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KAI RYSSDAL: I don’t know if you’ll remember this, but the last time Wall Street went to Washington en masse, we got the TARP. Then Treasury Secretary Henry Paulson, Ben Bernanke from the Fed, and not least Timothy Geithner, then the head of the New York Fed, sat almost a dozen big bank CEOs down and basically forced them to take bailout money.
In their meeting with President Obama that’s coming up this Monday, the bankers won’t be getting any new cash. They will be getting a going over, though. The president’s going to ask a question a lot of people have: Why aren’t you lending more? And then he’s going to sweeten the deal for banks that make loans to small businesses.
Our Washington bureau chief John Dimsdale reports.
John Dimsdale: To generate more lending for credit-starved small businesses, the Treasury Department wants to prime the pump with money left over in the Troubled Asset Relief Program. It would give banks TARP money to lend to small businesses.
Congressional supporters, including Virginia’s Democratic Senator Mark Warner, say banks have to get over their stigma of TARP money.
Mark Warner: I do think particularly some of the particularly community-based banks feel like taking TARP funds makes them toxic.
Warner agrees with Treasury’s idea of setting up a separate fund with a different name. Treasury is also willing to waive some of the conditions that are imposed on TARP recipients, like salary caps. Consumer groups, though, aren’t sure that’s necessary.
Gail Hillebrand is with Consumer’s Union.
Gail Hillebrand: If any conditions are lifted, there should be a very specific set of requirements — what do they have to do, how much credit, by what date. Because one thing we’re seeing on the mortgage-modification side is the banks say they’ll get in the program, but the results are slow to come out the other end.
The Obama administration says easing restrictions is necessary to generate small-business loans. But are small businesses really clamoring for credit?
Not according to Mike Miller, the CEO of Community One Bank in Ashboro, N.C.
Mike Miller: What we’re seeing is really not a great deal of demand for small-business credit. And in an economy that’s operating like this one has for the past 18 months, people may not be as credit-worthy as they have been.
But that’s just what Treasury wants, banks to lend to businesses they’ve been leery of lending to.
In Washington, I’m John Dimsdale for Marketplace.