speaker: mr. president, i wantto join you in welcoming to the white house the leaders ofamerica's small businesses, the community bankers who servethem, and the members of congress who play such aleadership role on small business issues. small businesses are the engineof america's dynamism, you create and sustain most of thejobs in the country, you are the anchor of our communities, andyou are ever more closely linked to the global economy.
when you prosper, the nationprospers, and when the national economy is hurting, you bearthat burden heavily, but you will lead us out of this. we are now more than a year intoa very tough recession. the national numbers are stark,but they cannot capture the damage to a community when afactory has to cut jobs or defer investment or close its doors,leaving families in that town with dreams deferred and less tospend. the national numbers cannotcapture the dashed hopes of the
innovator who has throwneverything into an enterprise only to watch it fail for lackof orders or credit. the president understands thecrucial role that small business plays in america, and that's whywe are moving with exceptional speed to put in place thelargest program of investments and tax cuts since the secondworld war to get americans back to work and get our economygrowing again. that's why we've launched a verysubstantial program to get credit flowing again and toaddress the nation's
housing crisis. that's why the recovery plan andthe president's budget includes additional targeted programs forsmall businesses. these programs include aprovision that nearly doubles to 250,000, the amount of newcapital investment you can write off on your taxes. it includes provisions thatreduce and then all together eliminate capital gains taxes onthe sale of stock and small businesses, a commitment to makehealth insurance more affordable
for small businesses byproviding refundable tax credits, and today the irs willannounce that small businesses will now be able to carry backtheir operating losses five instead of the usual two yearsin order to increase your cash flow -- (applause.) >> -- in order to increase your cash flow as we come out of this periodand allow you to invest more in your operations. now, the president is going tooutline a program of additional
actions in a few minutes, butbefore he does that, and before i introduce our speakers, i wantto deliver a clear message to our nation's banks. across this country thousands ofsmall businesses are finding it harder to get the creditnecessary to stay in business. credit is essential to economicrecovery, and we need our nation's banks to go the extramile in keeping credit lines in place or reasonable terms forviable businesses. when banks individually pullback out of the sense of
prudence and caution, thecollective impact of those actions will make the economyweaker and make each individual bank worse off, because bypulling back on credit, you push businesses to pull back, andthis dynamic can feed on itself. the government of the unitedstates has put in place extraordinary protections forthe banking system so that banks can continue to benefit from lowcost funds, so that they have access to liquidity and capitalthey need, and we need you to put that assistance to work forthe american economy.
many banks in this country tooktoo much risk but the risk now to the economy is that you willtake too little risk. as part of the president'scommitment to increase transparency and accountability,i'm asking for new reporting requirements on small businesslending. we will require the top 21banks, the largest 21 banks in the country that are receivingfinancial assistance from the government to include smallbusiness loans in their monthly reports, and today i am askingour bank regulators to call for
quarterly reporting of smallbusiness loans that we can carefully monitor the degreeof credit that is nowing to our nation's enterprises and smallbusiness owners. (applause.) >> we need every bankin the country to do everything in their power to provide thecredit the small business needs to operate and to expand. you need, you banks need to makethe extra effort to make sure that good loans are getting tocredit worthy small businesses in order to serve the largerpublic good of moving this
nation to recovery. and given the role that manybanks played in causing this crisis, you bear a specialresponsibility for helping america get out of it. now i want to introduce cynthiablankenship, the president of bank of the west, and i want youto hear from her what it's going to take to address thechallenges to community banks and small businesses, not justin grapevine, texas, but in communities across the country.
thank you. (applause.) cynthia blankenship:good afternoon. my name is cynthia blankenship,and i'm vice chairman of bank of the west in grapevine, texas andchairman of the independent community bankers of america. i believe in community bankingand the vital role they play in providing small business creditsin that market. we are so very pleased andgrateful to the administration for recognizing the importantrole that the sba programs play
in optimizing the extension ofcredit to the american entrepreneurs. when my husband gary and istarted our bank in 1986, we decided to develop our niche inthe small business market. we found sba program a valuabletool in providing credit terms complimentary to smallbusiness needs. our bank has been a user of thesba program for decades, from being a top producer to aminimum user. we were the first preferredlender in the north texas area
and used the program extensivelyfor many years. we are proud to use the sbaprogram as a tool to provide capital small business forstart-ups and expansion. we witnessed firsthand how thesba programs contributed to the creation of jobs andopportunities in our market. however, in recent years theprogram became onerous and unaffordable to the borrower. as a bank, we have not been ableto sell the guaranteed portions of the loans in the secondarymarket.
