WASHINGTON — The Congressional Oversight Panel is planning to release a report Thursday that calls the administration's small business lending programs a failure and casts doubt on a proposal to give banks government funds in an attempt to spur more lending.
In the report, COP reported that Treasury's previous efforts to spur small business lending, such as through the Troubled Asset Relief Program, Term Asset-Backed Securities Loan Facility and the Public-Private Investment Partnership, have had little impact on small business lending. The Tarp watchdog group said the administration's new small business plan to inject $30 billion from Tarp into community banks to boost lending may not increase lending and comes too late.
"The [Small Business Lending Fund] also raises questions about whether, in light of the [Capital Purchase Program's] poor performance in improving credit access, any capital infusion program can successfully jump-start small business lending," the report said. "Supply-side solutions that rely on bank balance sheets, such as the CPP and the SBLF may not increase lending…It remains unclear, however, whether Treasury's solutions can or will play a major role in putting small businesses on the path to growth."
Treasury announced its small bank lending program in January but only released a legislative proposal last week. The House Financial Services Committee will hold a hearing on the proposal on Tuesday.
The panel recommended that Treasury establish a data collection system for small business lending, require lending reporting for any capital infusion program, consider minimum underwriting standards for the community bank loans, and a study whether such a program could have much of an effect quickly enough to make a difference.