Obama Shifts Bailout Focus to Small Biz

President Announces Plan to Extend More Aid to Community Banks as Relief for Big Firms Winds Down

(CBS/AP)  Updated at 3:01 p.m. EDT

President Barack Obama unveiled plans to refocus spending of the government's $700 billion financial bailout away from Wall Street's big financial institutions and toward small businesses on Main Street.

Speaking in a small business near Washington, Mr. Obama said the initiatives would make it easier for smaller community banks to provide credit to small businesses, which have been hard-hit by the financial crisis. The president's plan also includes a request that Congress increase caps for existing Small Business Administration loans.

"Over the past decade and a half, America's small businesses have created 65 percent of all new jobs in the country," Obama told about 150 employees in a warehouse at a storage business filled with rows of boxes three-stories high.

"These companies are the engine of job growth in America," he said. "They fuel our prosperity. And that's why they have to be at the forefront of our recovery."

Mr. Obama pitched the plan as a way to create jobs and change day-to-day life.

"These entrepreneurial pioneers embody the spirit of possibility, the tireless work ethic, and the simple hope for something better that lies at the heart of the American ideal. And they have always formed the backbone of the American economy," he said.

"They're the ones who've opened the mom-and-pop stores and started the computer tinkering that has led to some of the biggest innovations and corporations in the world. After all, Hewlett Packard began in a garage. Google began as a research project. And McDonald's started with just one restaurant."

The president called on lawmakers on Capitol Hill to increase the maximum size of loans small businesses can receive. The administration's plan would also provide infusions of money to small banks at low rates, provided they agree to increase lending to small businesses. Financial institutions, including credit unions and banks, that serve low income areas would also get help at even lower rates to help small businesses in the hardest-hit rural and urban areas.

The administration was not prepared to place a cost on the small bank assistance program. An administration official said Treasury wanted to consult with small banks to determine what the level of participation might be. The bank help would tap money still available in the $700 billion rescue fund.

The fund, knows as the Troubled Asset Relief Program, is set to expire at the end of the year. The administration, however, could ask for an extension until next October. The administration official, who requested anonymity because he was speaking ahead of the president's announcement, would not say whether the administration would seek the extension.

Bank industry officials predict the small bank program would have to extend into next year to function.

Mr. Obama is facing pressure from liberals, who want to refocus the massive financial bailout more toward reducing foreclosures and creating jobs, and from Republicans, who are pressing the president to end the rescue plan and use bank repayments to reduce the national debt.

A new report released Wednesday by the inspector general of the Troubled Asset Relief Program gave the bailout effort mixed reviews. TARP watchdog Neil Barofsky said the rescue package pulled the country back from the brink of financial collapse but also engendered public anger over the seeming disconnect between Wall Street and average Americans, underscored by the continuance of lavish corporate bonuses.

During and appearance on CBS' "The Early Show", Barofsky gave the bailout an "incomplete" report card and said it was "unrealistic" for Americans to expect to recoup all of the money doled out to stave off further crisis.

An administration official said the Treasury Department intends to wind down and terminate bailout programs launched at the height of the financial crisis to stabilize Wall Street and aid the struggling auto industry.

[sandrahecker10]

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[Treadlightly2]

Tons of work available at FedBizOpps.gov

And it will only take you 3 or 4 years to wade through all the red tape required to qualify...

Happy Days..wooo..hooo!

[wheresmycountry]

The problem with the Small Business Administration is that they only lend money to small businesses with good credit. If my credit was good, I could go to a bank. Why would I need the federal government? People who go into business for themselves are tough, proud, and generally optimistic. This is a formula for temporary shortages of cash that lead to bad credit. That bad credit means we can't support our businesses through tough times, moves and reorganizations.

If GM could lose billions over decades, I should be forgiven a run of late car and utility payments, and helped to continue to contribute to America's dwindling manufacturing sector. I'm on the edge of ruin, and the brink of success. I hate suffering alone knowing corporations who hurt thousands are given a free ride.

[spaceatoms]

No it should be 64.9 percent, they have no idea, and I laugh everyday at the speeches of Obama although I do like his candor because I do the same thing to win over people at work,but its over, the bailout was wrong, as an owner of a business, and a successful one, I wake up everyday prepared to shut my doors if you can put me out of business, and then I see millions excuse me billions of dollars wasted on a losing company AIG and still losing so investors can get a return without any physical or mental work. The best thing for the country would have been a minor meltdown with the DOW going to 2000 to 3000 for around 5 to 10 years as the power shifted to some new bright executives in their 20's and a new set of rules for Wall Street, gas is going right back up to 5.00 as the speculation continues amazingly, I would rather just have the government buy the oil directely from Saudi. Bill Gates and Einstien and I can run off more names both made most of their discoveries in their 20's amazingly, we have to allow a power shift to the young brilliant people in this country, the compensation packages are ridiculous and why Warren Buffet cares when he is 75 is hilarious!

[bubbadubba]

"Over the past decade and a half, America's small businesses have created 65 percent of all new jobs in the country,"

But Limbaugh says "when was the last time a poor person gave you a job?"
Only the ultra rich and wealthy hire people, right Rush?
Rush Limbaugh.......................
LOL

[doc_holliday76]

"Over the past decade and a half, America's small businesses have created 65 percent of all new jobs in the country,"
------------------------------------------





This just goes to show everyone that it is small businesses in America creating jobs here, while corporate America has been getting all the breaks to create jobs in "Chindia."

Small businesses need more tax breaks and an easier line of credit in order to create more of those "liveable wage" jobs!

Screw corporate America!

[stuart-johns2]

Well, it seems Obama is beginning to get with the real program here. About time too.

[sjc_1]

TARP was meant for buying Troubled Assets, but Paulson put in the provision to buy stock. So, just after it started, he began buying big bank stock and telling small banks that they would just have to be bought buy big banks. There would be no help for them.

[stuart-johns2]

And is Paulson still around?

[chonder2]

ATTENTION PLEASE- ALL LARGE US BANKING INSTITUTIONS:

Will the management of the above mentioned institutions please bath before reporting to work each morning.Since the American people have to kiss your a$$es to get you to do what's right, we want them to be nice and clean. Thank you.

[hologram5]

I think they should have just let them fail to begin with. Obviously we would have bounced back in time and the economy would have been stronger for it.

[banders6]

Why do banks get grants and businesses get loans from these banks that they have to try to pay back or go bust? Why doesn't the Fed cut out the middle man and give it to businesses and save all the million dollar bank bonuses?