WASHINGTON (AP) — A measure creating a $30 billion fund to help community banks increase lending to small businesses overcame a Republican filibuster Tuesday night in the Senate.
Democrats projected that banks would use the fund to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets.
The measure, supported by President Barack Obama, will be added to a bill providing a series of tax breaks aimed at small businesses, which could come up for a vote in the Senate next week. The House approved a similar lending fund in June.
“One of the biggest hurdles is the ability for businesses to secure loans or investors,” said Sen. George LeMieux of Florida, one of only two Republicans to vote in favor of the measure. “This bill primes the engine for investment.”
Other GOP lawmakers called the bill another bank bailout that would do little to increase lending to small businesses.
“I believe that American taxpayers have lost their appetite for bank bailouts,” said Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee.
But Sen. Mary Landrieu, D-La., chairwoman of Senate small business committee, spent much of Thursday on the Senate floor arguing in favor of the lending fund. She fumed at the comparison to the bank bailout.
“Contrary to what some are saying about this lending fund, this program is not to bail out the big banks, it is for the small businesses across this country,” Landrieu said. “We are simply using the healthy community banks as a conduit to get money flowing to these businesses.”
Democrats said the fund would be available only to banks with less than $10 billion in assets.
The measure cleared the GOP filibuster by a vote of 60 to 37, getting the minimum votes needed. LeMieux and Sen. George Voinovich of Ohio were the only Republicans to join Democrats in voting to advance the measure.
Banks that tap the fund would issue preferred stock to the Treasury Department, paying dividends based on how much they increase lending to small businesses. The more they lend, the lower the payments.
The nonpartisan Congressional Budget Office estimated that the fund would generate a $1 billion profit for the government over the next decade, from loan repayments and dividends.
Copyright 2010 The Associated Press.