Snappy newsletters. Simple Facebook sharing. Spirited comments. Sweet features are waiting… GET THEM NOW!

Bailouts May Be Offered to Small Businesses

TARP funds, meant to save banks, could be used to save jobs

By Kevin Spak,  Newser Staff

Posted Jul 11, 2009 8:13 AM CDT
Email

(Newser) – The Obama administration is working on a plan that would take money from the TARP—the $700 billion fund intended to rescue banks—and lend it to small businesses, the Washington Post reports. The money would come with few restrictions, and the government would pick up as much as 90% of the tab should the businesses fail. Most of the country’s jobs, proponents argue, come from companies with fewer than 500 employees.

But shifting TARP money to them would be the most dramatic change in direction yet for the windblown fund, which has already strayed far from its original mandate by helping auto companies and life insurers. Timothy Geithner supports the plan, sources tell the Post, but Larry Summers is skeptical.

Treasury Secretary Tim Geithner, right, and National Economic Council Director Lawrence Summers, left, await the arrival of President Barack Obama in the East Room of the White House, Feb. 6, 2009.
Treasury Secretary Tim Geithner, right, and National Economic Council Director Lawrence Summers, left, await the arrival of President Barack Obama in the East Room of the White House, Feb. 6, 2009.   (AP Photo/Charles Dharapak)
In this June 18, 2009 file photo, Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington before the Senate Banking Committee.
In this June 18, 2009 file photo, Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington before the Senate Banking Committee.   (AP Photo/Susan Walsh)
Treasury Secretary Timothy Geithner, left, talks with National Economic Council Director Lawrence Summers in the Rose Garden of the White House, May 22, 2009.
Treasury Secretary Timothy Geithner, left, talks with National Economic Council Director Lawrence Summers in the Rose Garden of the White House, May 22, 2009.   (AP Photo/Haraz N. Ghanbari)
« Prev« Prev | Next »Next » Slideshow
To report an error on this story, notify our editors.
A snapshot of the day's best news stories.
 
COMMENTS
Showing 3 of 9 comments
kokuaguy
Jul 12, 2009 7:46 AM CDT
Robert Reich sets out the arguments pretty well. "Some, and usually conservative, highlight the "moral hazard" problem: bail people out and the negative consequences of bad decisions are never born, which in turn facilitates bad behavior as surely as giving an alcoholic a drink. That was the crux of the debate over what happened with Bear Stearns in March of this year. On the other side, and usually liberals, are those who say that one of the primary roles of government is to step in when the free-market fails or when it manifestly allocates finite resources in such an unequal fashion that it creates both injustice and rifts in the precious social fabric that supposedly holds us together." My take is that the so called moral hazard argument makes the least sense when applied to small businesses. An individual entrepreneur who is given a "bailout" at this point will most likely use it to set the business on a footing that has the greatest chance of weathering the storm and coming back strong. It's a matter of survival.
kokuaguy
Jul 12, 2009 7:26 AM CDT
Can't wait for 2010 as well, Noba-- you however will be sorely disappointed. Mark my words.
ABO_2012
Jul 11, 2009 5:29 AM CDT
Robert_Dada. 1. YOU can thank the likes of Frank, Dodd, Reid, and Princess Pelosi for the current economic mess since they refused several requests by the Bush administration to have the government exercise more oversight over Fannie and Freddie (while Frank was humping a former Fannie--no pun intendend--exec). 2. Name a tax that the government purported as temporary which was, indeed, temporary.

 
small businesses • Treasury Department • small business • Larry Summers • bailout • Obama administration • Timothy Geithner • TARP

More Newser Stories

Eastwood: I'm Not Politically Affiliated With Obama

Geithner: Obama Won't Ask Me to Stay

Taxpayers Still Have $132.9B Stuck in TARP

Fannie Mae Needs Another $7.8B

Occupy Side Effect: 21 Cafe Workers Lose Jobs
NEWS FROM OUR PARTNERS
Other Sites We Like:   24/7 Wall St.   |   Betty Confidential   |   BuzzFeed   |   Cracked   |   Fark   |   Timelines   |   The Frisky   |   Geek Sugar   |   NewsOne