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Project on Government Oversight
 

 

 

 

POGO Urges Congress Not to Reduce Oversight for Small Business Bailout Program

March 22, 2010 

 

A recently proposed bailout program for small businesses should not be exempted from oversight rules established under the Troubled Asset Relief Program (TARP), POGO said in a letter sent today to the House Committees on Financial Services and Small Business.

According to the administration's legislative proposal, the Treasury Department would transfer $30 billion from TARP into a new Small Business Lending Fund (SBLF) that will be used to encourage community banks to lend more to small businesses. Treasury seeks to separate the program from TARP in order to "encourage broader participation" from banks that might otherwise be hesitant to comply with the rules and restrictions that come with accepting TARP capital.

POGO urged Congress to exercise caution before agreeing to exempt the SBLF from TARP oversight rules designed to safeguard the interests of taxpayers and to ensure that the funds reach their intended recipients. The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) has also raised red flags about this program, stating that Treasury's proposal to circumvent TARP is all the more surprising given the striking similarities between the SBLF and the TARP's Capital Purchase Program.

If the SBLF is created outside of TARP, the program should still be governed by comparable oversight rules: for instance, recipients should be required to report on how they actually use the funds, and Treasury should be required to document any communications with outside parties seeking to influence the SBLF investments. POGO also called on Congress to grant explicit oversight authority to the appropriate watchdog, be it the SIGTARP or the Treasury Department Inspector General, and to give it all the tools and resources it needs to root out waste, fraud, and abuse in the program.

“A bailout program for small businesses still needs big oversight,” said POGO Executive Director Danielle Brian. “Congress should think twice before allowing banks to circumvent rules that were put in place to make sure taxpayers don’t get taken for a ride.”


Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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