The economic recovery, such as it is, has been a big business experience for  a while now, with small companies largely left out of the party.

And there's evidence that's still true.

Companies that look to banks for loan facilities are the ones that ultimately will pay for rising bank regulatory costs under Dodd-Frank, and a group of lenders are in the process of changing loan document standards to ensure that is the case.

New corporate loan documents are already seeing clauses added to shift the cost of Dodd-Frank compliance from the bank to the borrower, according to a report on Tuesday in the Wall Street Journal.

Private placements are on the rise for companies worldwide, with record issuance volumes expected this year in the private market. In addition, a number of companies have upped their deal sizes on the back of strong investor demand.

Companies raised $27.4 billion in the first half of this year, according to Thomson Reuters data, which is just below the $28.5 billion in private placement volumes seen over the full year last year.

Bear with me here. This is going to be one of those "out there" posts. But Steve Randy Waldman takes an interesting stab at a problem I've been wrestling with, at least in the furthest reaches of the financial corner of my brain, since the financial crisis began.

And that is how to stimulate the economy without creating another asset bubble. It sounds easy enough to the Keynesians, but as Waldman has pointed out before, rebooting aggregate demand through traditional government action may simply create another bubble. And ultimately, the distinction between monetary and fiscal policy may be moot.

The six largest banks in the UK will set up a task force to evaluate the business lending landscape in the UK and look at ways to increase credit to UK companies. However, at first glace it appears this is just the next step in the political dance that the UK coalition government and the banking community have been sashaying to for quite some time.

First, the government says small businesses--the fuel for the furnace of recovery--need access to more credit in order to grow; then the banks say we have no money to lend because you are making us hold more in reserve; then--surprise, surprise--the banks all return to profit; then the government says okay now lend to small business; then the banks say they don’t want our money; then the government says okay, really guys, you must lend more to small business; then the banks say okay we will set up a task force to look at it….and the dance goes on.

The recent financial crisis has taught companies innumerable lessons, and one of the biggest is their reliance on banking partners—not just for funding but also for providing critical data needed to understand a company’s own liquidity and risk picture. As such, companies will become ever-more selective about their banking partners, and will expect more from those partners.

Even though sources of funding are unchanged, banks will be asked to be more proactive and entrepreneurial in their approach to service large corporate clients, according to a report from consultancy Celent.

Submitted by Caleb Newquist, republished from Going Concern, Accounting News for Accountants and CFOs.

Banks hate the FASB. This is understood. They're especially bent out of shape these days because the Board recently put out its latest fair value proposal that requires them to carry their loans at fair value. Bob Herz knew that this was going to cause hella-belly aching although he may not have predicted the virtual assault that was coming.

A panel sponsored by the Securities Industry and Financial Markets Association on Monday on what banks can expect from financial reform warned that higher capital reserves and other limits Congress imposes on their profitability would hurt the economy as they curbed their ability to lend.

Several panelists, including Adam Gilbert, head of regulatory policy in the corporate risk management group of JP Morgan Chase, and Gary Mandelblatt, chief risk officer of Nomura, warned repeatedly of such "unintended consequences" from financial reform.

The banking crisis may have made the phrase "moral hazard" a household term, at least in finance quarters. But there's actually a theoretical argument against the idea that providing banks with taxpayer subsidies encourages them to take risks they wouldn't otherwise shoulder.

The theory that subsidies do not (emphasis on "not") create moral hazard rests on the notion that banks will actually take less risk as a result of such guarantees against failure because taking more would jeopardize the future value of their banking charters.

Yes, that sounds strange to me, too. But there's a body of academic research that supports the idea. And it smacks of the same logic behind other theorizing about so-called "real options." 

With all the news about President Obama's proposals to increase bank lending to small business, there's one obvious question that needs to be addressed: Why not have the Small Business Administration take a more aggressive role? Why not allow the agency to lend directly to small businesses?

The issue came up at a recent hearing held by the House Financial Services and Small Business Committees.