it is long past time for the alarm bells to sound. we missed the target in a systemic and serial fashion. one has to dig deeper to honor the the underlying causes great -- to unearth the underlying causes. in my view, it has been a failure to focus on the engine of economic growth, the private sector, those on whom we depend to create those jobs. if you listen to those businesses, as i do on my main street tours and the conduct of roundtables and numerous business people in here and everywhere, they will tell you, loud and clear, that the two main issues are tax reform and fewer regulations. that is what is driving the problems that we are facing in america now, mr. secretary. it cannot be temporary solutions. there is no reflection of that emergency or the need to move into a direction to reform the

tax code and overhaul the regulatory system. i know you said recently, in early october, that the idea that regulations affecting our economy is without foundation. but when you talk to business after business, they cited the regulatory impact. 3000 federal regulations every year. 50 dozen since 1996. more than 407 come out of the administration this year to cost an additional, to $1.70 trillion. we depend on these businesses because they are the ones who have driven past economic recoveries. now they are asking the government to make the environment conducive enough to expand the private sector, not to simply grow our government. therein lies the problem. the jobs had been created, they have been created in the government sector, not in the private sector, essentially. the lending to find in the jobs act is a case in point.

-- lending fund in the jobs act is a case in point. we started a year ago july. i want at that time that the lending -- warned at that time that the lending fund was a new and expense of the federal program that closely resembled tarp. i remind everyone that the special inspector general for tarp stated that in terms of its design and application process, it would essentially be an extension of tarp. i know proponents of the legislation do not share that view. they did not heed the warnings, and certainly not of the special inspector general. they claimed repeatedly that the program would be immensely popular with the 7000 community lenders across our nation, requiring a fault $30 billion. in reality, we wasted an entire nine months on this program. nine months before a single dollar was distributed. only four killion will be

utilized. -- wholey four million will be utilized. -- only 4 million will be utilized. with only $1.8 billion remaining for actual small- business lending. "the wall street journal" pointed out, as depicted in a chart, the program's failures on october 6. where is the disconnect? $30 billion a year ago, and i know how urgent it was, and everybody said we had to have $30 billion. clearly the problems were anticipated. they were foreseen. here we are today dealing with less than what $1.8 billion out of the entire $30 billion for small business lending. prior to receiving the lending funds, a full 51% of recipients had already increased small-

business lending to initially qualify for a low interest rate of 2% or less, because the baseline for increased lending was purposely set in the legislation. however, the administration represents the senate structure program. the banks are a great deal, paying off one taxpayer-funded credit card, tarp, with another, the lending fund. is that a wise or appropriate use of taxpayer dollars? it certainly was not effective in addressing the unemployment crisis that we are facing in america. we should contrast that experience with this program with the other initiatives that were extended in the jobs bill, which i authored or supported and it was authored by others. increase the sba loan guarantees, which would read

this all in sblf -- lending which would result in lending reaching an all-time high. i am deeply concerned that this administration failed to create the conditions that were warranted in the surgeon times, mr. secretary. something has gone terribly wrong. what i hear over and over again is that there is no tepco, a tempo of urgency, that there is an emergency out there. if you are proposing more tax incentives only for a year, that is the problem. we have temporary solutions, 1- year to resolution -- one-share tender rate solutions are not going to be sufficient to extricate ourselves from the worst post-recession recovery in the history of this country that is why we need reform both on taxes and regulation. we have 150 tax incentives expiring at any of this year, 11 out of 12 in the jobs bill that expire at the end of the

year. they are all expiring. that is the point, and small businesses recognize that. beyond one year there is nothing, and that is the point. that is why we need on a man of reform right now, and requires the presidential leadership -- that is why we need fundamental reform right now, and requires a presidential leadership to join with the congressional leadership to get it done now. >> thank you, madame chairwoman, ranking member snowe. the biggest challenge facing small business today is the demand for the goods and services at they produce is not growing fast enough. the less important thing we can do for small businesses is -- the most important thing we can do for small businesses is to strengthen the overall rate of economic growth. we of the proposed a strong set of tax incentives to increase economic growth and help put more americans back to work. these proposals, according to independent estimates, not ours, would increase economic

growth by between 1% and 2% and add more than 1.5 million jobs. if congress does not act on these measures, then taxes will go up for virtually all working americans. taxes will rise for most businesses, large and small. unemployment rates will rise, not fall out there will be fewer jobs for veterans and the long-term unemployed. the housing market will be weaker. our damage infrastructure will lead america's businesses with a growing costs. cities and states will have to cut back further on a critical services, laying off more teachers and first responders. enacting the proposals in the american jobs act will not, of course, solve all the problems we face as a nation. we need, as senator snowe said, copper heads of tax reform that improves incentives for investing in the united states.

