Chicago Sun-Times
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Obama: Send $30 billion big bank bailout money to community lenders for small business


President Obama devoted the biggest portion of his first State of the Union address on Wednesday night to various aspects of job creation. While I appreciate Obama's aspirational and inspirational speeches -- in Cairo on Islamic relations and in Oslo on waging war, to name two standouts -- I welcome some nitty-gritty coming from the president.

Even if the speech had not come at the lowest point of his one-year presidency, jobs would have had to be the main focus.

Obama rightfully claimed credit for pulling the nation back from the brink of a depression in his first year in office. Still, the national unemployment rate is hovering at 10 percent -- 11.1 percent in Illinois -- and no one is predicting the numbers will get better in the months ahead. As long as people are nervous about their jobs -- or don't have one --Obama has a problem.

One of the most intriguing proposals Obama put on the table is taking $30 billion in TARP money and channeling it to community banks. The aim is to take money set aside to bail out the big banks and send it to small banks in order to stimulate small business lending and, in turn, spark hiring.

The Troubled Asset Relief Program was created under former President Bush as the economy was crumbling in 2008. Irresponsible financial institutions that brought on the recession with the subprime mortgage crisis were deemed too big to fail. AIG, Citigroup and Goldman Sachs were rescued, and stories about big bonus checks going to executives infuriated the public -- and frustrated the Obama administration.

There were no details offered up on Wednesday night on the TARP proposals. Jason Furman, deputy director of the National Economic Council, said they would be released in the coming days. Another appeal of sending out TARP money -- that is, with a mandate to make small-business loans and not stash the cash -- is that it can kickstart job creation faster than tax cuts or credits.

Obama is also proposing a series of tax incentives to bolster small business and help middle class families -- but most of them would not be effective in 2010.

On the political side, retooling TARP -- redirecting the money from Wall Street to Main Street -- also has populist appeal that may tamp down the anger that has contributed to Obama's low favorability ratings and raised questions about his ability to deliver change.


Redirecting this $30 billion is a step in the right direction, but it should be a lot more. The big banks aren't lending, but community banks will. Unfortunately, $30 billion won't create many jobs.

Your Readers might be interested in joining our new Centrists Group at Linked In and taking a look at my new blog for Centrists, The Rest of U.S.

Extremists have become so loud, they’re deafening, and the media birddog their every rant, however irresponsible or outrageous. But we believe the political tide’s about to turn with a vengeance.

No matter their party affiliation or lack thereof, Americans are disgusted with those who harass to harass, obstruct to obstruct, tear down to tear down. Compromise, consensus, bridge-building, and respect for differing viewpoints have been the hallmarks of American life as long as there’s been an America and will be again.

Please read: The Rest of U.S. – Who We Are and What We Stand For

If you like it, please circulate to your family, friends, and colleagues. Or perhaps to your favorite extremist!

Billions of dollars given to big banks or small banks; it doesn't matter. Main street and the local small businesses will never see it.

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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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About this Entry

This page contains a single entry by Lynn Sweet published on January 28, 2010 6:32 AM.

President Obama official schedule and guidance, Jan. 28, 2010. Tampa town hall was the previous entry in this blog.

Chicago-St. Louis high speed rail corridor in line for $1.1 billion from Obama is the next entry in this blog.

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