consequently, we are now holdingan inventory, $11 million in loans, that could be used asextensions of credit if we would sell those loans and have thosedollars available. there must be demand inthose markets to maximize this process. we are proud of the positivechanges to the sba program. all community bankers will beencouraged about the opportunities the new programwill afford to leverage credit lending dollars and give thesmall businesses an affordable
way to finance future growth. we looked forward to putting anew program into effect immediately and commend theadministration and the treasury to encourage our borrowers bymaking the program more affordable. this is an incredible tool forcommunity banks nationwide to help jump start the economy andthe credit market. marco lentini:good afternoon. my name is marco lentini, andi'm here today to share
with you my story. it's a story similar to manyamericans, hard-working people across this country, a storymade possible by the american dream. i am the son of twoimmigrant parents. i was raised in the inner cityof south philadelphia. with the support of my familyand a lot of hard work, i was able to attend iv league school,pursue a masters at the wharton business school and ultimatelylaunch my dream of starting an
all natural wholesome foodscompany in philadelphia, pennsylvania. because of sba lending,susquehanna bank was able to fund my first gia prontorestaurant six years ago. today, sba lending is allowingme to grow my business with the expansion and opening of afourth gia pronto location in philadelphia. each new restaurant we openemploys approximately 20 people. these are people who in turn buyhouses, make car payments and
shop at our malls. president obama's new economicstimulus plan, including specific measures, waiving smallbusiness loan fees, will provide a direct measurable impact onour business by allowing us to invest in training our people,providing additional working capital and also help fundfuture expansions. so, it is now with great honorand pride that i introduce to you our president of the unitedstates of america, someone who is truly and unquestionably apresident of the people,
president barack obama. (applause.) the president: thank you, thank you, thank you so much. thank you, thank you so much. please everybody, have a seat. thank you very much. first of all, marco, thank youfor the wonderful introduction. i don't know if people heardproperly here, but this is a all-natural health foodrestaurant in philly. (laughter.) so i asked him whatwas the equivalent at his shop for a cheese steak.
(laughter.) and he described forme -- what was it, a chicken -- mr. lentini: it's our chickenitaliano. (laughter.) it's a chickencutlet, spinach florentine, sharp provolone, all on anitalian ciabatta bread. (laughter.) the president:right. so i wanted to know if there waswhiz on that. (laughter). and he said, no. (laughter). marco is an example of what small business isall about about
and i think cynthia is anexample of what community banks are doing all across thecountry, partnering with small businesses in order to createjobs and opportunity and entrepreneurship that's been thedriving force in our economy for so very long. so i thank all of you,particularly the small businesses and community bankerswho are here today. and i thank the two of you, aswell as some of the other entrepreneurs that we met, andbankers that we met, before this
public event. thank you for sharing yourstories. i also want to thank the chairand ranking member of the senate committee on small business andentrepreneurship, senators mary landrieu and olympia snowe. please give them a big round ofapplause. (applause.) as well as the chairand ranking member of the house committee on small business,congresswoman nydia velazquez and congressman sam graves, whoare here as well. (applause.)
i want to thank thempublicly for being here, but also so much of the good workthat our proposals today are building on has to do with thevigilance that they've shown on their committees. so we very much appreciate that. now before i talk about the newsteps we're taking to get credit flowing to small businessesacross our country, i do want to comment on the news aboutexecutive bonuses at aig. i think some of you have heard alittle bit about this over the last few days.
this is a corporation that findsitself in financial distress due to recklessness and greed. under these circumstances, it'shard to understand how derivative traders at aigwarranted any bonuses, much less $165 million in extra pay. i mean, how do they justify thisoutrage to the taxpayers who are keeping the company afloat? in the last six months, aig hasreceived substantial sums from the u.s. treasury.
and i've asked secretarygeithner to use that leverage and pursue every single legalavenue to block these bonuses and make the american taxpayerswhole. (applause.) i want everybody tobe clear that secretary geithner has been on the case. he's working to resolve thismatter with the new ceo, edward liddy -- who, by the way,everybody needs to understand came on board after thecontracts that led to these bonuses were agreed tolast year.
