Geithner defends SBLF to Sen. small biz cmte.
On Oct. 18, the Senate Committee on Small Business and Entrepreneurship held a hearing to examine the Small Business Lending Fund (SBLF). Treasury Secretary Timothy F. Geithner was the sole witness and provided some defense of the SBLF while taking fire from various members of the Committee.
The SBLF fund was created in September 2010 as part of the Small Business Jobs Act, and was closed-based on statutory requirements-Sept. 27, 2011. The SBLF distributed, in total, slightly more than $4 billion to 332 community banks nationwide. This is lower than the $30 billion authorized, as is the number of community banks that were approved out of a total 933 institutions that applied for a total of $11.8 billion in funding.
While there was little argument that the program performed below expectations, Geithner pointed out that "...for every bank that got capital in this program they have more capacity to lend than they otherwise would have," Geithner told members of the Senate Small Business and Entrepreneurship Committee about the fund, which was created a year ago.
Committee Chair Mary Landrieu (D-La.) stated that "While it [SBLF] did not release as much as we had hoped, it was successful to a degree nonetheless." She went on to state her intention of using the hearing as well as input from banks and small businesses to start work on a SBLF II, however no additional details on what that would look like were offered.
Ranking Member Olympia Snowe (R-Maine), along with other Republicans on the Committee brought up the fact that reports show many banks have used SBLF funds to refinance funding provided by the Troubled Asset Relief Program (TARP) which they say has done little to directly help small businesses.
While peppered with questions about the overall economy, Geithner continually pointed to various pieces of the American Jobs Act, which fell short of the 60 votes needed in the Senate last week, as an opportunity to promote economic growth.
Despite agreement among Geithner, Landrieu and Snowe that Democrats and Republicans need to work together on these difficult issues, the fact remains that there are deep ideological differences which must be overcome.