Obama's Small Business Plan: $30B from TARP; Boost SBA

President Obama today formally launched his already-controversial proposal to re-direct $30 billion in bailout funds into community banks to bolster small business lending. “The more loans these banks provide to credit-worthy small businesses, the better a deal we’ll give them on capital from this fund,” Obama said in prepared remarks. The program would provide better rates on risk-related capital to banks that boost lending to small businesses.

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Overseer Sheds Doubt on TARP Helping Small-Biz, Foreclosures

A somber and pessimistic assessment of the government’s bailout program has been issued by the official overseer of the $700 billion Troubled Asset Relief Program (TARP) – concluding that the fundamental problems in the U.S. financial system are still in place for another crisis. The report also looks pessimistically to the re-focused future role of TARP funds for increasing small business lending and helping desperate homeowners avoid foreclosures as outlined in recent weeks by President Obama and U.S. Treasury Secretary Timothy Geithner. But the “leverage” U.S. officials had over the major banks is now gone, putting in doubt the effectiveness of a new lending pipeline to small businesses.

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Volcker on Big Banks: 'Structural Changes' Needed

Clearly making his mark as the chief proponent of separating big banks from their lucrative-but-riskier speculative investment operations, former Federal Reserve chairman Paul Volcker said “structural changes” are needed to avoid repeating history with another crippling financial crisis. In an opinion piece – “How to Reform Our Financial System” – published today on the New York Times website, Volcker gave his rationale for supporting capital markets trading restrictions on the biggest commercial banks where a significant portion of Americans keep their money.

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Obama's $30B Plan for Small Businesses May Not Work

In his State of the Union speech, President Barack Obama proposed taking $30 billion out of the bailout money returned by big banks and injecting the funds into community banks to generate more small business loans. But the plan will likely fall short in a lending arena where low demand matches low access to credit. Moreover, the small-biz bailout has already generated enough opposition to place it in doubt – particularly if a full vote by Congress is required.

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Wall Street vs. Obama: Big Bank Tax Under Attack

While President Obama blasted major banks in his radio address for mobilizing to stop his fee on financial firms with $50 billion in assets, a top lobby group for Wall Street was doing just that, a media report says. The Securities Industry and Financial Markets Association (SIFMA), the top lobbying group for financial markets participants, is currently considering challenging the constitutionality of Obama’s Financial Crisis Responsibility Fee, according to a report in the New York Times.

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Report: Small Business Optimism is 'Clearly Stalled'

Optimism has “clearly stalled” among small businesses despite U.S. economic improvements. That was the summary for the end of 2009 by the National Federation of Independent Business, which today released its Index of Small Business Optimism for December. The index lost .3 points last month, falling to 88.0. The Index is seven points higher than its second-lowest reading reached in March 2009, and has been below 90 for 15 months.

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Obama vs. Regulators: Easing the Grip on Community Banks

President Barack Obama surprised some in the regulatory arena when he said that community banks may be mired in too much “red tape,” and that may be hindering their ability to increase loans in the vital sector of small businesses. “We are looking to see if there are possibilities to cut some of the red tape,” Obama said. “We don’t have direct influence over our independent regulators, but we think that the more we can highlight that…the pendulum may have swung too far in the direction of not lending…”

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Obama: Let's Cut 'Red Tape' for Community Banks

Without offering specific proposals, President Barack Obama told executives with community banks at a White House meeting today that he hopes there is a possible loosening of regulatory “red tape” to help them increase lending to small businesses. Saying he doesn’t have direct influence over “our independent regulators,” Obama added that he fears the “pendulum may have swung too far in the direction of not lending.”

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Study Finds Political Ties to TARP Bailouts

A new study finds that banks with connections to members of Congressional finance committees, and banks whose executives served on Federal Reserve boards were “more likely to receive funds” from the Troubled Asset Relief Program, the government’s primary bailout program. “Banks with strong political connections were more likely to receive bailout money from the government — and more of it — in the past year than those with weaker ties,” concluded the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan’s Ross School of Business.

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Key SBA Funding Restored, But Only Thru February

Some small business borrowers got some good news – at least through Feb. 28 – after the U.S. House passed a defense appropriations bill that included restoration of two key stimulus funding programs for the Small Business Administration. The legislation permits the U.S. Small Business Administration to raise the percentage of loan amounts that it can guarantee back up to 90 percent. The SBA would also be given the authority “to waive or reduce loan fees.” The funding extension, however, expires on Feb. 28.

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Obama to Seek Small-Biz Help from Community Bankers

President Barack Obama will meet Tuesday with community bankers who are vital to extending more credit to small businesses — a week after he had a similar White House meeting with the CEOs of the top banking institutions. This month, the Federal Deposit Insurance Corp. found that only a quarter of 1,300 community banks surveyed directly marketed their services to individuals who are under-served or not served at all by banking services in their community.

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