Congressman Rick Larsen's Online Office

Washington, D.C. — Today, U.S. Representative Rick Larsen (WA-02) made the following statement on the floor of the U.S. House of Representatives about the need to help community banks lend to small businesses in order to create jobs and grow the economy. Larsen delivered this statement in conjunction with sending a letter to Timothy Geithner, Secretary of the U.S. Department of the Treasury, urging Secretary Geithner to address the deteriorating conditions in the commercial real estate market that are prohibiting community banks from lending and threatening economic recovery in Northwest Washington.

“Small businesses are the number one source of new job growth in our country and their success will be critical to our nation moving out of economic recession and toward recovery.  

“One of the key drivers of small business success is access to capital.  Unfortunately, the credit crunch has prevented them from accessing the capital they need to grow and create jobs.  

“Recovery Act and Small Business Administration (SBA) lending programs such as 504 loans, 7(a) loans, and America’s Recovery Capital (ARC) loans are stemming the tide of job loss and getting our economy moving again, but more needs to be done.  

“In order to expand the availability of credit to small businesses, we must strengthen community banks to allow them to lend to deserving small businesses.  Our nation’s community banks play a vital role in small business lending, but the financial crisis has hamstrung their ability to make those loans.  

“I look forward to seeing how the Administration’s Small Business Lending Fund proposal will help community banks provide loans to give small businesses access to the tools they need to build their businesses and start hiring again.    

“I have heard from many community banks in my district that federal regulatory policies are also inhibiting their ability to lend.   These banks are struggling because federal regulators are requiring them to increase capital above already well-capitalized levels and shrink their balance sheets.  

“As a result, they are forced to restrict their lending activity in order to meet these standards.   I have urged the Treasury Department and the FDIC to review the effect that the current regulatory environment has on community bank lending in order to ensure an appropriate balance between prudent regulation and a robust lending market.  

“In Northwest Washington, the state of the commercial real estate (CRE) market is also threatening our economic recovery.  Community banks in my district have been devastated by these troubled real estate loans.  This problem must be addressed so that we can free up much-needed capital for community banks to jumpstart their small business lending.  

“While I appreciate the FDIC’s October guidance on prudent commercial real estate loan workouts, I am concerned that this guidance is not yet working to stabilize the CRE market.  The Treasury Department and the FDIC must take further measures to address this problem and ensure that the guidance is fully implemented.  

“I urge my colleagues to address this problem head-on so we can help community banks lend to small businesses, which will in turn create jobs and launch us on a path towards long-term economic growth.  

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