TARP Lending Programs Curtailed
By DEBORAH SOLOMON - july 21, 2010
WASHINGTON—The Treasury Department, under Congressional orders to shrink and end sooner the much-maligned Troubled Asset Relief Program, plans to curtail two programs originally intended to help consumer and small-business lending.
Treasury officials say they plan to end a long-delayed, never-utilized $30 billion program designed to boost small-business lending and cut the amount of money available for a Federal Reserve lending program.
The Treasury will also stop creating any new programs to stabilize the financial sector.
The moves are expected to have minimal impact since the programs were not being used to the extent originally envisioned.
The Fed's Term Asset-Backed Lending Facility, which provided financing to bolster issuance of consumer and business loans, was used less than anticipated after markets stabilized.
The Treasury's small-business program, which never got off the ground, is expected to be replaced by a $30 billion lending fund. The House has already authorized the fund and the Senate could vote this week.
The Treasury's steps stem from a provision of the recently passed financial overhaul requiring the Treasury to cut TARP's spending authority to $475 billion from $700 billion and cease spending on new any programs. The provision brings forward the end of the government's ability to use TARP to fund any new programs retroactively to June 25 from Oct. 3.
The early end of TARP was included during last-minute negotiations between House and Senate leaders as a way to help pay for the new financial regulation. The nonpartisan Congressional Budget Office estimates it will save the government $11 billion.
President Barack Obama is expected to sign the legislation into law Wednesday.
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WASHINGTON (Reuters) – President Barack Obama on Saturday accused Republicans of holding American small businesses "hostage to politics" after Republican senators refused to back a $30 billion small-business lending package.
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