but i think mr. liddy andcertainly everybody involved needs to understand this is notjust a matter of dollars and cents. it's about our fundamental values. all across the country, thereare people who are working hard and meeting theirresponsibilities every day, without the benefit ofgovernment bailouts or multi-million dollar bonuses. you've got a bunch of smallbusiness people here who are struggling just to keep theircredit line open -- that they
are foregoing pay, as one of ourentrepreneurs talked about, they are in some cases mortgagingtheir homes, and doing a whole host of things just in order tokeep things afloat. all they ask is that everyone,from main street to wall street to washington, play by the samerules. and that is an ethic that wehave to demand. and what this situation alsounderscores is the need for overall financial regulatoryreform, so we don't find ourselves in this positionagain, and for some form of
resolution mechanism in dealingwith troubled financial institutions, so that we've gotgreater authority to protect american taxpayers and ourfinancial system in cases such as this. now, we already have resolutionauthority -- excuse me, i'm choked up with anger here --(laughter) -- we always -- already have some of thatresolution authority when it comes to a traditional bank. but when you start getting intoaigs and some of these other
operations that have a wholebunch of different financial instruments, then we don't haveall the regulatory power that we need. and this is something that iexpect to work with congress to deal with in the weeks andmonths to come. well, we're here today to talkabout how my administration can help the millions of smallbusinesses bearing the brunt of this credit crisis. and secretary geithner and ijust met with not only marco and
cynthia, but a number of othersmall business owners and community lenders who sharedwith us experiences that are familiar to so many. small businesses are the heartof the american economy. they're responsible for half ofall private sector jobs -- and they create roughly 70 percentof all new jobs in the past decade. so small businesses are not onlyjob generators, they're also at the heart of the american dream.
after all, these are businessesborn in family meetings around kitchen tables. they're born when a worker takes a chance on her desire to be her own boss. they're born when a part-timeinventor becomes a full-time entrepreneur, or when somebodysees a product that could be better or a service that couldbe smarter, and they think, "well, why not me? let metry it. let me take my shot." that's marco's story, which hejust shared with us.
that's brian conrad's story. when brian's company eliminatedhis department -- brian is sitting right there, so i don'twant to embarrass him here, but it's a great story -- he losthis job, but he found his calling and started, you know,doing all kinds of work on a restaurant called the bluemonkey, which now employs some 40 people in pennsylvania'slehigh valley. that's carmen jones's story. carmen is over there. carmen was disabled in anaccident a few years ago.
and in facing personal trials,she discovered a reservoir of strength and an untapped market. so today she helps companiesadvertise and sell their services to people living withdisabilities. this is america's story -- aplace where we believe all things are possible; where weare limited only by our willingness to take a chance andwork hard to achieve our dreams. but today, too manyentrepreneurs can't access the capital to start, operate, orgrow their business.
too many dreams are beingdeferred or denied by a form letter cancelling a line ofcredit. and this is a consequence of thecredit crisis, which began when some banks bundled and soldmortgages in complex ways to hide risk and avoidresponsibility. the collapse of thesemortgage-backed securities and other complex financialinstruments froze the credit markets, including the marketsthat help small businesses access loans to cover payroll,to purchase supplies, or to
expand in ways that create newjobs. and i think it's important justto take a moment to understand -- here's how these marketswork. a community bank, like the onerun by cynthia, offers an entrepreneur, like marco, a loanto open up a restaurant. before this crisis, cynthia hadtwo options. her bank could hold the loan andreceive regular payments from marco as he pays back the amountthat he borrowed plus interest. but another option was the bankcould also sell part of the loan
as an asset to a larger bank orto an investor. and that means that her bankcould then use these new funds for more business loans and autoloans and home loans and student loans. that's why this secondary market-- cynthia's ability to resell loans -- is so important: itmeans banks can offer small businesses and families morecredit because the bank has more money on hand. if cynthia could get that $11million of sba loans that she
currently holds in herportfolio, if she can get that into the secondary market,that's now $11 million that she can make work back in hercommunity. today, unfortunately, therearen't nearly as many secondary buyers for these kinds of loans-- even when they're guaranteed by the small businessadministration. so community banks cannot bringin the funds necessary to provide as many loans. and as a result, we've seen aprecipitous drop in lending to
small business. the sba typically guarantees $20billion in loans annually. but this year, lending may fallbelow $10 billion. even businesses with impeccablecredit can't access loans. so entrepreneurs and theiremployees pay an enormous price. but the whole country pays aprice, as well, because less lending leads to fewer jobs andlower spending, which leads to less lending -- a vicious cyclethat delays our recovery. and small businesses don't justprovide jobs -- they provide the
innovations that help us lead inthe global economy. smaller companies produce 13times more patents per employee than large companies. now,think about it. hewlett-packard beganin a garage. it was a small business. google began as a researchproject -- small business. the first apple computers werebuilt by hand one at a time -- mcdonald's started with onerestaurant. marco, i know you've got ideas. (laughter.) small business.
