Shelby Skeptical of $30 Billion White House Small-Business Plan
Sen. Richard Shelby (R., Ala.) said Thursday he was skeptical of a new White House plot to use $30 billion banks have returned from the Troubled Asset Relief Program and to help small banks offer more business loans.
President Barack Obama briefly mentioned the plot during his State of the Union speech Wednesday night but provided few details. People familiar with the matter said the plot could allow small banks to obtain government loans up to the equivalent of 5% of their assets. The dividend these banks would have to repay the government could be reduced if their loan volume to small businesses augmented, these people said. Obama administration officials have already approached some lawmakers and regulators with outlines for their thought, which could be finalized by next week.
?It?s just another use, maybe a excellent use, but just another use of TARP assets that wasn?t originally intended,? Mr. Shelby said. He said government officials should push to recoup all of the outstanding TARP money and then commence discussions about any new program.
?I do believe the banks can make a difference if they are not overtaxed, and can make a difference in our economy,? he said in an interview. ?But right now we are still in the crisis mode. A lot of banks are sick, and I don?t believe temporary things will work. We need to get to the fundamentals.?
The Obama administration would likely need bipartisan support for their plot, as any changes to the way TARP assets are used could need congressional praise. Banks will likely want fewer strings attached to the assets than the first TARP capital buy program, which forced some banks to limit their executive compensation and eventually carried a ?bailout? stigma.
The White House might be able to win support for the plot even if Sen. Shelby doesn?t eventually sign on. Several Republican lawmakers have complained about a lack of access to credit for small businesses, and White House officials could try to pitch their plot as a way to free up more credit to companies.
Read WSJ.com?s 1/26/10 description of the program.