New Inspector General May Oversee Small Business Lending Fund
An inspector general would have oversight of the new $30 billion Small Business Lending Fund if a bill with that proposal becomes law.
The Small Business Lending Fund Accountability Act of 2011, or H.R. 1387, would place the fund under the jurisdiction of the special inspector general for the Troubled Asset Relief Program Fund. The legislators that introduced the bill are concerned that banks that participated in TARP will use SBLF monies to refinance out of TARP rather than extend loans to small businesses.
Currently, numerous financial institutions that received TARP funds through the Capital Purchase Program and the Community Development Capital Initiative are eligible to exit TARP and its oversight by refinancing into the SBLF, according to Rep. Patrick McHenry (R-N.C.), who introduced the bill April 6. Under the proposed legislation, oversight reports would be required on a quarterly basis.
“Congress and the president have a duty to hire a stern investigator to expose accounting gimmicks by banks and the Treasury Department in order to bring an end to taxpayer-funded bailouts,” McHenry said.
Meanwhile, the deadline for community banks to apply for the fund was recently extended from March 31 to May 16 by the U.S. Treasury Department. Discussions are still under way for S corporation community banks and mutual institutions to be included, Treasury said. By some estimates, there has been a 7% participation rate in the fund since its launch last fall. The Wall Street Journal recently reported that 526 community banks had requested $7.6 billion in funds. Approximately 7,700 lenders are eligible to participate.
House Oversight Committee Chairman Darrell Issa (R-Calif.) and Rep. Dennis Ross (R-Fla.) also co-introduced H.R. 1387. The Small Business Jobs Act was signed by President Obama on Sept. 27, 2010.
The SBA said it was able to approve nearly $1 billion in loans after the Small Business Jobs Act was signed because it provided funding for increased loan guarantees and reduced fees.