.
Upset by what they see as government bailouts of banks that still aren't lending money, several small broker-dealers are floating the idea of getting government money to smaller firms.
They say it would spur lending to small-business clients starved for credit.
Such a plan wouldn't be similar to the Troubled Asset Relief Program “but a pool of funds given to small broker-dealers,” said Alan Davidson, owner of Zeus Securities Inc.
The 4,400 firms that qualify as small broker-dealers “are perfectly positioned to get capital to small businesses” through their normal capital-raising activity, he said.
Mr. Davidson, who runs the 250-member Independent Broker-Dealer Association Inc., and his ally in the government-funding cause, Tommasina Olson, owner of LifeVest Financial Inc., were scheduled to meet last Monday with Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
Mr. Frank had to cancel at the last minute, but his office is promising a new meeting, Ms. Olson said.
“I think [small firms] would be a good bet to get the economy going again,” she said. “The money would be to assist us in loaning to our clients.”
Mr. Davidson and Ms. Olson said that details of how government money might be run through small brokerage firms will have to be worked out.
But the “mechanics for [small-business lending] are in place” at broker-dealers, Mr. Davidson said.
“It's not like [the government would] have to plead with us [to lend] like they have to with the banks,” he said.
