Timothy Geithner, the Treasury Secretary, has come out in defense of the way his department handled the Small Business Lending Fund. The SBLF closed its $30 billion capital last month after a one-year run having committed a fraction of the capital as authorized by Congress.
Geithner acknowledged his own frustration due to the little lending but at the same time said that the distributed $4 billion in funds can generate $9 billion small business loans by 2014. Geithner commented that the loaned amount suggests an effective and successful use of federal dollars that can be repeated in the future. Banks can’t be forced to lend but banks that received capital have more lending capacity now than previously.
In an attempt to defuse the Democratic unrest over the closing of the $30 billion SBLF fund, Geithner said that the action is going to pay political dividends and so similar new programs can be enacted in future.
But ranking Republican ‘Olympia Snowe’ went unsparing and said the $4 billion is actually an exaggeration as banks used a part of it to repay their TARP debts. Snowe said that $2.2 billion came back to Washington. She lamented that the administration is experimenting more on temporary programs like the SBLF fund. It is not doing anything about long-term changes like ‘tax reform’ that can provide more certainty and help to right the economy.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to email@example.com