Russ Kanjorski's Frim Survives "Collateral Damage In Lending"

Jennifer Silverberg for The Wall Street Journal

Joseph Jackson, owner of Jackson Pianos in St. Louis has outgrown his workspace, yet is unable to get the loan he needs to expand.


Last week the Wall Street Journal published an article by Emily Maltby titled "Collateral Damage In Lending".

It highlighted the problem many small businesses are incurring when seeking financing. Their efforts are being thwarted by higher or alternative collateral requirements.

Behind the credit squeeze on small business lies the collateral gap.

Many small businesses, thwarted in efforts to get loans, are saying it takes money to get money. That's because property and equipment assets have fallen in value, so businesses seeking loans are being asked for alternative collateral, often in the form of cash so that the loan is backed in case the borrower defaults.

The catch for most business owners is that if they had money sitting in reserve they wouldn't need a loan.

According to Kathie Sowa, a commercial banking executive at Bank of America Corp., one of the nation's largest small-business lenders, basic underwriting standards haven't changed: Cash flow must be sufficient to support the loan, and there must be a secondary source of repayment. That collateral was typically a combination of accounts receivables, inventory, real estate, equipment, and other business or personal assets.

But since real-estate and equipment values have plummeted, she says, business owners who may have landed loans in the past are now falling short of having sufficient assets. Cash can make up the difference.

Tony Corso, owner of Mi-Box Moving & Storage, has been tripped up by the collateral gap. He wants to buy more trucks and storage containers to meet brisk customer demand, which will increase cash flow at his two-year old business, he says. But the banks that have entertained the loan applications from Mr. Corso's West Haverstraw, N.Y., firm are willing to help finance those purchases only under conditions Mr. Corso can't afford, he says.

Three banks have asked that Mr. Corso use all the assets of his business as collateral—including his accounts receivables, containers, trucks and forklifts—and sign a personal guarantee, he says. Plus, he says he would have to deposit cash into a bank account, equal to the amount of the loan, which Mr. Corso had hoped would be at least $250,000.

"The loan requirements are so onerous," says Mr. Corso, who says Mi-Box pulled in $150,000 in revenue last year and hopes to break even this year.

Abound Solar which employs Russell Kanjorski, Congressman Paul Kanjorski's nephew, had no problem securing a $400 million FEDERAL LOAN GUARANTEE by the Department of Energy.

The same company, formerly called AVA Solar and now known as Abound Solar Manufacturing, received a $3 million federal grant in 2008.

Kanjorski said the loan guarantee was just "coincidental".

I guess Kanjorski's "Too Big To Fail" Amendment included parachute provisions for Abound Solar.

Small business owners are not included in the "too big to fail" category despite the immediate impact on their families, their employees, and their employee's families. If you are a Kanjorski possibilities "ABOUND" to minimize your consequences from bankruptcy, not once but twice, after all its the "CORNERSTONE" of their philosophical trademark.

Kanjorski Seeking Banking Interests Money For Election

Despite being on member of a committee that decides on banking regulation a report that appeared in the Times Leader today details the efforts of the Kanjorski campaign to seek money from those he regulates for his re-election effort.

“Now, after railing against Wall Street when the media is watching, Kanjorski goes back to his Wall Street friends with his hand out,” said Shawn Kelly, Barletta spokesman. “It’s hypocritical and it’s shameful."

Tory Mazzola, spokesman for the National Republican Congressional Committee, criticized the Nanticoke Democrat for seeking the Wall Street financial support.

“With one hand he’s writing the legislation while the other hand asks Wall Street for campaign cash,” Mazzola said. “It’s business as usual for this career politician.”

“The fact is that the ink is not even dry on this bill, and everyone in town is still getting fundraising requests from members of the conference committee and all sorts of other people who were beating up on Wall Street,” said the banking official in Politico, citing Reps. Carolyn Maloney, D-N.Y., and Kanjorski as two conference committee members who recently sought Wall Street contributions. Maloney and Kanjorski would not comment to Politico.

“It’s unseemly at best, and right now we are just not inclined to say ‘yes,’ ” the official said.

When Kanjorski faced off with O'Brien in the May primaries here's what he had to say about donations from those he regulates.

"If you look at my campaign contributions, they come from people that are on all sides of all issues. It doesn't mean a damn thing. I don't pay any attention to it. I couldn't tell you what they contribute. But they're insignificant," he said.

According to the OpenSecrets website 60% of donations to the Kanjorski campaign came from PAC's for 2009-2010 and that doesn't include the personal donations from corporate members of those PACs. Once again Kanjorski and Mitchell are misleading the public and stretching the facts to win an election.

In the same article about the Kanjorski/O'Brien contest Ed Mitchell had this to say about buying Kanjorski's vote.

"Paul Kanjorski may take campaign donations from banks and brokers PACs, but he stands up to Wall Street. He's leading the fight to break up big banks and brokerage companies," Mr. Mitchell said. "Paul Kanjorski's vote is not for sale.

Let's see how well Mitchell's statement stands with the litmus test. The blog "Accounting Principles" wrote this post about Politics and Accounting regarding campaign donations and influencing an outcome.

With the aid of $286,000 in campaign donations to the 33 members of a key House subcommittee, the Fair Value Coalition, the lobby group set up by the banks, succeeded in getting the industry rule-making body, the Financial Accounting Standards Board, or FASB, to give the banks immense latitude in suspending mark-to-market rules.

The Wall Street Journal on June 3 published an investigative report detailing the banks’ use of campaign fund monies to get their way. The Journal reported that the banking coalition spent a total of $27.6 million in the first quarter of 2009 on its lobbying effort.

It focused its drive on a House Financial Services subcommittee chaired by Rep. Paul Kanjorski, a Pennsylvania Democrat. Kanjorski received $18,500 from Fair Value Coalition members in the first quarter. Over the past two years, Kanjorski has received $704,000 in contributions from banking and insurance companies, the third-highest among members of Congress.

This summer the weather has been much hotter than last year. The same can be said about the race between Kanjorski and Barletta.