Congressman Mike Turner, a senior member of the House Oversight and Government Reform Committee (OGR), submitted the following statement for the record as the Committee held a hearing on “Broken Promises: the Small Business Lending Fund’s Backdoor Bank Bailout.” In his statement Turner, criticizes the Small Business Lending Fund (SBLF), which was created by the Democrat-controlled House as part of the so-called “Small Business Jobs Act of 2010.” The intent of the fund was to increase “the availability of credit to small businesses.” However, the resulting program was simply a slush fund for bailed-out banks to use in avoiding repayment of their debts to the taxpayer.
Statement for the Record
House Committee on Oversight & Government Reform
Full Committee Hearing
“Broken Promises: the Small Business Lending Fund’s Backdoor Bank Bailout”
April 24, 2013
Congressman Michael R. Turner (OH-10)
Mr. Chairman, today’s hearing continues our Committee’s important work to investigate waste, fraud, and abuse in the federal government. The topic of discussion today, the Small Business Lending Fund (SBLF), was created by the Democrat-controlled House as part of the so-called “Small Business Jobs Act of 2010” with the stated goal of increasing “the availability of credit to small businesses.” However, the resulting program was simply a slush fund for bailed-out banks to use in avoiding repayment of their debts to the taxpayer.
As some of our colleagues stated during debate on the bill that created this $30 billion account, the SBLF was no more than another unwise, taxpayer-funded bailout – “this is TARP, plain and simple” as now-Chairman of the Financial Services Committee, Mr. Hensarling, described it at the time. Moreover, we saw strong opposition by Democrats and the Administration as to placing responsibility for oversight of the SBLF with the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). However, we are here today because, at least in part, of the failures of the Treasury Department to properly administer the SBLF and using it to let TARP recipients off the hook.
As noted in the SIGTARP audit entitled Banks that Used the Small Business Lending Fund to Exit TARP, two-thirds of the $4 billion disbursed by Treasury from the SBLF went to TARP banks. Rather than using those funds to create jobs or institute a meaningful expansion of small business lending, Treasury allowed these TARP banks to use eighty percent of their SBLF funds to pay-off – or more accurately, refinance – the debts they owed to taxpayers under TARP. The lower interest rates for the SBLF when compared to the interest rates of TARP, as well as the absence of restrictions on luxury expenditures, executive compensation, and governance in the SBLF allowed bailed-out banks to skirt oversight safeguards in TARP and short change the taxpayer on their debt.
Mr. Chairman, thank you for holding this important hearing today to examine this clear mismanagement of taxpayer dollars and to hear from SIGTARP experts on the failures of the Treasury Department in administering this multi-billion dollar bailout. I would also like to thank Christy Romero, the Special Inspector General for TARP and our witness here today, for her continued work on behalf of the American people to bring accountability and transparency to these programs.