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Washington
TARP Watchdog: SBLF Little Used To Boost Lending
WASHINGTON (4/10/13)--Former Troubled Asset Relief Program (TARP) banks that took part in the taxpayer-funded Small Business Lending Fund (SBLF) "have not effectively increased small-business lending and are significantly underperforming compared to non-TARP banks," the Office of the Special Inspector General for TARP (SIGTARP) reported on Tuesday.

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.

"Basically, you have TARP banks taking unused TARP funds channeled to the SBLF and using it to pay off their TARP obligations instead of helping small businesses--it's unconscionable," said Credit Union National Association President/CEO Bill Cheney after the report became public. "This is just further evidence why Congress should take the far more logical step of enacting legislation to raise the member business lending cap. You'll see billions in new loans from credit unions to small businesses, with no need on our part for a TARP-like government handout."

The majority of former TARP banks that did not increase their lending after receiving SBLF funds instead used approximately 80% of those funds to repay their TARP obligations, the report found. "TARP banks had much to gain and little to lose from refinancing into SBLF irrespective of their small-business lending capability or willingness to lend," SIGTARP noted.

For the full SIGTARP report, use the resource link.
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