WASHINGTON (AP) -- The Obama administration announced Monday that the 21 largest banks receiving government money must report monthly on how much lending they do to small businesses.
All other banks getting taxpayer help are being asked to report quarterly on small business loans. Even banks that are not taking government funds are being told by the administration to "make an extra effort'' to increase small business lending.
The announcement was part of a broad package aimed at boosting the credit available to struggling small business owners that President Barack Obama and Treasury Secretary Timothy Geithner were unveiling in an East Room ceremony. The White House figures that making billions in federal loans available to small businesses was one way to address misgivings over the widely unpopular bailout program, which has sent hundreds of billions to large financial institutions like Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. with few strings attached.
At the same press conference, President Barack Obama said his administration will ``pursue every legal avenue'' to stop insurance giant American International Group from paying $165 million in executive bonuses.
Obama made the declaration at the outset of an appearance at the White House to announce new steps to ease loans for small businesses hurt by the economic crisis.
Obama said he has asked Treasury Secretary Timothy Geithner (GYT'-nur) to use the leverage of government assistance to AIG to get the company to roll back the bonuses. He said the company cannot justify ``this outrage to the taxpayers'' who are keeping it afloat.
The rescue program has appeared to do little so far to loosen credit, the lifeblood of the American economy.
In brief comments Monday morning with Geithner before the official announcement, Obama called small businesses ``one of the biggest drivers of employment that we have.'' He said he had pressed his economic team to specifically help owners of small businesses and get credit flowing to them again, and he called the newest initiatives only a first step.
The measures includes $730 million from the stimulus plan to immediately reduce small-business lending fees and to increase the government guarantee on some Small Business Administration loans to 90 percent. The government also is taking aggressive steps to boost bank liquidity with up to $15 billion aimed at unfreezing the secondary credit market.
Often primary bank lenders will seek to sell the SBA loans in the secondary market, allowing them to use the proceeds of the sale to make new loans to other small business owners, but skittish investors have been staying away. Under the administration's initiative, the government will step in to buy these loans to help unlock the frozen credit market, using money from the recently passed bailout package in the range of $10 billion to $20 billion, one official briefed on the plan said.
While the SBA typically guarantees $20 billion in loans annually, new lending this year is on track to fall below $10 billion, according to the administration.
The reporting requirements for financial institutions receiving government bailout funds are the first, the White House said.
The plan comes amid Republican efforts to cast doubt about Obama's ambitious budget, in particular the proposal to raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000. Those provisions also hit small businesses.
Geithner also ordered the Internal Revenue Service to issue a series of new rules for temporary but significant tax breaks, meaning that small businesses:
_That earn up to $15 million will be allowed to claim losses for the past five years in the current tax year;
_May write off up to $250,000 in investments this year.
_Can reduce estimated tax payments to 90 percent of the previous year's filing.
_Are allowed to take larger depreciation deductions within the first year of property purchases.
_And will see 75 percent of capital gains excluded for those who invest in small businesses.