Banks Misuse Small Business Fund

Posted 8 years ago

Business FundInvestigators are starting to uncover something that small community banks did with government funds. The banks used the funds, which they were supposed to lend to small businesses as part of a program by the Obama administration, to pay-off the bail-outs that were given to them during the recession. The investigators found that the misuse covers more than $2 billion of the government fund that was set aside for the program.

According to Jose Pagliery of CNNMoney, “A significant number of banks used the small business lending program “to exit TARP using government funds… with little resulting benefit for small businesses,” according to the report’s author, Christy Romero, special inspector general for the Troubled Asset Relief Program.”

Because the program’s rates were a lot lower than the rate for the TARP funds that they were given, the banks opted to use it instead. All that they had to do was prove that they have been lending to small businesses.

You can read the full story here.

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