Optimism has “clearly stalled” among small businesses despite U.S. economic improvements. That was the summary for the end of 2009 by the National Federation of Independent Business, which today released its Index of Small Business Optimism for December. The index lost .3 points last month, falling to 88.0. The Index is seven points higher than its second-lowest reading reached in March 2009, and has been below 90 for 15 months.

President Barack Obama surprised some in the regulatory arena when he said that community banks may be mired in too much “red tape,” and that may be hindering their ability to increase loans in the vital sector of small businesses. “We are looking to see if there are possibilities to cut some of the red tape,” Obama said. “We don’t have direct influence over our independent regulators, but we think that the more we can highlight that…the pendulum may have swung too far in the direction of not lending…”

Without offering specific proposals, President Barack Obama told executives with community banks at a White House meeting today that he hopes there is a possible loosening of regulatory “red tape” to help them increase lending to small businesses. Saying he doesn’t have direct influence over “our independent regulators,” Obama added that he fears the “pendulum may have swung too far in the direction of not lending.”

A new study finds that banks with connections to members of Congressional finance committees, and banks whose executives served on Federal Reserve boards were “more likely to receive funds” from the Troubled Asset Relief Program, the government’s primary bailout program. “Banks with strong political connections were more likely to receive bailout money from the government — and more of it — in the past year than those with weaker ties,” concluded the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan’s Ross School of Business.

Some small business borrowers got some good news – at least through Feb. 28 – after the U.S. House passed a defense appropriations bill that included restoration of two key stimulus funding programs for the Small Business Administration. The legislation permits the U.S. Small Business Administration to raise the percentage of loan amounts that it can guarantee back up to 90 percent. The SBA would also be given the authority “to waive or reduce loan fees.” The funding extension, however, expires on Feb. 28.

President Barack Obama will meet Tuesday with community bankers who are vital to extending more credit to small businesses — a week after he had a similar White House meeting with the CEOs of the top banking institutions. This month, the Federal Deposit Insurance Corp. found that only a quarter of 1,300 community banks surveyed directly marketed their services to individuals who are under-served or not served at all by banking services in their community.

The top executives of some of this nation’s largest financial institutions got an earful from President Obama in a meeting at the White House today, where they were told that an “extraordinary commitment” was expected of them to help rebuild the economy. Primarily, the president told reporters after the morning session, the executives need to find more ways to “help creditworthy small and medium-size businesses get the loans that they need to open their doors, grow their operations, and create new jobs.”

It orchestrated an expensive and ambitious campaign against a Consumer Financial Protection Agency, but the U.S. Chamber of Commerce lost that bid on Friday when the House passed its financial oversight reform bill, and the new agency along with it. Now the U.S. Chamber, representing more than 3 million small-to-medium businesses and organizations, is fixing its sights on the Senate version of financial regulatory overhaul, and hoping to convince moderate Democrats to downsize the CFPA’s regulatory reach and fine-tune legal ambiguities.

President Barack Obama fired back today at opponents of financial oversight reform, including banks and their lobbyists, referring to their “phony arguments and bad habits” that could leave the U.S. economy vulnerable to “another meltdown.” The President’s weekly address came a day after the U.S. House approved a landmark financial regulation overhaul that creates a new overseer of the credit industry, the Consumer Financial Protection Agency. The reform bill has drawn significant opposition from banking groups, Republicans and the U.S. Chamber of Commerce.

Now fueled to a growing degree by prime borrowers, the foreclosure crisis is not abating, and U.S. Treasury officials are hoping new incentives will accelerate short sales and other alternatives to rescue homeowners. Starting on April 30, amendments to the government’s Home Affordable Modification Program (HAMP) will offer new incentives to lenders to accelerate short sales or DILs.