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Public Statements

Small Business Lending Fund Act Of 2010 -- Resumed

Floor Speech

Location: Washington, DC


Ms. CANTWELL. I thank my colleague from Washington. I know she too has been very active in this issue and has spoken on it and has urged our leadership, in signing a letter, I believe probably 6 months ago, that we pass this legislation. I wish to thank again the chair of the Small Business Committee for her advocacy.

This literally is an issue about Main Street versus Wall Street. This is about whether we are going to help Main Street in tough economics times, or whether we are going to continue to say that Wall Street gets the ear of Congress.

I am someone who didn't vote for either of the TARP pieces of legislation. I know my colleague, Senator Shelby, the ranking member of the Banking Committee, was here speaking about this. I can assure my colleagues that this legislation is focused at the problem that was caused by Wall Street. Many people across America are asking when we are going to stand up for small businesses in America and help Main Street recover from this economic disaster.

How did we get into this situation? We got into this situation when large banks failed because of their active participation in things such as credit default swaps and other derivatives that weren't truly backed by financial commitments and basically became a house of cards, and they brought down our entire economic system.

So what was our response to that? Our response to that was to bail out the big banks and give them assistance.

What happened to the community banks? As deposit insurance basically was paid out in various forms, that said to those community banks: You now have to have higher capital standards. Can my colleagues imagine that? Can my colleagues imagine that? We had big banks such as Goldman Sachs and others that basically had imploded and we gave them taxpayer money and, basically, then said to the community banks: You need to have more capital within your banks. That is what we said.

So what did those community banks do when regulators told them they had to have higher capital requirements? They did what many of them only had one choice to do, which was come up with situations to either get more capital or stop their lending. The consequence is that there was a lot of lending that was done to small businesses that suffered as a consequence of those actions. Imagine that. The practices of the larger banks of investing in credit default swaps and derivatives that had no basis ended up costing small businesses their access to capital because capital requirements were put on small businesses through their banks at the same time large banks were given a bailout.

So no, no, this is not a bailout. This is about a lending program for small business to save Main Street and save our economy, because this Senator believes that job creation happens from small business. That is a proven fact. Seventy-five percent of the increase in jobs comes from small business, but right now they can't get access to capital.

Here is a letter from one of my constituents:

In unprecedented times I am writing to you to express and urge relief for small business owners who are struggling to survive and who can be one of the key factors to improving the U.S. economy. We have been a small business for over 9 years and have 5 restaurants in Washington State and we currently employ 150 people between five operations. Until September of 2008, our business was stable and we were expanding and adding jobs and tax dollars to the State and Federal coffers. But then in September of 2008, after signing a 20-year lease for our first Arby's project--

that is a restaurant--

our lender pulled our financing due to economic conditions. This was the same lender that just 3 months earlier had refinanced over $3 million of our business debt. And even though we had excellent personal and business credit, two business properties as collateral, good cash flow, we were forced to take high-interest equipment leases, advances from credit cards, as well as cash advances with an almost, yes, 50 percent interest rate from finance companies with an 18-month term.

We tried going directly to the bank to finance the company, but we were told we had no options. Instead, the same bank charged an almost 50 percent interest rate through the finance company.

There is nothing worse to an entrepreneur than to have the foundation and determination of their survival caused by this economic calamity and then to feel that State and Federal agencies would rather see your doors shut than work with you. We are honest, hard-working Americans who want to pay all our debt, but these agencies are uncompromising and missing the human factor.

Missing the human factor. Why is it that the other side of the aisle thought it was such a priority to bail out Wall Street, but now a well-crafted piece of legislation that is a lending program that is voluntary--banks don't even have to participate in it if they don't want to; it is not like TARP which was mandated on the banks to participate--why is it the other side doesn't want to see the success of these small businesses?

As my colleagues have said, this program is a well thought out program to help recapitalize the community banks as more requirements were put on to them as it related to the economic crisis of 2008. Imagine that. No questions asked to the big banks; they were given a bailout. Small banks got new capital requirements. They cut thousands and thousands--probably millions--of lines of credit; that is, performing loans to businesses across America were cut out from under them.

The voices are loud and clear across America. They want us to help restore this kind of stability through access to capital for small businesses. This is a program that can generate $1.1 billion to our economy and reduce our Federal deficit. It will help stabilize in a way that these other programs have not been able to do, and it will create the job growth we need to see in America.

I hope my colleagues will support this important legislation. I know some on the other side of the aisle want to name this some other legislation. But the truth is that this is about Main Street, whether one's perspective is that Main Street is going to help us. I believe Main Street will be that job creator. I hope my colleagues on the other side of the aisle will think about this and the consequence of the votes they have already taken. It is so important for us to say that we understand their plight, just like the gentleman's letter that I read. It is important for us to say we understand the frustration they have been through; that we are on their side in making sure small business gets access to capital; and that we believe our economy isn't about the big banks. It is about those millions and millions and millions of entrepreneurs every day who go out there and are hard working and who have been told no, no, no--told even on their lines of credit, no, you can't have access anymore. We need to right that wrong that happened over the last year and a half and get capital flowing again to small businesses.

I thank the Chair, and I thank the chairwoman of the Small Business
Committee. I see my colleague from Washington, who has been outspoken about this since January, the importance of getting this done, and has written many letters to try to emphasize how critical it is to our Washington State economy.


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