Taypayer Handouts and Ripoffs

Thousands Protest Bailout Bonuses at Chicago Bank Meeting

October 27, 2009

AFP – Thousands of protesters chanted "the banks got bailed out, we got sold out" as they marched through the streets of Chicago on their way to a meeting of US bankers Tuesday.

Carrying signs proclaiming "Hold Wall Street accountable" and "Foreclosures ruin communities," they demanded more help for those who have lost their jobs and their homes as they sang "hey hey, ho ho, those bailout bonuses have got to go."

The Obama administration last week slashed executive salaries at firms rescued by taxpayer bailouts and the Federal Reserve also imposed new rules limiting compensation packages which encourage excessive risk-taking.

Critics have complained at government interference in the free market and warned that the pay cuts may stifle innovation and see already struggling firms lose top executive talent to competitors not subject to pay curbs.

But speaker after speaker here castigated the bankers who they accused of profiting from their role in bring about the financial crisis and credit crunch which dragged the United States into the deepest recession since the Great Depression.

"We cannot rest until we begin to break the power that big banks and corporations have over our economy," Anna Burger, secretary treasurer of the Service Employees International Union, told the crowd.

"They have spent decades rigging a system so that no matter what they do, they will always win at our expense."

Burger called the heads of the major banks the "architects of our economic collapse" and called on lawmakers to "investigate them and, if necessary... prosecute them for what they've done to our country."

The protesters lambasted the American Bankers Association and six top banks for spending 35 million dollars fighting financial reforms after accepting 17.8 trillion dollars in taxpayer bailouts and backstops.

"We demand accountability for the pain the Big Bankers have inflicted on families who face financial ruin, for joblessness, pensions wiped out, foreclosures and bankruptcy," said Richard Trumka, president of the American Federation of Labor and Congress of Industrial Organizations.

"And we are here to support President Obama's call for tough new regulations to force these bankers out of their Wild West mentality, out of their arrogance, out of their contempt for the public they're supposed to serve."

Obama Announces Steps to Channel Loans to Small Businesses

October 21, 2009

Wall Street Journal - President Barack Obama unveiled initiatives to help small businesses, saying the U.S. has "a long way to go" to ensure that credit flows to an area of the economy hit hard by the recession...

Mr. Obama detailed plans for legislation boosting the maximum size of certain Small Business Administration loans and called for new steps to provide lower-cost capital to community banks. The administration hopes the measures will help boost job creation at a time when the unemployment rate is expected to top 10%. Small businesses shed 2.4 million jobs from the middle of 2007 through the end of 2008...

Under the White House plan, the maximum size of so-called 7(a) loans would rise from $2 million to $5 million, helping businesses invest in machinery, equipment, land, and buildings. The SBA's 7(a) loan program provides partial guarantees on loans for small businesses borrowing to invest in working capital, machinery and equipment, and real estate. It is the agency's largest loan program.

The top size of the SBA's 504 loans would rise to $5.5 million, an increase the administration says would help businesses expand their payrolls by supporting real-estate purchases. The 504 program provides guarantees on loans for real estate and other fixed assets to small businesses for expansion that will create and retain jobs.

The maximum size of SBA microloans would increase from $35,000 to $50,000 under the administration's plan.

In the second plank of the White House plan, community banks with less than $1 billion in assets, which make the bulk of small-business loans, could receive new capital at an initial dividend rate of 3%. The current rate is 5%. The rate would increase to 9% after five years to encourage timely repayment, according to the White House.

In hard-hit rural and urban communities, Community Development Financial Institutions that do the bulk of their small-business lending in underserved areas would get access to capital at a 2% rate for up to eight years.

"The major banks that were in critical condition a year ago need no new assistance from the government, and so we are winding down that portion of the TARP program," Mr. Obama said. "But to spur lending to small businesses, it's essential that we make more credit available to the smaller banks and community financial institutions that these businesses depend on."

An administration official said the amount of money allocated for the program under the Troubled Asset Relief Program won't be determined until after a consultative process that will be wrapped up before the end of the year. The official said the program can be executed with existing funds and won't be reliant on TARP repayments.

Institutions that take part in the new program would be subject to the requirement that TARP participants sell warrants giving the government the right to purchase common stock at a set price. There would, however, be a de minimum exception for some institutions. Participants also would be subject to TARP rules on executive compensation, though an administration official said he didn't expect that to be a deterrent for small banks.

Obama to Offer Banks Aid for Small Business Loans

October 21, 2009

Bloomberg - ...The lawmakers called on Obama to redirect bank rescue funds for community lending by creating a new program within the $700 billion TARP. They suggest using federal financing to anchor a $40 billion pool to support new lending, accompanied by as much as $10 billion in private investment.

Obama said that because major banks that were “in critical condition” during the financial markets crisis a year ago no longer need assistance, the administration is winding down that part of the TARP...

Some Republican lawmakers argued that Obama initiative won’t make a difference if Congress places new tax burdens on companies by enacting health-care legislation.

House Minority Leader John Boehner of Ohio said lower taxes and other policies to help small businesses invest in equipment and jobs are needed to restart the economy.

“Until we get the small businesses working again, we are not going to get the economy working again,” he said. Uncertainty about expenses contained in health-care and energy legislation is causing small business owners “to sit on their hands,” he said.

Obama to Bolster U.S. Small Bank Capital, Lending

October 21, 2009

Reuters - ..."There is still too little credit flowing to our small businesses," Obama said at the Landover, Maryland, warehouse of a small records storage company. "There are still too many entrepreneurs who can't get the loan they need to open their doors and start hiring."

Obama said he was ready to shift the focus of the Troubled Asset Relief Program, from large, Wall Street banks to the more than 7,500 small and community banks that do a bigger percentage of their lending with small businesses.

"The major banks that were in critical condition a year ago need no new assistance from the government, and so we are winding down that portion of the TARP program," Obama said. "But to spur lending to small businesses, it's essential that we make more credit available to the smaller banks and community financial institutions that these businesses depend on."

Obama's announcement comes a day after U.S. Treasury Secretary Timothy Geithner told the Reuters Washington Summit that he was ready to shift the TARP to target key areas where credit markets still needed repairs -- namely small business and housing.

U.S. Commerce Secretary Gary Locke told the Reuters summit on Wednesday that increased lending to small business could have a "huge ripple effect" in terms of job creation, given that smaller firms have created 65 percent of all new U.S. jobs over the past 15 years.

"This is what the American public wants and that's what small business owners want," Locke told the Reuters Washington Summit. "I mean let's not just bail out the banks, but let's make sure that when we help the banks that it benefits taxpayers and small business owners."

With the U.S. unemployment rate nearing 10 percent, Obama is under pressure to boost job creation ahead of midterm congressional elections next year.