President Obama once again took the gloves off and blasted Republican leaders – this time for blocking a vote in the Senate on a $30 billion incentives package for small and mid-sized banks that Democrats hope would spur lending to small businesses.
Democrats failed to muster 60 votes on Thursday that were needed to advance the measure. Republicans are angry that Democrats refused to discuss further amendments to the package, claiming it is yet another costly government program without strong assurances of success.
“That isn’t right,” Obama said in his weekly address yesterday. “And I’m calling on the Republican leaders in the Senate to stop holding America’s small businesses hostage to politics, and allow an up-or-down vote on this small business jobs bill.”
Small businesses, which account for two-thirds of jobs created in the United States, have been mired in the credit crunch of the financial crisis aftermath. Community banks are failing at a faster pace than last year as loan portfolios tied to commercial real estate continue to falter.
Democrats see the aid package – dubbed the Small Business Jobs Act – as helping businesses secure the loans necessary to expand and increase hiring.
But the proposed program that would siphon the $30 billion from the government’s primary bailout vehicle – the U.S. Treasury’s $700 billion Troubled Asset Relief Program, TARP – has also come under from the Congressional Oversight Panel, the watchdog over TARP.
The fund would provide the $30 billion in low-cost capital to small and mid-sized banks, along with incentives to increase lending.
“…Banks may shun the program for fear of being stigmatized by its association with the TARP, or they may wish to avoid taking on liabilities at a time when their existing assets, such as commercial real estate, remain in jeopardy,” said a May 2010 report by the oversight panel said.
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Banks were already given a bailout to provide liquidity so they could resume lending. They have not done that, so why should anyone expect that giving them even more money will produce the desired result?