Today's Washington Examiner posted an article on the Obama Administration's efforts to push a Small Business Lending Fund bill through Congress.
"Touted as a means to open up lending for credit-starved small businesses, in practice this fund would continue the very politicization of the financial industry that has voters upset and the economy in shambles. Senate Republicans have so far been successful at blocking this bill, but Senate Majority Leader Harry Reid hopes to bring it to a test vote on Monday."
As with almost all federal programs, the money comes with strings attached. The fund would allow the Treasury Department to give $30 billion to community banks.
According to the article:
"Stephen Spruiell of National Review notes that each recipient bank applying for funds would be required to submit a small-business lending plan to "describe how the applicant's business strategy and operating goals will allow it to address the needs of small businesses in the areas it serves, as well as a plan to provide linguistically and culturally appropriate outreach, where appropriate.""
As usual when the government interferes with banks, politics will determine who gets loans rather than creditworthiness. This was the kind of government intervention that caused the financial crisis in the first place.
The article concludes:
"We already know the dangers of encouraging lenders to lower lending standards by dangling taxpayer dollars before them: Peter Wallison of the American Enterprise Institute notes that almost two-thirds of all bad mortgages, many of which are now defaulting, were created to satisfy government requirements or to get government largesse. It is always best to be wary of Washington politicians and bureaucrats bearing gifts."
It seems as if we would have learned our lesson by now.
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