Small Business Group: No Thanks on TARP Help

Timothy GeithnerOne of the most prominent small business associations is effectively telling the Obama Administration that it doesn’t want the Treasury’s bailout program shifted to help reinvigorate small business lending.
The National Federation of Independent Business has gone even further by voicing support for an amendment that would stop any new initiatives with unused or repaid money under TARP, the Troubled Asset Relief Program – most notable for its big bank bailouts. 
The amendment, authored by Sen. John Thune (R, South Dakota) would prohibit the U.S. Treasury from spending un-obligated TARP funds immediately, and would also lower the national debt ceiling by the amount repaid into TARP. Many Republicans are expected to support the amendment, which lawmakers want to include in a larger bill that raises the debt limit. It’s unclear how many Democrats would support the measure.
Most major banks have repaid their TARP bailouts.
U.S. Secretary Tim Geithner has said that he wants to re-focus TARP money to help homeowners facing foreclosure and increase lending to small businesses, which are still mired in a tight credit market.
President Obama has also urged banking executives in meetings at the White House to increase lending to small businesses. Federal Reserve officials have said that many lenders are building cash reserves against future losses and are still tightening lending standards.
The NFIB, a nonprofit organization founded in 1943, is the largest association of small and independent businesses. 
“Ending TARP and paying down the federal debt with returned TARP funds would signal to small businesses that Congress is beginning to get its fiscal house in order,” the NFIB said in its letter supporting the Thune amendment. “If these debt levels are not addressed, small businesses will face a future of high interest payments, increased taxes, and reduced investment opportunities. Small business needs Washington to just get out of the way so they can get back to growing their businesses and creating jobs.”
The $700 billion TARP program was enacted in 2008 to prevent the insolvency of major U.S. financial institutions. The statute permits the Treasury Department to commit funds until October 3, 2010, and to spend funds for these purposes after that date.
“While the full $700 billion has not been allocated yet, almost $370 billion has been disbursed and the Treasury Department has already expanded the program beyond its original purpose,” the NFIB wrote in its letter, signed by Susan Eckerly, NFIB’s senior vice president for Public Policy.
Last month, U.S. Treasury Secretary Tim Geithner wrote about TARP’s exit strategy to House Speaker Nancy Pelosi:
“We recently launched initiatives to provide capital to small and community banks, which are important sources of credit for small businesses. We are also reserving funds for additional efforts to facilitate small business lending.”

Leave a Reply

Your email address will not be published. Required fields are marked *