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House panel OKs 30 billion fund for bank lending
WASHINGTON (5/20/10)—Voting 42-23 in favor, the House Financial Services Committee Wednesday passed H.R. 5297, a bill that would establish a $30 billion fund for low-cost capital to small and mid-sized banks as incentives to increase lending. The bill, called the Small Business Lending Fund Act, is designed with hopes to boost lending to small businesses that, in turn, may look to hire and expand their operations. The bill gives oversight of the program to the U.S. Congress, the Government Accountability Office, and the U.S. Treasury Department’s Inspector General. The bill calls for the capital to be repaid by community banks over time During the markup process, the committee adopted several amendments, including one backed by the Credit Union National Association, which was introduced by Rep. Gary Peters (D-Mich.). The Peters amendment would provide federal funding for state lending programs that use small amounts of public resources to generate substantial private bank financing. According to a release from the committee, such programs would be intended to address many of the reasons banks are having trouble increasing lending to small businesses, including lenders’ desire to hold greater reserves against certain loans and concerns about collateral shortfalls on the part of borrowers. The next step for this bill would be a full House vote.
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