we need to sustain a substantial program of investment to rebuild america's infrastructure. we need the education system to produce better results. we need to expand exports, building on trade agreements congress passed last week. we need to get deficits back to earth as the economy recovers to make sure we are living within our means. as you work on the long-term challenges, we need to get the economy growing more rapidly. to do that, we need congress to act, and that means democrats and republicans are working together. we cannot pass tax cuts for working americans and businesses, we cannot rebuild america's infrastructure, we cannot get critical help to save local governments without the support are the republicans alongside democrats. i provided in my written testimony a full update on tax incentives and credit programs we put in place the last 2.5 years to help small businesses. because of these programs, the tax burden on small businesses is lower than when the president took office.

among the range of the specific tax cuts enacted over the past 2.5 years, we made it possible for businesses to police by of investments and capital limit. we have -- to fully write off investments in capital equipment. because of these small business credit programs, credit terms of east for businesses. small banks that are in solid shape but are unable to raise capital in the private markets are able to take investments from treasury, so they can increase lending to small businesses we have provided $15.5 billion in capital in total, including roughly $4 billion under sblf, to a total of 713 community banks across the country perhaps we are $14 trillion at the economy. -- we are at $14 trillion economy but it is a very substantial number of banks assisted through these programs. they are not designed to help banks, they are designed to help banks' debt capital they needed

to extend credit. cdfi's have been getting support from treasury to help communities urban and rural across the country, some of the communities hit hardest by the recession. governments across the country have been able to access resources from the treasury to put into innovative credit programs. businesses have been able to access all loans through the sba's guarantee programs, and these programs have been among the most cost-effective programs we have available to us to help economic growth. they work alongside the private sector, mobilizing substantial amounts of private capital alongside investments in taxpayer resources. cbo estimates that the investments we've made in banks will produce billions of dollars of gains for the american taxpayer. those investments provided the oxygen that is essential for economic growth. it they or critical resent the economy started -- they were

acquitted present the economy started recovering in 2009. there were not enough to insulate us from the full damage caused by the crisis, but they are a very good model of how to combine tax incentives with credit programs to ease some burden on businesses. i appreciate the support many of you have provided to these programs, and i hope we can continue to work together on any steps to help small businesses access to credit and the capital they needed to meet needs of business customers. i would be happy to respond to your questions. i am grateful for the chance to do so. >> thank you, mr. secretary. i would like you to reiterate the initiatives the administration has taken in reducing the tax burden to small business, because i think that is important. i do agree with senator snowe, although we disagree on other aspects of the bill before us -- i do agree that giving long- term stability and relief in the

tax code is important. we don't have in the small business committee to jurisdiction. that is a finance issue. but we have provided ideas along those lines. but reiterate again some of the accomplishments of lowering tax rates to businesses, and what you intend to continue to do in that regard. >> let me just say that i completely agree that the tax system we have today for businesses, where you have tremendous uncertainty year by year about what the basic tax rates you are going to bed, and a system that is riddled with -- you are going to pay, and a system that is riddled with special privileges, is a system that needs reform. as we focus on these short-term things to get the economy more rapidly, we should keep our eye on long-term imperatives for exactly the reason that you and senator snowe said.