our recovery in the present andour prosperity in the future depend upon the success ofamerica's small businesses and entrepreneurs. and that's why my administrationhas already taken aggressive action on their behalf. my recovery plan, as alreadybeen noted, raises the guarantees on sba loans to 90percent and eliminates costly fees for borrowers and lendersthat can be too costly in a recession.
and these changes are beingimplemented now, fulfilling a campaign promise that i made. the recovery plan also includesa series of tax cuts for small businesses and tax incentives toencourage investments in small businesses. and the treasury department haslaunched the consumer and business lending initiative tohelp unfreeze the credit markets. i've also proposed, as part ofmy budget, that we reduce to
zero the capital gains tax forinvestments in small or startup businesses -- expanding andmaking permanent one of the tax cuts in the recovery plan. and my budget, as part of ourhealth care reform efforts, calls for tax credits and otherassistance to help small businesses offer coverage totheir workers. so we've already done a lot. but we've got to do more. and none of these steps will beeffective unless we unlock the credit markets that are denyingsmall businesses the loans they
need to grow. therefore, as part of myfinancial stability plan, the treasury department will beginpurchasing up to $15 billion of sba loans through the troubledasset relief program, or tarp. we will immediately unfreeze thesecondary market for sba loans and increase the liquidity ofcommunity banks. cynthia's bank is going to beable to sell those $11 million loans so that she's got moremoney to lend. (applause.) so with this action,any lender that provides sba
small business loans will have abuyer for those loans. and in turn, community bankswill no longer have to choose between providing loans tocreditworthy small businesses and maintaining the requiredcapital and liquidity. now, this plan is the lateststep -- but by no means the last step -- in our ongoing effortsto stabilize the financial markets on behalf of businessesand consumers. we'll be outlining further stepson behalf of small businesses in the weeks and months ahead.
and we will continue to dowhatever is necessary to lead this economy out of recessionand lay the foundation for long-term prosperity. that's what the small businessowners in this room expect us to do. they're folks like john wilson,the president and part owner of a small business in raleigh,north carolina. he wrote to me a few weeks agoand participated in the meeting we just held.
and john's business, nc designgroup, sells cabinets and interior design services. and not surprisingly, it's beena tough year. sales have fallen by half. and keep in mind, john hadpreviously doubled what had started off as a very smallbusiness, to the point where he's providing a living for --it was up to 40 -- 48 people. and john did all that he couldto save loans. the owners, including john, havetaken no compensation.
but they had to reduce the sizeof their company from 48 employees to 34. and john just told the group ofus that he personally took the time to speak to each and everyperson that he had to lay off. and i don't think he minds mesharing that he cried each time he did it, because it's a hardthing when somebody is working hard and committed to helpingyou build your business, you having to lay them off. and now, even though they'venever been late on a payment to
the bank, they're having troublekeeping a credit line. it's putting his small business-- and the 34 jobs left -- in jeopardy. now, john is not looking for ahandout. he's looking for the opportunityto succeed. and he said it best himself inhis letter, and i'm quoting from the letter here: "small businesspeople are incredibly resilient and resourceful given half achance," he said. "but we need the chance."
well, i want to say to john andto every american running a small business or hoping to runa small business one day: you deserve a chance. america needs you tohave that chance. and as president, i willcontinue to do everything in my power to ensure that you havethe opportunity to contribute to your community, to our economy,and to the future of the united states of america. thank you, everybody. thank you. (applause.)