Even though the administration initiated measures like targeted tax incentives, increased SBA loan guarantees and developed a $30 billion fund for community banks to lend to small business, most institutions are still not providing such financing. What can be to be done to get small banks to boost their lending?
The president did put in place a sweeping, very creative comprehensive set of measures and a bunch of tax incentives for small businesses, too. They are starting to help now. You’re starting to see for the first time the rate of growth of lending by banks to small businesses starting to strengthen. If you talk to banks across the country, they’re starting to see more demand from small businesses for lending which is good. That’s a sign that they think there’s going to be more demand for their products. They want to be able to put more resources to work, bring people back to the job and will need to borrow to do that. And you’re going to start to see that happen on a greater scale.
Are there any other measures to shore up small businesses?
We have a program in place that gives states substantial resources for them to put more ammunition into their lending program for small businesses. We want to make sure that if someone has an idea [and] want to create a new business, they can get funding. If someone has an existing business and want to expand, we make sure they can find the financing to do that.
There’s still a high incidence of home foreclosures. What is the administration doing to curb that trend?
The principle thing that’s driving the rate of foreclosures across the country, and it’s not surprising, is the high levels of unemployment. If someone loses [his or her] job or your spouse loses his or her job, you’re going to find it hard to meet your monthly payments on your house until you get back to work. Until we get the economy to grow more rapidly and until we get the unemployment rate down more definitively, it is going to be hard to get the housing market back on its feet more quickly. The president is doing everything he can to try to do that. Now as we do that, we’re trying to make sure we reach as many Americans as we can and give them a chance to save their house. We can’t reach everybody.
So you’re trying to help those who were responsible and found themselves in a tough situation due to no fault of their own.
Exactly. Not only that, you had people who were taken advantage of and we need to help them out. You have people who were completely innocent victims, who were responsible in how they borrowed, bought a modest home but who saw all their neighbors lose their homes, saw house prices in their neighborhoods fall very, very sharply. That hurt them a lot, too. That’s why it’s so important that we do what we can to get the economy growing again, get house prices start rising again and try to reach people who really deserve to be helped stay in their homes.
The Center for American Progress recently released a report that communities of color have been the most devastated by the Great Recession and the Obama administration should develop targeted programs to help them. Is the administration developing such programs?
The Center is absolutely right. This is what always happens in a recession. The impact falls much more brutally, much more severely on African American communities [and] urban areas. That’s the tragic thing of recessions and financial crisis. The programs that we designed are designed to go to where the needs are greatest. One thing we’ve done is to make sure that the states that were hardest hit in the housing crisis or have cities and communities that were suffering the most damage receive more assistance. So we have a program in the housing market which gives 18 states which are at the center of the crisis still a substantial amount of resources that they can use to help people who are unemployed and risk losing their home or give people greater principal reduction on their mortgages. We think that’s a good strategy. We’ve also tried to put more substantially more resources into the community development financing program and into our New Markets Tax Credit Program. So we are directing resources where they’re needed most and where over in the past we’ve seen they have huge benefits in helping communities get back on their feet more quickly.
For more of this interview with Secretary Geithner, view Black Enterprise Business Report, which airs on Saturday, Feb. 5, and Sunday, Feb. 6; upcoming video clips on blackenterprise.com; and the April issue of Black Enterprise magazine.
- For more of our political coverage, see:
- Obama’s plan to win the future
- Rescuing communities of color
- What you can learn from…the Obama White House Shake-Up