Here at the Arkansas Office of Financial Services (OFS), we encourage both people and businesses to take advantage of the opportunities that are available to them. It’s not that we want you to become a wealthy businessman or a successful entrepreneur. But, rather, we want you to become a more productive citizen.
In the financial services industry we work closely with businesses, but also with individuals. We work with the state in its efforts to ensure that the most effective way to help people and businesses is to make the best use of their tax dollars. Businesses who are able to save money through investment programs and private equity investments can be more competitive in the competitive business markets. That’s part of the reason why we strongly encourage businesses to use the opportunities that are available to them.
The fact is that the majority of businesses use the opportunity to get business from their employees to their customers. We’ve said it again and again in this industry. The way to get around this is to get out of the way and go to your nearest business.
At any given time the majority of businesses have a balance sheet that looks like a giant checkbook. This means that they have a lot of cash and don’t need to worry about investing the extra money in the business. But when you really check out your balance sheet, you find that there are a lot of other businesses in the industry that don’t know what they have.
This is the reason that banks have been so slow to add to their portfolios. If they were smart, they would have added more businesses to their balance sheet than they have (or at least been able to do so with the amount of money they have) and that would have given them a huge edge in the market. But the reason banks don’t add new businesses to their balance sheet is because they are worried about their credit ratings.
As a matter of fact, most of the time the reason why banks are so slow to add more businesses is because they don’t have the capital or the liquidity to do it. There has been a lot of talk recently about the bank bailout plan where the government was going to take a portion of the banks capital and put it in the hands of the banks to lend out to businesses that would have otherwise gone out of business.
The real reason why this plan didn’t work was because it didn’t get the support of a lot of banks that they had to do it the hard way. It only got the support of a much larger group of banks that were pretty sure that these small banks wouldn’t need to do it.
The plan was to use the money to put money in the hands of businesses that would have gone out of business. In fact, the real banks that were supposed to lend to the small banks never got the money to lend, they just had their own banks bail out. So, while the plan worked, the real banks that were supposed to lend to the small banks didnt help them out with the bailout.
I’m sure many of you have heard of the bailouts that have occurred in the past year. We may have to be a tad selective in the examples we use because the banks that got wiped out werent from the same industry as the big banks. The ones that were wiped out, however, werent the banks that were supposedly struggling. They were the banks that werent in the financial industry at all. As you can imagine, some of the bigger banks arent happy about this.
The same logic applies to banks that are taking out loans. The loans that a big bank is providing to businesses are the ones that arent going to help them out. If that bank has a hard time finding workable loans to work with, and the banks that have been working with it for a while arent able to find them, then the business will be in trouble.