- Small Business Lending Fund is Moving Very Slowly
Remember the Small Business Lending Fund that President Obama’s administration boasted would provide a much-needed financial boost to small businesses and community development banks? In testimony before the House Small Business Committee last Wednesday, Treasury Secretary Timothy Geithner admitted that the process has moved much slower than the administration had hoped.
Geithener said that the administration is both surprised and disappointed about the program’s pace, but blamed it on safeguards that Congress put in the legislation to protect taxpayers. He also said that it was taking more time than anticipated for regulators to evaluate applications and ensure that loans would be repaid. According to Geithner, the Treasury Department has received 869 applications requesting $11.6 billion in SBLF program funds.
“We require the applications to be reviewed by their primary bank supervisor and we don’t consider them unless they get recommended by the bank supervisor. That program leaves us vulnerable to the time it takes those regulators to be careful in a review. But also, we have to look independently at them, and we’re trying to be careful,” he said. “So we’re a little slower than we thought. But we’re very close to moving ahead and again, I’m very confident you’re going to see a very meaningful impact on the institutions that are eligible. And we’re close to being able to unleash that capital.”
Rep. Allen West (R-Florida) said that during a meeting with a local chamber of commerce, community bankers expressed concern that they are facing a great deal more regulation that they do not have the resources to address. He suggested that there may be a need to review the Dodd-Frank bill to determine whether it is having an unanticipated adverse effect on small businesses and community banks. West also said that lawmakers need to find “that sweet spot, kind of like on a baseball bat” in terms of how much regulation is required.
Geithner acknowledged that bank examiners are only human and want to ensure that they are on the side of caution, but also said it was important to not overdo it.