WASHINGTON — President Barack Obama freed billions of dollars to help the nation’s small businesses Monday, hoping to get credit flowing again to Main Street, not just Wall Street. He heaped praise on the little guys of American industry, often overshadowed in the blitz of government bailouts.
The centerpiece of Obama’s latest plan will allow the government to spend up to $15 billion to buy the small-business loans that are now choking community banks and lenders. That, in turn, could allow those banks to start lending money again to small companies to invest, pay bills and stay afloat.
“You deserve a chance. America needs you to have a chance,” Obama said.
Obama’s effort was, at one level, fundamental to helping the economy rebound. Small businesses have created about 70 percent of the new jobs over the past decade, and as their credit lines have dried up, so has their ability to thrive or survive.
There was also a political component to all the attention the president gave to small businesses. The White House is aware of the nation’s bailout fatigue; hundreds of billions of taxpayer dollars have gone to prop up financial giants that made poor decisions, while many others who have done no wrong have paid the price.
Obama said small businesses “are the heart of the American economy,” “the heart of the American dream” and the core of “America’s story.”
Meanwhile, the president pledged to try to stop American International Group, the bailed-out insurance giant, from paying $165 million in executive bonuses.
Obama’s primary focus was on leaders of small companies and community lenders. He met with some privately in the White House’s Roosevelt Room and cited their stories as inspiration as he announced his details in the East Room.
Normally, primary bank lenders can issue loans to small businesses and then sell those loans to what’s known as a secondary market of bigger bankers. The sales allow the community lenders to make even more loans and keep the credit cycle going. But that isn’t happening. Skittish investors have been staying away.
So under Obama’s plan, the government will start buying up many of the loans directly.
