WASHINGTON — A bill to create a $30 billion small-business lending fund could finally be moving toward final passage this week after months of stops and starts.
The bill cleared a hurdle on Tuesday by passing a procedural cloture motion 61 to 37, with Republican George Voinovich of Ohio deciding to support the legislation. Sen. George LeMieux, R-Fla., also voted to move the bill forward. The legislation is now poised to move to final passage as early as Thursday.
"This small-business lending fund is a clean new piece of legislation that goes to Main Street banks to help them lend to Main Street small businesses," Gene Sperling, counselor to the Treasury secretary, said at a news conference. "You only get the incentive if you are expanding your lending, so it is one of the best bangs for the buck you could ever do with federal taxpayer dollars. … This effort could expand so much private-sector lending."
President Obama first put forward a plan for a small-business lending fund in January, but the idea has languished in Congress. Although the House passed a bill in June, the Senate tried and failed to move the legislation forward several times before the August recess.
The bill, which also includes tax cuts for small businesses, was a centerpiece of President Obama's economic speeches during the congresssional recess.
"It is a common-sense bill that traditionally would have garnered a lot of bipartisan support, but we're in the political silly season right now so it's been blocked up by the Senate Republicans for the last month and a half, two months," Obama said in a speech Monday in Fairfax, Va.
He continued: "Small businesses are still having trouble getting loans. And what we want to do, even though we've already given them eight different tax breaks, is we want to say we're going to give you just a little bit more incentive, because if we can get small businesses growing and investing and opening their doors and hiring new workers, that's probably going to be the area where we can make the most progress over the next year in terms of accelerating employees and reducing the unemployment rate."
At the press conference, Sen. Maria Cantwell, D-Wash., dismissed criticism that the bill was a ploy to help Democrats win votes in the midterm elections.
"Many of the talk shows and pundits want you to think this is about the November elections," she said. "I can tell you this is not about the November elections. This is about writing a wrong that was done to small business when Wall Street put Main Street down and cut off access to capital."
The package includes $12 billion in tax credits for small businesses and extensions of Small Business Administration guarantees. The most controversial piece has been a $30 billion fund to provide capital to community banks with incentives to lend to small businesses.
The bank would initially pay a 5% dividend, but could lower it to as little as 1% if it boosts small-business lending. Unlike the Troubled Asset Relief Program, the program is free of warrant requirements or restrictions on executive compensation.
Throughout the debate, Republicans have characterized the program as Tarp 2.0. Democrats have countered that it is a completely separate program. "It pushes out from Treasury $30 billion to healthy community banks in every neighborhood in American and in every rural community to the banks that know their customers," said Senate Small Business and Entrepreneurship Committee Chairman Mary Landrieu.
After repeated delays, Senate Majority Harry Reid urged quick passage of the bill.
"I hope we can move through this very expeditiously," he said. "It's the most significant thing we've done since the stimulus bill was passed to create jobs."
Even if the Senate successfully finishes the bill this week, it must still be reconciled with the House version that passed on June 17 by a vote of 241 to 182. The House version did not include the SBA guarantees or the tax provisions.
Speaker Nancy Pelosi told the San Francisco Chronicle that
Rather than going through the reconciliation process, she said, "we may have to convince some of our House members to work out the differences in subsequent legislation. It's important to get this money out as quickly as possible."
Given the short legislative calendar before the Congress recesses for November elections, if the House makes any changes, it could slow down final passage this year.
"All eyes are now on the House to see what they will do on this bill," said Paul Merski, senior vice president and chief economist for the Independent Community Bankers of America. "I think there will be tremendous pressure given the tight calendar to get the legislation passed. I think there is going to be a desire to get the assistance out to small businesses as soon as possible. Making changes this late in the game in the House would really jeopardize the bill getting across the finish line."
Landrieu appeared confident a compromise with the House could be reached and noted many of the provisions of the Senate bill are similar to the House bill's provisions.
