The economy will not recover until banks start lending to small businesses, said Federal Reserve Chairman Ben Bernanke.

Bernanke urged banks to loosen lending to smaller companies at a Fed conference Monday, saying that small businesses employ about half of all Americans and account for 60 percent of job creation.

Startups are especially vital, Bernanke said. Over the past 20 years, startup businesses accounted for about a quarter of all job creation.

Meanwhile, big companies are building up their cash reserves and are expected to report strong earnings in the coming week, said the Associated Press.

According to the National Federation of Independent Businesses, roughly one-third of small businesses seeking credit have had trouble getting it. Banks counter that the demand for credit remains weak.

Several big banks, including Bank of America, JPMorgan Chase and Citigroup, have pledged to increase small business lending this year. Total lending to small businesses has continued to decline, however, dropping from around $710 billion in the second quarter 2008 to less than $670 billion in the first quarter of this year, said the AP.

A number of small business owners say they are relying on personal credit cards or dipping into their own savings to stay afloat.

Good news ahead for the banking industry?

Wells Fargo turned a profit in the first three months of 2009, but could also post record quarterly earnings with net income of $3 billion, according to an April 10 story in USA Today.

Investors naturally cheered, sparking a big rally in bank shares.

Wells Fargo jumped 32 percent to $19.61 per share, USA Today said, while other banks like Bank of America, which bounced 35 percent to $9.55, enjoyed similar gains.

Economists and investors hoped the run of good luck meant the system was finally stabilizing.

USA Today said Well Fargo’s results show that homeowners took advantage of low rates. “The bank saw $100 billion in new mortgages in the quarter, with more than 450,000 people purchasing or refinancing homes. Mortgage applications rose 64% from the fourth quarter of 2008 to $190 billion,” the paper said.

Analysts were buoyed, but cautioned against jumping to too much of a rosy conclusion, citing that the results of the government-ordered “stress tests” on bank assets had not yet been revealed.

Ben Wallace, an analyst at Grimes & Co., told the paper: “It’s a good start.”

fight club dvd