Listen to Senator Murray and Secretary Geithner’s exchange on community banks and support for Main Street.
(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA) aggressively questioned U.S. Treasury Secretary Timothy Geithner on fiscal policies that she believes have focused too heavily on Wall Street at the expense of Main Street at a Senate Budget Committee hearing. In an effort to address concerns on Main Street, Murray, the second-ranking Democrat on the Committee, pushed Secretary Geithner to support her community bank legislation that will help small businesses get the loans they need to hire, will help banks teetering close to failure, and will speed economic recovery in Washington state. Geithner pledged to work with her.
“Assistance was immediately provided to Wall Street, but a year later it remains absent on Main Street,” Murray said to Geithner. “And I’m angry – especially when I see that Wall Street banks have returned to profitability and a ‘Bonus-As-Usual’ mentality.
“The American dream of owning a home, running a business or going to college is still alive in communities across the country – but it’s been put on hold due to an almost exclusive focus on Wall Street at the expense of Main Street. If we’re serious about expanding credit availability to small businesses, stabilizing the housing market, and accelerating job creation, we’ve got to strengthen community banks in a more permanent way.”
Senator Murray’s community bank legislation differs from similar efforts introduced by colleagues and the administration because it brings together TARP funding with funds from private investors to remove troubled assets from the books of community banks. Murray’s approach offers a more permanent solution for community banks who, because of the presence of troubled assets on their balance sheets, have had to raise significant capital and cut back on lending in their communities.
See more information on Senator Murray’s bill.
At today’s hearing, Senator Murray noted that over the course of the past year, six community banks in Washington state have failed. She also used the example of a Washington state community bank that has just been ordered by the Federal Deposit Insurance Corporation (FDIC) to raise capital and which has cut back on lending due to bad commercial real estate loans to illustrate the need for her approach.
After Senator Murray laid out the situation many Washington state community banks and her concerns that we need to take an approach that addresses the root cause of the problem – the troubled assets that are hindering lending – Secretary Geithner agreed with her assessment of the problem and committed to work with her.
“I know you have thoughtful legislation in this area designed to try to get directly at the legacy assets that are still on the books of the banking system,” Geithner said in response to Murray’s concerns. “….I completely agree with you about this concern. We share the basic objectives.”
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