President Barack Obama unveiled plans to refocus spending of the government's $700 billion financial bailout away from Wall Street's big financial institutions and toward small businesses on Main Street.
Speaking in a small business near Washington, Obama said the initiatives would make it easier for smaller community banks to provide credit to small businesses, which have been hard-hit by the financial crisis. The president's plan also includes a request that Congress increase caps for existing Small Business Administration loans.
"Over the past decade and a half, America's small businesses have created 65 percent of all new jobs in the country," Obama told about 150 employees in a warehouse at a storage business filled with rows of boxes three-stories high.
"These companies are the engine of job growth in America," he said. "They fuel our prosperity. And that's why they have to be at the forefront of our recovery."
Obama pitched the plan as a way to create jobs and change day-to-day life.
"These entrepreneurial pioneers embody the spirit of possibility, the tireless work ethic, and the simple hope for something better that lies at the heart of the American ideal. And they have always formed the backbone of the American economy," he said.
"They're the ones who've opened the mom-and-pop stores and started the computer tinkering that has led to some of the biggest innovations and corporations in the world. After all, Hewlett Packard began in a garage. Google began as a research project. And McDonald's started with just one restaurant."
The president called on lawmakers on Capitol Hill to increase the maximum size of loans small businesses can receive. The administration's plan would also provide infusions of money to small banks at low rates, provided they agree to increase lending to small businesses. Financial institutions, including credit unions and banks, that serve low income areas would also get help at even lower rates to help small businesses in the hardest-hit rural and urban areas.
The administration was not prepared to place a cost on the small bank assistance program. An administration official said Treasury wanted to consult with small banks to determine what the level of participation might be. The bank help would tap money still available in the $700 billion rescue fund.
The fund, knows as the Troubled Asset Relief Program, is set to expire at the end of the year. The administration, however, could ask for an extension until next October. The administration official, who requested anonymity because he was speaking ahead of the president's announcement, would not say whether the administration would seek the extension.
Bank industry officials predict the small bank program would have to extend into next year to function.
Obama is facing pressure from liberals, who want to refocus the massive financial bailout more toward reducing foreclosures and creating jobs, and from Republicans, who are pressing the president to end the rescue plan and use bank repayments to reduce the national debt.
An administration official said the Treasury Department intends to wind down and terminate bailout programs launched at the height of the financial crisis to stabilize Wall Street and aid the struggling auto industry.