Small business lending
Small business lending to get boost from TARP funds
The U.S. Treasury Department announced today that Main Street is about to get some of the same home cooking enjoyed by Wall Street.
As much as $1 billion from the Troubled Asset Recovery Plan will be made available to banks, credit unions and thrifts certified by the Treasury as Community Development Financial Institutions (CDFIs). CDFIs are committed to lending to businesses in poverty-stricken rural and urban areas.
During a time when small business lending dropped off precipitously, the Obama administration has met with bitterness from voters and struggling small business owners resentful of the $700 billion given to some of the largest Wall Street banks, which, in turn, refused to loosen the purse strings and spread the wealth.
Earlier this week President Obama asked Congress to make another $30 billion of the remaining TARP bail out money available for small business lending from community banks. Last week, in his State of the Union address, Obama stressed the urgency of creating new jobs to stanch the small business failures contribution to high unemployment levels. Roughly half of American jobs are in small businesses.
Congress is not required to approve the money to CDIFs, but because the small business lending plan is an altogether new program, Congress must approve it. Congressional members, however, are already giving the lending plan a stiff arm.
“The law is very clear. The monies recouped from the TARP shall be paid into the general fund of the Treasury for the reduction of the public debt,” Sen. Judd Gregg, R-N.H., said in a Senate Budget Committee hearing Tuesday. “It’s not for a piggy bank because you’re concerned about lending to small businesses.
Last month, the 22 banks that received TARP bail out money announced they were cutting another $1 billion from small business lending for the tenth straight month.