(Corrects headline and first paragraph to refer to deficit reduction.)
June 22 (Bloomberg) -- U.S. Treasury Secretary Timothy F. Geithner said a bipartisan agreement on the deficit would help small-business lending.
“If Congress can find a way to reach a bipartisan, comprehensive, balanced agreement to bring down long-term deficits that would help. It would be a sign that Washington works, is able to come together to solve some problems,” Geithner said today at a hearing before the House Small Business Committee. “That would improve overall confidence across the country.”
Lawmakers met again today to reach a deal on the debt limit before the Aug. 2 deadline Geithner has set for legislation. The hearing largely focused on Treasury’s $30 billion Small Business Lending Program that’s yet to distribute funds. Geithner recognized the program has been slow to start and said it would begin distributing funds soon. Treasury has received 869 applications for $11.6 billion in funding.
“We’re a little a little disappointed too and a little surprised it’s been slower than we thought,” Geithner said. “We’re slower than we thought but we are close to moving ahead and I’m confident you are going to see a very meaningful impact on the institutions that are eligible and we’re close to being able to release that impact.”
Lawmakers on both sides of the aisle said the program is moving too slowly.
“Throughout my discussions with Treasury staff I was told the program would be up and running in six months,” committee ranking member Nydia Velazquez, a Democrat from New York, said. “I am quite disappointed that still not a single money has been dispersed to the small companies.”
“I’m talking about creditworthy institutions who cannot get a response from Treasury, your office, about whether or not they are approved or not approved,” said Jaime Herrera Beutler, a Republican from Washington.
The $30 billion small-business lending program was set up in September by Congress and the administration of President Barack Obama to provide low-interest capital injections to community banks that increase their lending to small companies. The program permits them to use the new capital to essentially refinance their TARP debt.
Geithner said the program’s delay is due to the narrow focus of institutions and regulatory scrutiny of applicants.
“What this program tries to do is reach a subset of the banking system that can’t raise capital on their own but are still viable institutions,” Geithner said. “That’s not going to be a bulk of banks but is going to be a meaningful fraction.”
“The reason we are a little behind schedule is because we are being careful. The regulators are being careful and that’s what you want us to do,” he said.
Lawmakers also asked whether the Dodd-Frank Act is harming small businesses.
“Dodd-Frank was very carefully designed to make sure that small businesses were not the object of a huge increase of or meaningful increase of regulation,” Geithner said.
Allen West, a Florida Republican, said small companies have suffered “collateral damage” from Dodd-Frank and the right balance needs to be reached.
“The crisis caused a huge amount of damage,” he said. “It’s going to take years for us to dig our way out of that hole. A lot of the damage was concentrated in construction where a lot of small businesses operate,” Geithner said.
--Editors: Vince Golle, Kevin Costelloe
To contact the reporters on this story: Cheyenne Hopkins in Washington at Chopkins19@bloomberg.net
To contact the editor responsible for this story: Chris Wellisz at firstname.lastname@example.org