Geithner readying small business help

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Geithner readying small business help: sources
Tue Mar 10, 2009 12:31pm EDT
By Corbett B. Daly

WASHINGTON (Reuters) - The Treasury Department will offer support for lending to small businesses in a plan to be unveiled as early as next week, Treasury Secretary Timothy Geithner told Democratic lawmakers on Monday night, according to sources familiar with the meeting.

Geithner made the brief comments in a wide-ranging discussion on the state of the U.S. economy and the government's efforts to stabilize the fragile financial system in a weekly meeting of House Democrats.

The plan to spur lending to small businesses is one component of Geithner's Financial Stability Plan, which he introduced on February 10.

"Working jointly with the Federal Reserve, we are prepared to commit up to a trillion dollars to support a Consumer and Business Lending Initiative," Geithner said last month at the plan's unveiling.

"This initiative will kickstart the secondary lending markets, to bring down borrowing costs, and to help get credit flowing again," Geithner said then.

The plan is modeled on the Federal Reserve's existing Term Asset Backed Securities Loan Facility and would expand the credit to target small business loans, student loans, car loans and commercial mortgages.

Geithner also plans to increase government backing of Small Business Administration loans and expedite SBA loan approvals to jump-start small business lending.

The Treasury chief spoke for about fifteen minutes and then took questions for more than an hour. Lawmakers expressed frustration at the lack of transparency over the administration's handling of the $700 billion bailout passed last fall and at the slow pace of rolling out the second half of the plan.

Geithner's predecessor, former Treasury Secretary Henry Paulson, committed half of the bailout funds while President George W. Bush was still in office.

Geithner told the members of Congress he understands the unease in markets and among lawmakers but insisted his team was making progress during the few weeks they have been in office and said more programs were on the way.

"We're doing more in weeks than other countries do in years," Geithner told Reuters after the meeting.

Geithner also laid the groundwork for a request for more money from Congress. The Obama administration has a $250 billion "placeholder" in its budget blueprint for a future request, on top of the $700 billion already approved.

White House and Treasury officials have repeatedly stressed that the placeholder is not an official request for more money, and Geithner repeated that in his remarks to legislators. At the same time, he acknowledged the Treasury may need to seek additional funds.

Lawmakers told the Treasury chief there was "not a willingness" to provide more money for the banks without better explanations how the money is being spent and why it is needed.

Geithner told the Democrats he expected the U.S. economy to get worse in coming months before turning around at the end of this year or early 2010.

(additional reporting by David Lawder; Editing by Tom Hals)

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