America can't create jobs without small businesses, which in turn can't hire people without loans from banks.
That was the message Robert G. Wilmers, M&T Bank chairman and chief executive officer, delivered Wednesday near the end of the three-day America East conference for Small Business Administration lenders.
Wilmers, speaking at the Buffalo Niagara Convention Center, said he is "troubled by the way things are today" in the economy and the banking industry.
"The nation's most pressing economic problem is creating jobs," he said, noting that the country has lost 7 million jobs since the financial crisis began, while 25 million Americans are unemployed, underemployed or marginally attached to the workforce, unable to find "suitable, sustainable employment."
"How do we solve this problem? Not only does it affect our national economy. Twenty-five million people who aren't producing or consuming at their normal levels is pretty bad for the economy, but it's tragic -- tragic -- for those unemployed workers and the families that they're trying to support," he said. "Small business has long been the catalyst for job creation in America."
Wilmers cited a Massachusetts Institute of Technology study that found 67 percent of new jobs from 1969 to 1976 were created by companies with 20 or fewer employees. In 2010, firms with 50 employees or fewer accounted for just 3 percent of net job creation.
"When it comes to the all-important business of job creation, the small business engine is slowing down; it's slowing way down. In fact, it has slowed down so much that it has just about stopped," Wilmers said. "These numbers must not -- must not -- decline further. Indeed, we must reverse the trend in order to continue our recovery from the financial crisis of the past few years."
To reverse that trend, which Wilmers said he believes is possible, the banking industry has to restore the public's faith in banks and bankers.
"I don't have to tell you, but the financial crisis has led many to distrust banks," he said.
There is also a perception that banks aren't lending money. Companies have begun moving their accounts and relying more on cash and retained earnings than on bank financing, slowing the demand for credit.
"A bank that refuses to lend money is like a factory that refuses to produce goods. Neither will survive for long. But the perception is out there that banks are not lending money," Wilmers said.
"Helping small-business owners receive the capital they need to open their doors, build inventory and hire workers is how banks and the SBA can come together to solve the most important economic challenge of the day."
With distrust rampant, he said, banks can't expect small businesses to reach out to them. Banks, he said, must reach out to their communities and let them know that credit is available, particularly small-business loan initiatives crafted by the SBA.
"Some may dismiss the traditional role of banks as a quaint vestige of a bygone era. I disagree," Wilmers said. "Our small-business focus and our community-first approach, I'm pleased to say, have made M&T one of the strongest, most successful companies in the U.S. financial services industry."
M&T Bank joined with 19 other organizations to sponsor the three-day event that brought bankers from Maine to Florida here.