Lankford Says Geithner, Obama Administration Are "Out of Touch' With Small Business, Community Banking

Statement

Congressman James Lankford (R-OK) said that President Obama and his administration are disconnected from the challenges that face community banks when they lend to small businesses.

During a hearing of the Senate Committee on Small Business and Entrepreneurship on Tuesday, Treasury Secretary Timothy Geithner stated that "you can't force banks to lend." Geithner made this assertion in defense of a Treasury Department small business lending program that resulted in a negligible amount of funds actually making it into the financial system.

"This is a laughable statement from Secretary Geithner," said Congressman Lankford. "Success in banking depends on a healthy flow of new loans; that is how they build a successful company. If banks are not lending, then maybe Secretary Geithner should examine the financial policies promoted by his department."

Lankford said that these views demonstrate that President Obama and his administration are out of touch with the challenges community banks face as they try to increase lending to small business. The fund was equipped with $30 billion, which was designed to infuse community banks with additional capital in an effort to spur lending. However, when the program's life cycle expired last month, only $4 billion in the fund had been distributed. Even worse, $2.2 billion of distributed funds had been used to help banks refinance any outstanding debt to the Troubled Asset Relief Program (TARP).

"This program is just another example of a poorly-designed federal scheme that underscores how little Washington knows about the private sector," said Congressman Lankford. "The Treasury Department created a flawed program that never had a chance to succeed. Secretary Geithner's comment during the hearing that he is "not aware of a more effective way that this,' shows his lack of understanding of community banking.

"Community banks do not want government money and all the surrounding red tape. They want the freedom to lend and do business," Lankford continued. "They want to develop relationships in their community and help their neighbors start businesses, expand operations, plant crops and achieve their goals. Community banks did not cause the housing crisis, but they have experienced the heat from someone else's fire. Slow lending and decreased economic activity in towns across America are the direct results of Washington attempting to micro-manage the affairs of private enterprise.

"Bankers and business leaders in Oklahoma tell me constantly that our giant federal regulatory structure hurts their companies," he added. "Every banker I speak to tells me that the key impediments to lending are the rapidly changing regulatory environment and excessive second guessing of risk by examiners. Each day, new regulations are written in accordance with the Dodd-Frank regulatory overhaul.

"This is a death by a thousand cuts. Now bankers have to hire more compliance officers and fewer loan officers. They spend countless man hours attempting to navigate an ever-changing regulatory maze. Local banks are part of the core fabric of small communities across the nation, and they need help -- not punishment. It is time for Washington to abandon its top-down approach to micro-managing our economy and let community banks focus on growing the local economy," Lankford concluded.

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