WASHINGTON — Elizabeth Warren, the chairman of the Troubled Asset Relief Program's Congressional Oversight Panel, challenged the efficiency of the Obama administration's small-business lending programs Thursday, arguing they have conferred little benefit to date.

In a hearing featuring Treasury Secretary Timothy Geithner, she questioned the administration's recently announced, fourth plan to use Tarp money to spur small-business lending.

"Small businesses are closing every day, but Treasury has now announced three plans and clearly has not gotten the job done," she said. "What's going to be different now, Mr. Secretary?"

Geithner placed the blame on banks, saying many were afraid to take Tarp funds to help spur Small Business Administration lending for fear that Congress or the Treasury could add to their regulatory restrictions.

"For this to work, we have to make it possible for banks to come get capital from the government so they can support our lending," Geithner said. "The reason the SBA programs have not yet been launched is because the institutions necessary to make that work have been very reluctant to come and do business with the government. Their concern is that, if they come, they will be stigmatized and they will be subject to conditions in the future."

He said the fear of Tarp is a primary reason that too little credit is available to small businesses.

"The basic credit crunch we see across many small businesses across the country today is partly as a result of banks' pulling back from government capital," Geithner said.

The Treasury has announced several small-business lending assistance programs, including its Term Asset-Backed Securities Loan Facility and a program to buy up to $15 billion of securities from the SBA.

On Wednesday, the Treasury announced it would extend Tarp until October 2010 and focus its remaining funds on loan-modification and small-business lending programs.

Damon Silvers, a panel member, suggested that the Treasury lend directly to small businesses to get around banks' reluctance.

"The right way to do this is, do it as a conduit, and you lend more or less directly to small firms with banks as a manager of the process rather than the intermediary," Silvers said.

Geithner spent much of the hearing on the defensive about his decision to extend Tarp, arguing that, though it has stabilized the banking sector, new emergencies could arise.

"It would be deeply irresponsible and imprudent at this stage, only a year into this recovery process, only three months after we had our first period of growth, to stand back and walk away from those challenges ahead," Geithner said. "That would leave the taxpayer at much greater risk to future losses. The ultimate cost of the program would go up, not down."

Under the Tarp extension, the Treasury said it would use only $550 billion of the funds and would consult with the Federal Reserve and the president before using it for new emergency measures.

Paul Atkins, another panel member, blasted the decision, saying Tarp should be wound down. "To extend Tarp borders on recklessness and irresponsibility on Treasury's role as a steward of the nation's financial system," Atkins said.

But Silvers defended the decision.

"The administration's decision to extend Tarp was the only responsible course of action. … It was an act of political courage," he said.

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Corrected December 17, 2009 at 1:33PM: An earlier version of this story misattributed this quote: "The right way to do this is, do it as a conduit, and you lend more or less directly to small firms with banks as a manager of the process rather than the intermediary." The speaker was Damon Silvers, not Paul Atkins. Both men are members of the Troubled Asset Relief Program's Congressional Oversight Panel.