Washington (PRESS RELEASE – March 2, 2010) — Rep. Nydia M. Velazquez (D-NY), the Chairwoman of the House Committee on Small Business, delivered the following statement today at a joint hearing with the Committee on Financial Services entitled, “Condition of Small Business and Commercial Real Estate Lending in Local Markets”:
“Earlier this week, the FDIC reported that last year saw the largest annual decline in lending since the 1940s. Since that crisis hit, Congress and the Administration have taken a series of steps aimed at restarting the small business credit market. The TARP program was passed to shore up banks. TALF was implemented to clear out the secondary market for small business lending. The Recovery Act raised the guaranty and cut fees for SBA-backed loans.
“While these steps have helped to spur a rebound, the flow of credit is not where we need it to be. A recent Federal Reserve Survey found that 10.8% of banks had cut small business credit lines over the last quarter. And, SBA-backed lending is still down 30% from 2007.
“Part of the reason that firms continue struggling to find credit has been that most efforts to date focused on getting banks to lend. If we are truly going to open up financing options for small businesses, we need a more balanced approach.
“That does not mean doing more for financial institutions and expecting the benefits to trickle through to small firms. Taking $30 billion and simply handing it to banks – in the hopes that they will make loans – is not sound policy. And, allowing lenders to make fewer loans that are bigger is an equally questionable strategy.
“Until entrepreneurs can go out and find affordable sources of financing, we aren’t going to see the type of job growth our economy needs. Small businesses are our best job creators, producing 60 percent of new jobs. During economic recoveries, this job creating potential is even more important. Following the recession of the early 1990’s, small businesses created 3.8 million jobs. That outpaced big business job growth by half a million jobs. Small firms will lead us out of this recession, too, but, only if we provide them with the right tools and create a credit environment that helps them grow.
“In today’s economy, access to capital is nothing less than the opportunity to create jobs and put Americans back to work. For these reasons, as we pursue policies to get credit flowing again, we must get it right. Our very economic recovery depends on it. It is my hope that today’s hearing will take a hard look at proposals that have been floated and help us make wise decisions as we move forward.”