WASHINGTON, D.C. – U.S. Senator Olympia J. Snowe (R-Maine) today called on colleagues to fix a number of transparency and accountability problems associated with the $30 billion Small Business Lending Fund created by Congress last year. Senator Snowe introduced the Greater Accountability in the Small Business Lending Fund Act of 2011 to create repayment requirements, a sunset provision for the program, bank solvency standards, and better bank regulator oversight. Snowe also offered this legislation as an amendment to the SBIR/STTR Reauthorization Act, which is currently under consideration on the Senate floor.
“Our nation’s economic recovery depends on the health of our small business community. Many small businesses can’t find affordable credit and that is inhibiting job creation. While I would prefer to terminate this fund altogether, it is unlikely based on the current political environment, which is why we must work to protect taxpayers from some of its most egregious provisions. My goal with this legislation is to ensure that only healthy banks have access to taxpayer money, that they are required to repay loans within a reasonable period of time, and that small businesses find the affordable credit they need,” said Senator Snowe, Ranking Member of the Senate Small Business Committee. “Taxpayers demand more accountability from their government and my amendment fixes a number of problems within the Fund. This is not a silver bullet, but it is a start.”
Under the provisions of Senator Snowe’s legislation:
- Banks would be required to repay Small Business Lending Fund distributions within 10 years. Current law gives the Treasury Secretary the discretion to extend the repayment period.
- The Small Business Lending Fund would sunset after 15 years. Under current law, no such end date exists.
- Banks that received Troubled Asset Relief Program distributions would be prohibited from receiving Small Business Lending Funds. Under current law, banks that have received money through the TARP program remain eligible to receive Small Business Lending Funds as well.
- The Small Business Lending Fund would cease operations if the Federal Deposit Insurance Corporation is appointed receiver of five percent or more of eligible institutions.
- Only healthy banks would be allowed to participate in the Small Business Lending Fund.
- Banks that apply for the SBLF would be prohibited from counting anticipated SBLF funds as Tier 1 capital in order to artificially strengthen their capital position. This provision would ensure a more realistic financial picture of bank assets, at the time of applying for the program, rather than assuming the institution will receive taxpayer funds in the future .
- The Secretary must obtain prudential regulators’ approval – rather than consultation – before an individual applicant financial institution can receive distributions through the Lending Fund program.