A leading moderate Republican took Treasury Secretary Tim Geithner to task for the failure of the community bank lending fund and other initiatives to jumpstart the economy.
The fund was "not an effective use of taxpayers' money,'' Sen. Olympia Snowe of Washington, the top Republican on the Small Business Committee, said at a hearing Tuesday on the Obama administration's efforts to help small businesses.
She noted that although Congress had allocated $30 billion for the Small Business Lending Fund, the Treasury Department only received applications from 332 banks that sought about $10 billion worth of loans and approved loans totaling $4 billion.
Snowe said that of that $4 billion, only $1.8 billion will be used for small business lending and the rest to repay TARP funds. And she noted that it took nine months for the first loan to be approved.
Geithner replied that while the administration wishes more banks had used money to make business loans, he noted that "it was Congress' intent,'' to let small banks use the funds to repay TARP "and we knew that.''
He also said that the approval process took so long because regulators were very careful about which applications were approved to ensure that the taxpayers' money was used wisely. Snowe said Obama administration's failure to embark on serious tax and regulatory reform efforts meant it was ignoring the biggest obstacles to more job creation.
"What is it that you're not hearing?'' she asked.
Geithner said he hopes that the efforts of the House-Senate committee making deficit reduction recommendations would be a good start in tackling some of those issues.
Sen. Carl Levin (D-Mich.) criticized Republicans, most of whom fought the implementation of the program, for complaining about the delay in making loans.
"If Republicans had their way, it wouldn't be implemented at all. Their criticisms aren't just ironic, they are counterintuitive,'' Levin said.
In a letter to the committee members, NAFCU Executive Vice President Dan Berger wrote that while "credit unions were not included in the Small Business Lending Fund, we support the goal of helping America's small businesses create jobs. One of the best options remaining for Congress to help create jobs, without spending taxpayer money to do so, is raising the arbitrary credit union member business lending cap."
A House subcommittee held a hearing on this subject last week, following a similar hearing in the Senate in June.
Bankers and credit unions in Wisconsin have been waging a war of words over the issue as well.
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