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By Staff Blogger President Obama’s Small Business Lending Fund has been used for other purposes other than was originally intended. $2.1 billion was paid out for paying back bailouts according to a federal investigation. Community banks have used government funds to pay back their recession-era bailouts after the government bailed them out in 2008 and 2009 under the Troubled Asset Relief Fund (TARP). Christy Romero, author of the report and special inspector general for the Troubled Asset Relief Program, said that quite a few banks used the money, given to them by the government, to help small businesses for their own purposes. Instead they used a big part of the money “to exit TARP using government funds….. with little resulting benefit for small businesses,” said Romero. The small business fund was established in 2011 to help small businesses that were having difficulties obtaining loans. However, according to the report by Romero, banks used 80 percent of the money to repay TARP. “Everyone went in thinking it was one of the ways to pay back TARP,” said McCauley, senior executive vice president for Frost Bank in San Antonio. He continued, “It was disguised as promoting to encourage business lending.” McCauley went on to say that banks were looking everywhere to find the money to pay back the money they had been given for bailouts and he wasn’t at all surprised what the investigation reported. According to the report, 137 banks of the total 332 that shared in the small business lending program used the money to pay back TARP. Deputy Assistant Secretary of the Treasury Department, Don Graves, said that the banks did nothing wrong. In fact, he says, that’s exactly what Congress intended for them to do when they initiated the funds. The Treasury Department also criticized the findings of the report, saying that 84 percent of the banks that received TARP bailouts had increased their small business lending. Romero, however, said that 24 of the bailed out banks did not increase their loans to small businesses. She went on to point out that banks that didn’t receive TARP funds increased their lending by $4.2 billion while only receiving $1.2 billion in federal loans.

Banks Used Small Business Funds To Help Themselves & Not Small Businesses

bailout_people_not_the_banks

By Staff Blogger

President Obama’s Small Business Lending Fund has been used for other purposes other than was originally intended. $2.1 billion was paid out for paying back bailouts according to a federal investigation.

Community banks have used government funds to pay back their recession-era bailouts after the government bailed them out in 2008 and 2009 under the Troubled Asset Relief Fund (TARP).

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