Thursday, Oct. 22, 2009 | 2:05 a.m.
One major drawback of the federal government’s $700 billion bailout of the nation’s major banks has been the failure of those financial institutions to lend money to small businesses battered by the deep recession. The inability to access loans has made it virtually impossible for those businesses to rebound and hire new workers, which has contributed to double-digit unemployment rates in Nevada and elsewhere.
That is why Congress should endorse measures unveiled Wednesday by President Barack Obama that would make it easier for small businesses to borrow the money they need to expand.
One proposal would give community banks access to existing federal bailout money at low interest rates as long as those banks step up efforts to make small-business loans. Obama also asked Congress to increase the maximum amount of loans available from the Small Business Administration.
The president gave lawmakers ample reason to adopt these proposals when he reminded an audience in Landover, Md., that in the past 15 years, small businesses have created 65 percent of the nation’s new jobs.
Obama said: “These companies are the engine of job growth in America. They fuel our prosperity. And that is why they must be at the forefront of our recovery.”
We couldn’t agree more.
As Congress considers the proposals, though, it should make sure the lending programs are as transparent as possible so the public can see evidence that small businesses are being helped.
The lack of transparency is one of the reasons many Americans questioned the bailouts of big banks. Under the Troubled Asset Relief Program, created during the Bush administration, those banks were not required to disclose how they used the bailout money.
Community banks should be more than willing to participate because their future relies heavily on the success of surrounding small businesses and the strength of their cities’ economies. As those businesses secure loans, they should be able to regain their footing, enabling Las Vegas and other struggling cities to fully participate in the nation’s economic recovery.