(Washington D.C.) – Today, U.S. Senator Patty Murray
(D-WA) spoke on the floor of the U.S. Senate in favor of an amendment that
would create a $30 billion small business lending fund to help local community banks get the capital they need
to lend money to small businesses. The amendment would also help support
small business initiatives run by states across the country that are struggling
due to local budget cutbacks. And it includes the Export Promotion Act which would provide support and resources to
small businesses that are trying to ramp up their exports. The non-partisan Congressional Budget Office
(CBO) has determined that the small business lending fund will save taxpayers
$1 billion. A summary of the small business lending fund is below.
Murray has been a
long-time advocate for a $30 billion fund to help community banks lend to small
businesses. Last year she introduced similar legislation, and she talked directly to Secretary Geithner and President Obama about making this happen.
The full text of
Senator Murray’s speech follows:
Madam President, as all of us know, small businesses are not
only at the heart of our communities they are at the heart of economic
recovery.
They provide secure and stable jobs.
They drive the innovation that provides economic growth
and expands opportunity for all.
They really are the foundation on which we build our
economy.
But we also know that this economic downturn has hit our
nation’s small businesses particularly hard.
Lines of credit have been cut off.
Businesses that were expanding and hiring suddenly
slammed on the brakes.
Employees have been let go.
Inventive and original ideas have been put on hold.
And in communities throughout our country our small
businesses have been left to fend for themselves.
Madam President, A large part of why this has happened
can be explained by looking at the health of our community banks which provide
the capital that drives business growth and job creation.
The fact is that help has come much too slow for our
community banks – and because of that we have seen banks fail one after
another, lending has dried up to our small businesses, and job growth suffer.
While Wall Street institutions like AIG and Goldman Sachs
were deemed “too big to fail”, the collapse of our community banks has
apparently been “too small to notice.”
But in communities across my state and the entire country
the loss of their hometown banks has certainly been noticed.
In my home state of Washington state, just in the past
year, there have been 10 community banks that have failed.
And believe me – these communities felt the loss of these
banks.
Earlier this year the FDIC closed American Marine Bank
which serves a number of small communities in my state including Bainbridge
Island.
It was a bank that had served small businesses and
families in the community since 1948 and was the first bank that allowed
residents to do their banking without having to take a ferry ride to Seattle.
Over the years American Marine provided the capital that
allowed Bainbridge Island and other areas of the Olympic Peninsula to grow into
self-sustaining economies.
To grow from sparse farm areas into suburbs that included
thriving small businesses and family-wage jobs.
An article that ran in the hometown Kitsap Sun newspaper
after the collapse captured what the bank’s failure meant for local businesses
and families.
In the article, Larry Nakata, president of a local
grocery chain said that American Marine had been his bank since the day his
store opened and notes the over the past 52 years, he has gotten repeated loans
from American Marine to build new stores, expand, and hire new workers.
In the same article Mary Hall a local business owner
talked about how a former CEO of American Marine believed in her enough to give
her a loan to start up her paint company back in 1984 which still serves the
community today.
And Jeff Brien a movie theatre owner talked about how
American Marine provided the loans he needed to buy new land and open new
theaters.
He said quote “they were there for us from the very, very
beginning.”
But Madam President it’s not just that community banks are
failing, it’s that they simply don’t have the capital to lend to even very
successful small businesses.
This is something I have heard repeatedly in talking to
small business owners from throughout my state.
In Vancouver, Washington I heard from Tiffany Turner, who
with her husband, owns a growing Inn.
She told me that they have grown close to 10 percent
despite the economic recession but that they have been told by their bank that
– “we’re not lending in your sector.”
In Seattle, I heard from Dani Cone the owner of a local
coffee company whose credit ran dry and who has been forced to borrow money
from family members to keep her business afloat.
I heard from a bookstore owner who had to take out
$60,000 on her PERSONAL credit cards.
I heard from a husband and wife who opened a local
restaurant about how they’ve had to close up shop for good.
I heard from people who are driven by their passions, who
want to grow their business, who want to hire, but who have been stymied by the
lack of credit flowing from banks.
Obviously, at a time when we are relying on small
businesses to drive job growth, this is unacceptable.
Right now, we should be doing everything we can to ensure
small business owners have the credit they need to grow and hire.
That’s why last year I introduced The Main Street Lending
Restoration Act, which would direct 30 billion dollars in unused TARP funding
to community banks – under 10 billion dollars – so they can unlock the vaults
and start lending to small business again.
It’s why I spoke to Secretary Geithner and President
Obama about this directly—and why I have been pushing hard to make small
business lending a priority here.
I’ve felt strongly that we must focus more on the
community banks if we were really going to make progress and bring true
recovery to Main Street businesses.
