Last month, in an interview with Packet Publications editorial staff, U.S. Rep. Leonard Lance (R-7th District) noted that while many of the nation’s largest banks and financial companies are near collapse, the nation’s community banks are still strong.
”Community banks have not been part of the problem,” he said. “They are the ones that lend to main streets across the country.”
And when it comes to restarting economic growth, Mr. Lance says, it will be the nation’s community banks and small businesses that will lead the way.
Mr. Lance is right to point out that the real source of the country’s economic strength lies not on Wall Street but on Main Street.
And while that phrase is in danger of becoming cliché, it’s good to hear that as the federal government continues to try and prop up the banking industry after the collapse of housing prices, some consideration will be given to strengthening local banks and businesses.
It’s been hard to know with any degree of confidence what the right solution is to the banking crisis that erupted in the fall — ask three industry experts, you’ll get four answers — but it’s clear that as bad as it’s been, it could have been worse.
The largest banks, like Citibank and Chase and Bank of America, are teetering on the precipice of collapse, and the talk of having the Federal Depositors Insurance Corp. take over banks (nationalizing) has many Americans feeling very anxious.
But lost in the discussion of sub-prime mortgages and collapsing home values, lay-offs and Troubled Asset Reduction Program bailouts, Mr. Lance noted the record-low interest rates set by the Federal Reserve Bank are hindering lending, and consequently, the economy.
He added that for the economy to begin growing, interest rates will have to rise.
He may be correct, but at the same time, many consumers and local businesses are already getting hit with higher interest rates, which will be counter-productive for fixing the economy’s ills.
We hope Mr. Lance is able to use his position on the House of Representative’s Finance Committee to keep a focus on the needs of small businesses and banks. He was an effective spokesman for those interests in Trenton, a suitable training ground for being effective in Washington.

