Legislation to create a $30 billion fund to boost small-business lending is likely to pass the House this week and Senate leaders could consider it as early as next week.

At a Senate Small Business Committee roundtable Tuesday bankers praised the program but also said low demand and a tense examination environment are to blame for the decline in lending.

"It will be a great opportunity to provide capital to community banks," said W.A. (Bill) Loving, executive vice president and chief executive of Pendleton Community Bank. "It would be a good program because once demand does increase, there will be a need for additional capital."

The House Financial Services Committee passed the bill May 19 to create a $30 billion small-business lending fund to provide capital to community banks with incentives to spur small-business lending. The bill has faced opposition from lawmakers, particularly Republicans, who have tried to categorize it as a repeat of the Troubled Asset Relief Program.

Regulators and bankers acknowledged Tuesday that the lending shortfall is more than just a lack of capital. While bankers said regulators are making the problem worse by asking banks to raise more capital, the agencies defended their moves as necessary to protect the safety and soundness of the system.

"We don't have regulators arbitrarily raising capital on banks," said Tim Long, senior deputy comptroller and chief national bank examiner for the Office of Comptroller of the Currency.

Steve Fritts, associate director of risk management policy and examination oversight for the Federal Deposit Insurance Corp., said higher capital requirements reflected the economy. "Capital is a business necessity," he said. "It is not a regulatory construct that we make up. Except in those few cases where bankers are in denial, most are not, the great majority are not, the great majority are reasonably healthy and weathered some hard economic times reasonably well."

But Small Business Committee Chairman Mary Landrieu called for the finger-pointing to end. Lenders "say it is the regulator that is being unnecessarily strict," Landrieu said. "The regulators, of course, say the borrowers are not creditworthy and the banks are using the regulators as a convenient excuse for not making loans. … It is this back-and-forth blame game that small businesses are tired of hearing."

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