He devised the concept of rural microcredit, the practice of making small loans to individuals without collateral.
The alleged method: borrowing shares of restricted stock in several small companies to use as collateral for loans without telling the banks the shares were borrowed.
There may also be too few small businesses because small-business owners may find it difficult to access credit markets without collateral, or administrative costs of complying with the appropriate laws may make small-scale firms less competitive.
WSJ: Do Small Businesses Deserve Their Reputation as Job Creators?
Properly handled, this could indeed give would-be entrepreneurs the collateral with which to start small businesses.
But one-size-fits-all reform reaction to the crisis by Congress and regulators is turning Main Street banks into collateral damage, as if they were too-small-to-matter.
Though Draghi didn't spell out what policy changes could emerge, analysts say the bank could look at ways to encourage lending to midsize companies that could allow banks to bundle small business loans as securities and park them at the ECB as collateral for central bank loans.
Basuki, the South Kalimantan businessman, says banks typically ask for collateral worth 90% of the value of the loan from small businesses.
Many senators voted for the bill because of last-minute additions forcing airlines not to shut down business in small communities and a provision to allow the government to receive airline stock options as collateral for the loan guarantees.
But as the federal government and regulators attack this crisis, ICBs are becoming collateral damage as the new regulatory regime does not differentiate enough between big banks and small ones.
Ireland is too small for its economic troubles to pull down other countries much but Spain's economy has enough heft to inflict collateral damage (see article).
应用推荐