ABC: A Tale Both Positive and a Cautionary: President Obama’s Phantom $15 Billion Program for Small Businesses

Jake Tapper
ABC News
February 8, 2010

Last March 16, President Obama and Treasury Secretary Tim Geithner announced a new $15 billion program to help encourage loans to small businesses — the Unlocking Credit for Small Businesses, or UCSB program.

Subsequently, wrote Neil Barofsky, Special Inspector General of the Troubled Asset Relief Program, in his latest report, “two additional initiatives were announced to support small-business lending, and Treasury announced an increase of the TARP funding dedicated to support these efforts to $30 billion.”

But oddly, Barofsky noted, as of December 31, 2009, “the details of the initiative under this program had not been announced and no funds had been disbursed.”

A $15-30 billion program for small businesses and no details have been released?

And no money disbursed??

I asked Treasury Secretary Tim Geithner about this on Sunday.

…The Treasury Secretary didn’t directly answer my question, but another administration source shed some light.

The source told me that the reason the program has not been officially utilized was twofold.

One, almost every potential participant declined to cooperate because they didn’t want the stigma of using TARP funds given the tremendous public anger towards Wall Street and resentment about the $700 billion bailout.

Two, the specific purpose of the plan – to get the secondary market moving again for these SBA loans – was largely accomplished.

Once the program was announced, the source said, the market started to recover dramatically, and the activity on these particular markets increased four times compared to January 2009. Many market experts credited the mere announcement of the administration’s willingness to be a buyer of last resort as helping to unfreeze that market.

The Small Business Administration reported that the number of SBA 7(a) loans sold on the secondary market was just $86 million in January 2009…

Tapper’s entire article is at ABC News.

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