Bill creating $30B lending pool for community banks at impasse in Senate over amendmentsBy Stephen Ohlemacher, AP
Wednesday, July 28, 2010
Small business lending bill at impasse in Senate
WASHINGTON — Senators struggled to reach agreement Wednesday on a bill that would create a $30 billion government fund to help community banks increase lending to small businesses.
Democrats say banks should be able to use the lending fund to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets. The fund would be available to banks with less than $10 billion in assets.
Some Republicans likened the fund to the unpopular bailout of the financial industry.
Democrats and Republicans were negotiating a handful of amendments with the goal of scheduling a vote on the bill. Both party leaders, however, said they were at an impasse Wednesday evening, just before the Senate adjourned for the day.
The talks played out as President Barack Obama traveled to Edison, N.J., where during a visit to a sandwich shop he urged the Senate to abandon partisanship long enough to pass the bill.
“Everywhere I go, I hear from small business owners who simply cannot get the credit they need to hire and expand,” Obama said. “And we’ve been hearing from smaller community banks that they want to lend to these folks but need more capital to do it.”
“The initiatives in this bill will help them meet those challenges,” the president added.
The measure is part of a bill that would also provide a series of tax breaks aimed at small businesses. The House passed a similar bill in June.
The lending fund overcame a Republican filibuster in the Senate last week, but Republicans wanted to add a handful of amendments before voting on the final bill. GOP amendments included measures to beef up border security, impose a government spending cap and lower the estate tax, which is scheduled to return next year with a top rate of 55 percent on estates larger than $1 million.
One Republican amendment would repeal a new tax reporting requirement for businesses that was included in the massive health care overhaul enacted last spring.
Democrats, meanwhile, have added about $1.5 billion in disaster relief for farmers who lost crops in 2009, a measure sponsored by Sen. Blanche Lincoln, D-Ark.
Democrats also want to add an amendment to settle long-running class-action lawsuits brought by black farmers and American Indians. One lawsuit concerned the government’s management and accounting of more than 300,000 trust accounts of American Indians. The other is a discrimination lawsuit brought by black farmers against the Agriculture Department.
The cost of settling the lawsuits is about $4.6 billion.
If Senate leaders don’t reach agreement on the amendments, Senate Majority Leader Harry Reid, D-Nev., has scheduled a vote to end debate for Thursday morning.
The underlying bill would combine about $12 billion in tax breaks aimed at small businesses with $1.5 billion for states to support small business lending programs.
There are tax breaks for restaurant owners and retailers who remodel their stores or build new ones. Other businesses could more quickly recover the costs of capital improvements through depreciation. Long-term investors in some small businesses would be exempt from paying capital gains taxes.
Much of the bill would be paid for by allowing taxpayers to convert 401(k) and government retirement accounts into Roth accounts, in which they pay taxes up front on the money they contribute, enabling them to withdraw it tax-free after they retire. Taxpayers who convert accounts this year would pay the taxes in 2011 and 2012, generating an estimated $5.1 billion.
Tags: African-americans, Barack Obama, North America, Small Business, Small Business Financing, United States, Washington