Most readers of the CPR newsletter are aware of the current capital crisis affecting property owners and small businesses across America. Most would probably also agree the two things needed to correct the problem are:

1) Relief from the property regulatory environment. CPR has long focused on the obvious problem of unnecessary regulation and its direct impact in restricting America's economy.

2) Similarly, and currently as harmful to property and small business owners is the credit crisis which has dried up finance-ability for all types of real estate development and small business expansion.

There may be a ray of hope for item (2) above. This comes in the form of amendments offered by Congressman Ed Perlmutter of Colorado  to H.R. 5297 the Small Business Lending Fund Act being debated on Capitol Hill. It would be hard to overstate how beneficial this amendment could potentially be for the local banking sector and by extension, in stimulating increased liquidity in the real estate market.

The amendment would, at no cost to government (this is not a bailout), allow banks to amortize their losses on small business loans made from 2003- 2008 over a 6- 10 year period rather than realize these losses immediately under current regulations. This simple accounting change would give local banks added time to absorb the impacts of the worst financial crisis in three generations. This approach would shore up local bank capital and reduce government's looming liability of taking over local banks with capital ratios below the new regulatory standards. It would encourage investment capital to once again flow to local banks and would allow local banks to begin lending again. This could very well be the first meaningful seed of recovery to come out of Washington since the malaise began several years ago.

According to Perlmutter, his legislation, is "designed to increase small business lending and job creation, is fully paid for and will save taxpayers $1 billion over the next ten years."

"Small businesses can't grow if community banks don't lend.  I am committed to promoting job growth and supporting the small businesses that are the foundation of Main Street and rebuilding our economy.   This bill also includes my amendment which will allow small community banks to more easily lend to Main Street businesses," stated Perlmutter. "Small businesses and banks didn't cause the economic downturn we are in now.  This measure will help small businesses and community banks weather the storm, regain their financial footing and get to the light at the end of the tunnel...The banking regulators at the top level tell banks to lend, while the examiners on the ground tell banks the opposite and require more capital.  This mixed message is confusing, and it must be clear small business lending is critical to a robust economic recovery."  

This legislation has been endorsed by a variety of organizations, including the National Small Business Association, the Small Business Majority, National Association of Realtors, the Conference of State Bank Supervisors, the American Bankers Association and the National Bankers Association.

Make no mistake, many local banks will still have to take balance sheet hits due to loan defaults.  However, this amendment will start a cycle of recovery by:

• Encouraging private capital to come back into Florida's once vibrant network of community banks;
• The revived banks will be able again to make small business loans, the shortage of which is at crisis stage with no relief in sight (outside of this proposal);
• Property markets will be able to begin normalizing from their extreme distressed levels;
• Small businesses with new capital for improvements and expansion will again be able to hire new workers;

Without this provision of time, American land owners and small businesses will continue to face an ongoing capital crisis which could cause many quality banking institutions to fail and cause needless pain at the street level where scarce capital is strangling more and more small businesses.

H.R. 5297 and the Perlmutter Amendment have found support in the US House of Representatives, but the legislation is up for consideration in the Senate next week.  Lawmakers need to hear additional citizen voices weighing in on this important issue and specifically on the Perlmutter Amendment. Citizens desiring to let their voices be heard can email Florida's Senators via the following direct links:

• Senator Bill Nelson http://billnelson.senate.gov/contact/email.cfm
• Senator George LeMieux http://lemieux.senate.gov/public/?p=emailsenatorlemieux

Property owners across the country can contact their individual Congressman via email, using the following convenient "Write Your Representative" link - https://writerep.house.gov/writerep/welcome.shtml

CPR members and readers are encouraged to pass this special alert on to others who may recognize how the capital crisis is impacting the economy.

Reader responses always welcomed!   Carolsaviak@aol.com