Julie Borowski
FreedomWorks
9/29/2010
On Monday, President Obama signed the Small Business Bill also known as mini-TARP into law. At the signing, he declared that the law was “a great victory for America’s entrepreneurs.” The centerpiece of the law will pump $30 billion taxpayer dollars into smaller banks in hopes that they will lend out more to small businesses.
However, small banks that have responsibly handled their money do not want or need these mini-TARP funds. In the end, mini-TARP is unlikely to spur lending to small businesses. William Chase, CEO of Triumph Bank in Memphis states that “we have taken a strategic decision not to have our primary regulator, the government, also be a partner in our bank.”
As part of the plan, the US Treasury will buy stock in the small banks that receive taxpayer funds. Consequently, banks will be forced to pay an annual dividend of 5 percent to the federal government. As Larry Kudlow states in Real Clear Markets, “Who in their right mind would sign up for this? This is government-planning intervention almost beyond belief.”
It is believed that mini-TARP will be rejected by a majority of small banks that do not want to be burdened by excessive government regulation. In fact, the Congressional Oversight Panel found that 690 small banks that were bailed out by the original $700 billion TARP funds are actually worse off.
Simply, the original TARP failed to meet its intended goals. The Congressional Oversight Panel report says that “there is very little evidence to suggest that the (bailouts) led small banks to increase lending.”
Read the rest at FreedomWorks.
