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House Panel To Study SBLF 'Backdoor Bailout'
WASHINGTON (4/22/13)--House lawmakers are going to be taking a close look this week at the Small Business Lending Fund (SBLF), the $30 billion program established by the Small Business Jobs Act of 2010, which was intended to encourage banks to lend more to credit-strapped small businesses.

The hearing, scheduled by the House Oversight and Government Reform Committee, is titled, "Broken Promises: The Small Business Lending Fund's Backdoor Bank Bailout."  It is scheduled for April 25 at 9:30 a.m. (ET). Witnesses will be announced this week.

The House oversight panel is charged with being a "watchdog" committee, in effect holding the government accountable to the nation's taxpayers. SBLF is a U.S. Treasury Department administered program.

A report earlier this month from the Office of the Special Inspector General for TARP (SIGTARP) criticized the former Troubled Asset Relief Program (TARP) banks that took part in the taxpayer-funded SBLF. Those banks "have not effectively increased small-business lending and are significantly underperforming compared to non-TARP banks," SIGTARP wrote.

While the SBLF was intended to incentivize bank small-business lending, 24 former TARP banks have not increased their lending, and the remaining former TARP banks have increased lending by $1.13 for each SBLF dollar they received, the report said.

"By comparison, banks that did not participate in TARP but received SBLF funding have increased small-business lending by more than three times that amount--$3.45 for each $1 in SBLF funds," SIGTARP added.

While Congress was considering whether to give the banks $30 billion in taxpayer money to lend to small businesses, credit unions were telling Congress that  they had money to lend but needed more authority to do so.  CUNA and credit unions strongly advocate for a measure that would raise the member business lending cap and would increase credit to small businesses by $14 billion in the first year of enactment.

"Small businesses must wonder what's going on here.  Of the $30 billion in taxpayer-funded SBLF money,  banks didn't even make use of most of it.  But many of the banks that did participate in SBLF used that bailout money to pay off another bailout," Ryan Donovan, CUNA senior vice president of legislative affairs, noted Friday.

He added, "All the while, a growing number of credit unions have been forced to stand on the sidelines with money to lend but a cap to contend with.  And today, the community banks have the gall to go to Congress and block additional credit union lending.  Looking at all of this, it make you wonder if they want anyone lending to small businesses… including themselves!"

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