In a sign that administration officials are increasingly nervous about the slow pace of economic recovery, the Treasury Department is considering expanding the bailout program to lend money directly to small business owners.
The proposal, which was first reported by the Washington Post, would funnel money from the $700 billion Troubled Asset Relief Program to the Small Business Administration's 7(a) lending program.
Small companies that qualified could use the low-interest funds to manage short-term financial obligations such as mounting credit card bills, inventory or payroll. The government would cover as much as 90 percent of the losses on the loan, the Post reported.
Administration officials said the plan, which has the support of Treasury Secretary Timothy F. Geithner, was in an early discussion stage and officials were uncertain if it would ever be policy. But planners have been looking for some time for ways to expand TARP. Initially intended solely to assist banks struggling with losses on mortgage loans and other housing-related assets, it later was used to bail out car companies and insurers.
Lawrence H. Summers, the director of the National Economic Council, is said to oppose opening the program to small businesses. Officials told the Post the main objections involve concerns that banks would lower their lending standards if they felt that the government would cover most of their losses. Lax credit markets played a major role in creating the current economic downturn, and the Treasury has been wary of creating any more moral hazards.
The proposal, which was first reported by the Washington Post, would funnel money from the $700 billion Troubled Asset Relief Program to the Small Business Administration's 7(a) lending program.
Small companies that qualified could use the low-interest funds to manage short-term financial obligations such as mounting credit card bills, inventory or payroll. The government would cover as much as 90 percent of the losses on the loan, the Post reported.
Administration officials said the plan, which has the support of Treasury Secretary Timothy F. Geithner, was in an early discussion stage and officials were uncertain if it would ever be policy. But planners have been looking for some time for ways to expand TARP. Initially intended solely to assist banks struggling with losses on mortgage loans and other housing-related assets, it later was used to bail out car companies and insurers.
Lawrence H. Summers, the director of the National Economic Council, is said to oppose opening the program to small businesses. Officials told the Post the main objections involve concerns that banks would lower their lending standards if they felt that the government would cover most of their losses. Lax credit markets played a major role in creating the current economic downturn, and the Treasury has been wary of creating any more moral hazards.
published July 13, 2009, 1 Comments
Forget about SBTARP. Illusionarry.
Don't release any technology under the stipulation of Technology Transfer to Govs
Take it all to another country.