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Treasury Secretary Defends SBLF Implementation

Posted on 10/19/2011

Treasury Secretary Timothy Geithner told the Senate Small Business Committee during a hearing yesterday that he shared their frustration that the Small Business Lending Fund (SBLF) program was not as extensive as originally envisioned. The program distributed about $4 billion of its $30 billion to 332 community institutions nationwide. Some 933 institutions applied for $11.8 billion in SBLF funding.

Noting that banks applied for about one-third of the program's funds, Sec. Geithner stated that "We made a major effort…to make sure banks were aware of it." Only half were deemed eligible "because we had to be careful to make sure that taxpayer resources were going to banks that were viable."

Sec. Geithner also expressed frustration about the approximately nine months it took to begin providing capital to participating banks, explaining that the program required bank regulators to decide whether applicants were eligible. He added that Treasury had legal constraints on communicating with institutions when applications were denied, but the Department now has developed arrangements with supervisors to share with rejected banks the reasons for refusals without jeopardizing confidential information.

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