And it’s why I am so proud to stand here today and
support this amendment that would create the Small Business Lending Fund and
State Small Business Credit Initiative.
The small business lending fund takes the most powerful
idea from my Main Street Lending Restoration Act.
It sets aside 30 billion dollars to help our local
community banks—those under 10 billion dollars in assets – to help them get the
capital they need to begin lending money to small businesses again.
It would reward the banks that are helping our small
businesses grow by reducing interest rates on capital they receive under the
program.
And it would help support small business initiatives run
by states across the country that are struggling due to local budget cutbacks.
My home state of Washington is the most trade-dependent
state in the nation—so I am very glad that this amendment also includes the
Export Promotion Act—which would provide support and resources to small
businesses that are trying to ramp up their exports
Small businesses are the lifeblood of our economy—and
this amendment will help them get back on their feet, expand, and add jobs.
Madam President, I grew up working in a small business – my
father was the manager of a five-dime in Bothell Washington.
As a kid, I did everything from sweeping the floor, to
working the till, to taking out the trash.
And I remember how our little business and those around
us on Main Street were the cornerstones of our community.
And how – in fact – they were the cornerstone of the
local economy.
And my experience is certainly not unique.
For many decades, the defining strength of our financial
system has been our small businesses and their ability to access credit at
affordable rates, grow beyond their walls, and provide good paying jobs.
It’s time for us to get back to ensuring that are small
businesses are the backbone of our economy.
And this amendment is a big step in that direction.
I want to thank Senator Landrieu for her outstanding
leadership on this issue and I’m here today to urge my colleagues to support
this amendment.
Let’s get Main Street working again.
The Small Business Lending Fund
A New Program, Separate From TARP, Providing Small
Banks With Incentives to Lend to Small Businesses
-
New Small Business
Lending Fund (SBLF) to Provide Needed Capital to Community and Smaller
Banks- $30 Billion in
Capital Could Provide Many Multiples of That Amount in New Lending: By
providing $30 billion in capital to small banks, the Small Business
Lending Fund could support several multiples of that amount in new
lending.
- $30 Billion in
-
Program Limited to
Smaller Banks – The Banks on Main Street That Focus Their Lending On Small
Businesses- Only the Smallest
Lenders Eligible for the Small Business Lending Fund: Only
lenders with less than $10 billion in assets will be eligible for the
SBLF. Over 90% of eligible banks will be community banks with less than
$1 billion of assets. - The Small Banks
Eligible for The Program Are the Lenders That Focus Their Lending on
Small Businesses: For example, at the average bank under $1
billion in assets, about 80 percent of commercial and industrial
(C&I) lending is in loans under $1 million. - While These Lenders
Have Been Challenged by the Financial Crisis, They’ve Dramatically
Outperformed Larger Banks in Maintaining Lending During the Crisis: For
instance, commercial and industrial (C&I) and commercial real estate
lending at banks with less than $1 billion in assets grew at an
average annual rate of 3.5 percent for the eight quarters ending
with the 4th quarter of 2009, while lending at banks
with more than $10 billion in assets contracted at an average annual rate
of 8.1 percent.
- Only the Smallest
-
Program is
Performance-Based – With Capital Structured With Incentives to Increase
Small Business Lending- Dividend Rates Paid
on SBLF Capital Decline As Banks Increase Lending: The dividend
rate that banks pay on SBLF capital would decrease as they increase
lending relative to a 2009 baseline level – falling to as low as 1
percent if they increase their lending more than 10 percent. - Banks That Do Not
Increase Lending Face Higher Dividend Rate: The dividend rate
would increase to 7 percent for banks that show no increase in small
business lending in the first two years after receiving capital.
- Dividend Rates Paid
-
Small Business
Lending Fund Established Completely Separate From TARP- Program Established
By New Legislation As Separate from TARP: The new program is not
connected to TARP at all – it is established and funded through new
legislation, with no financing from TARP. - Restrictions
Associated With TARP Would Not Apply: The program would not
include TARP restrictions that have discouraged participation from
community banks, including requirements to issue warrants and limits on
compensation or Net Operating Loss carrybacks. However, the program would
be subject to strong oversight from the Treasury Inspector General, and
requires applying institutions to submit a “small business lending plan”
as well as reports on how funds have been used under the program.
- Program Established
-
Small Business
Lending Fund Expected to Provide Savings for the Taxpayer- CBO Estimates
Program Would Provide Over $1 Billion in Savings to Taxpayer: With
strong protections in place to ensure Treasury only lends to viable
institutions and incentives to encourage timely repayment, CBO estimates
that the program will provide $1 billion in savings to the taxpayer over
10 years.
- CBO Estimates
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