The Treasury and Fed must stop giving small business lip service and actually provide them with the resources they need to survive in this very challenging time.
Washington, DC (Vocus) November 20, 2008
In recent months, small businesses have faced unprecedented difficulties in securing credit and capital. Today, the House Small Business Committee examined the recent actions taken by the U.S. Department of Treasury and the Federal Reserve to assist small firms and to consider what additional measures are necessary. The Committee largely found that the $1.6 trillion in federal bailout expenses have provided little assistance to small businesses, many of which continue to struggle.
"Entrepreneurs are facing serious challenges to secure credit on any terms, leaving many to wonder where the $1.6 trillion in bailout assistance has gone," said Congresswoman Nydia M. Velázquez (D-NY), Chair of the House Small Business Committee. "Our small businesses have historically led our country out of tough times, but now they are unable to secure capital to startup or expand, resulting in lower job creation and growth during a time when we need it."
At the request of the Bush administration, Congress enacted the Emergency Economic Stabilization Act of 2008 (EESA) to address the growing problems in the credit and financial markets. EESA gave the Secretary of Treasury authority to purchase troubled-assets, including residential and commercial loans, while the Federal Reserve responded under its existing statutory authority. Unfortunately, both the Treasury and the Federal Reserve's wide-ranging actions have not addressed the financing needs of small businesses.
"The Treasury and the Federal Reserve have created so many new programs, you would think that at least one would directly benefit small firms - but unfortunately this is not the case," Chairwoman Velázquez said. "The Treasury and Fed must stop giving small business lip service and actually provide them with the resources they need to survive in this very challenging time."
During the hearing, the Committee pressed the Treasury and Federal Reserve to take immediate, bold actions to assist small firms. One proposal called for the Treasury to use its authority to purchase troubled small business loans, so viable enterprises can stay in operation. Another solution raised during the hearing would have the Federal Reserve establish a facility to provide liquidity to the small business financing market, so that lenders are able to replenish their funds more readily. Finally, Committee Members demanded that both the Treasury and the Federal Reserve work with the Small Business Administration, which has seen a 50 percent decline in year-over-year loan volume, to jumpstart its lending. These measures would help alleviate the challenges that small firms are facing in the credit markets.
"There are options on the table to help small businesses, and we need to implement them now, before more enterprises go out of business altogether," Chairwoman Velázquez said. "Our economic recovery depends on the contributions of small firms and we are at risk of providing them with 'too little and too late'."
To see video of today's hearing, click here.
# # #