The Obama administration announced Monday that the 21 largest banks receiving U.S. government money must report monthly on how much they lend to small businesses.
All other banks getting federal taxpayer help are being asked to report quarterly on small business loans. Even banks that are not taking government funds are being told by the administration to "make an extra effort" to increase small business lending.
The announcements came Monday as part of a broad package aimed at small business that was being unveiled by President Barack Obama and Treasury Secretary Timothy Geithner. The package also includes reduced small business lending fees and an increase on the guarantee to some Small Business Administration loans.
A day earlier, the president’s advisers said in television interviews that they remained confident in the nation’s economic fundamentals, at times adopting upbeat rhetoric the president once mocked.
“The fundamentals are sound in the sense that the American workers are sound, we have a good capital stock, we have good technology,” said Christina Romer, who heads the White House Council of Economic Advisers.
Obama, for his part, has embraced the role of “confidence-builder in chief,” as one business leader asked him to become. One week after his budget director declared “fundamentally, the economy is weak,” Obama’s economic advisers offered up a buoyant assessment.
Larry Summers, the director of the National Economic Council and an Obama adviser, quoted the president: “It’s never as good as people say it is when they say it’s good and it’s never as bad as people say it is when they say it’s bad.”
Dealing with a severe recession, Obama has turned to a public face that emphasizes the potential for recovery instead of its limits.
To that end, the government plans to take aggressive steps to boost bank liquidity with more than $10 billion aimed at unfreezing the secondary credit market, according to officials briefed on the plan who demanded anonymity to avoid pre-empting the president’s announcement.
Administration officials confirmed they would unveil details Monday.
“We know that small businesses are the engine of growth in the economy, and we absolutely want to do things to help them,” Romer said Sunday morning, speaking broadly on the outline of the plan. “There are already a lot of things to help them in the recovery package, and some of what will be coming out are the things that were in the recovery package: increasing the SBA loan guarantees, lowering fees.”
The move comes as Republicans have sought to build on some bipartisan misgivings over Obama’s ambitious spending blueprint. In particular, Republicans say Obama’s budget proposal to raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000 will hurt small businesses, which face higher dividend taxes and limits on itemized deductions.
“We’ve got to do something to help these small-business people. We know that they’re the job creators in this economy,” the House Republicans’ No. 2 official, Rep. Eric Cantor, said Sunday. “And the problem ... I think we’re seeing out of the Obama administration is a lack of focus on how to get things going again.”
Meanwhile, Obama’s political aides working to better communicate his message on budget and tax issues. Organizing for America, whose almost 14 million-person e-mail list is drawn from voters who supported Obama last November, plans to mobilize them this week to build grass-roots support for the budget on the Internet and on phone lines.
“We didn’t fight to shy away from the tough long-term decisions Washington has ducked for far too long,” Obama political adviser David Plouffe wrote this weekend to members of the group, which is overseen by the Democratic National Committee.
The new measures taking effect Monday focus on opening up small-business lending, seen as critical to cities’ growth. While the SBA typically guarantees $20 billion in loans annually, new lending this year is on track to fall below $10 billion, according to the administration.
Under the two-month-old administration’s new initiative, the government will step in to buy these loans to help unlock the frozen credit market, using money from the recently passed bailout package in the range of between $10 billion to $20 billion, one official briefed on the plan said.
The other measures are part of Geithner’s financial stability plan announced last month. They involve temporarily eliminating upfront fees of up to 3.75 percent and some processing charges on certain SBA loans that lenders typically pass along to borrowers. It also increases the government guarantees on certain loans to 90 percent, up from 85 percent for loans below $150,000 and 75 percent for larger loans.
Summers appeared on ABC’s “This Week” and on CBS’s “Face the Nation.” Romer and Cantor appeared on NBC’s “Meet the Press.”