Hensarling: We Don't Need A TARP For Small Business

WASHINGTON — Congressman Jeb Hensarling, the top Republican on the House Financial Services Subcommittee on Financial Institutions and Consumer Credit and a former member of the Congressional Oversight Panel for TARP made the following statement at today’s House Financial Services Committee hearing on small business lending:

“Thank you, Mr. Chairman.  It’s another day and another opportunity to borrow $30 billion dollars we do not have, to borrow it from the Chinese and send the bill to our children and our grand-children.  The American people are increasingly asking, ‘What part of broke doesn’t this Congress understand?’  In just the last two years, the deficit has exploded, increased ten-fold, the national debt is tripling before our very eyes.  By the end of the decade, under CBO score, we will be paying almost a trillion dollars a year in interest alone, on the national debt.  We have to go back to World War II to find such debt-to-GDP ratios as what we are soon to see in the United States of America.  By the end of the decade, they will be rivaling those of Greece, and we know what is occurring in Greece.”

“Moody’s, not generally known for their pessimism, has stated that the US could soon lose its triple-A bond rating.  And in a first, recently, the bond markets during a debt offering seemingly showed that they had greater confidence in Warren Buffett’s Berkshire Hathaway repaying their debt than in the United States government repaying theirs.  So after a $700 billion TARP program, which has now morphed into little more than a revolving bailout fund for the administration, after a $1.2 trillion stimulus plan, which has stimulated our national debt, but otherwise leaves us mired in double-digit unemployment, highest in a generation, we have the next idea of the same philosophy, that seemingly, you can borrow, spend, and bailout your way into economic prosperity.  Although the $30 billion proposal is called SBLF, it reads like T-A-R-P to me.  This is TARP’s capital purchase program without the accountability, and with an incentive to lend.”

“But we have to look carefully at the incentive.  Will taxpayers end up subsidizing banks to lend to businesses that they are soon to lend to anyway?  Or, perhaps more ominously, reminiscent of the Government Sponsored Enterprises, is this an incentive to lend taxpayer money to marginal borrowers who may not be credit-worthy?  The preponderance of the evidence points to a lack of credit-worthy small business demand, not a lack of community bank capital supply, as the primary challenge that we face in our nation.  And until this Congress ceases its spending spree, its bailouts, its threatened higher health-care costs, its threatened higher energy costs, more small business taxes, regulatory uncertainty, and the list goes on, that is unlikely to change.  I yield back, Mr. Chairman.”

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