we need more research be about the environment on the tax side and -- we need more certainty on the environment on the tax side. but we're not going to do, even at the super committee is tremendously effective in this process, final tax reform in two months --. fundamental tax reform in two months. as we saw today the foundation for a broad critical consensus on tax reform that the was the corporate rate, it broadens the base, makes investment in the united states more competitive, we need to be doing things now to get the economy growing more rapidly. in my testimony i listed the full array of temporary incentives and senator snowe is like to say they were temporary. the two that were most powerful are zero capital gains for investments in small businesses, good for start-ups, a very compelling case for that,

and that has had broad bipartisan support for gatt we did a whole range of other things -- that has broad bipartisan support. we did a whole range of other things that makes it much more likely that businesses investing today will meet the demand will come later. this is the broadest, most sweeping, and i think, pretty creative mix of taxes that congress has ever considered for small businesses in short period of time. again, i want to emphasize again that we should think about this as a bridge to bottom and a long-term tax reform, not as a substitute for a period -- a bridge to fundamental long-term tax reform, not a substitute for it. >> i want to remind everyone that the hearing is focused on the jurisdiction of our committee, small business lending. but since it has been raised, i do also hear a lot of criticism about over-regulation. could you comment on the actions you are taking with other members of the administration to review that, and what your initial findings are in terms of reducing regulation from small business?

>> the president and cass sunstein, who runs this effort at omb, have undertaken a comprehensive review of the existing body of regulation and announced a series of changes to regulations, designed to get regulations smarter and reduce the burden where we can. i am completely supportive of that, and i am sure there is a whole range of work we can do in that area. it is absolutely true that because if health care reform -- because of health care reform, financial reform, the changes we are making, we are changing basic protections that americans depend on, and business depends on, across the country but change in that context is things that people just to, but if you look at the evidence -- senator snowe, when you quoted me last week, i was quoting your republican economist chris barlett -- it is hard to find evidence that regulation is having material

effect on growth at all. the evidence he cited -- is worth looking at this -- if you look at profitability, employment, in the sectors of the economy where there has been the most reform -- in mentioned -- i mention three of those areas -- if you look at the american economy today, profitability across the business sector is at historically high levels. having said that, it is very important that we put a much greater burden on all of us to make sure that as we are changing the rules, designing stronger protections, we do so in ways that are sensible, that we get regulations smarter, not just more of it, and we will continue to look for ways of doing that brought the biggest problem facing the economy -- if you look at every pole facing businesses today, they say their overall, and challeng -- their overwhelming challenge is they don't see enough demand for their products.

they have other concerns, too, but those are way, way down the list, and a smaller fraction of businesses, if you look at surveys, what would regulation as a meaningful challenge to to the broader challenge of economic growth. good't think there is evidence in support of the proposition that is regulatory burden or uncertainty that is causing the economy to grow more slowly than any of us would like. >> one final question, and i will extend the time equal to senator snowe -- one of the criticisms of the sblf, despite the fact we will get between $4 billion and $9 billion in lending out, is that it was too tarp-like. could you explain all the criticisms of tarp, that it looks like from the lending of tarp, it looks like the taxpayers will make money? >> you have to look at the

independent assessments of cbo and others. the conclusions they reach, and it is with them at the supports, is that those programs will are a substantial positive return to the taxpayer. current estimates are over $10 billion, but that is not the most important benefit they had. the most important benefits investments at banks is that it helped take an economy that was up falling off a cliff when the president took office, and economic growth began again in the second quarter of 2009, just three months after the president took office, because of the scope of the measure that congress helped the president enact, including the programs put in place to make sure that banks were more stable, deposits were more stable, statements were protected, and we did not face the catastrophic collapse week had in the great depression. these capital programs, and it is true sblf, cdfi fund, tarp- related investments in banks,

are set by any measure it the most efficient use of taxpayer money we have had, because every dollar of capital you make available to banks that cannot get it from other sources is were the summer between $8.10 dollars of lending capacity. if you have that dollar of capital, you have less need to cut lending and more capacity to expand lending. these are very effective, very successful programs. where i would like to talk about this in more detail, when i want to get your concerns about -- where they have been slower to get off the ground, it is because we have been very careful to make sure these investments came with the strong protections to protect taxpayer interest. >> i will allow 7.5 minutes to senator snowe, five minutes on the first round. >> the point is on that question is the fact that many

of the recipients would have made those investments in small business lending and to m -- would have made those investments in small business lending and away. that is the point here. it was all recognized at the time it it was identified as one of the major issues, that they did not need that incentive. 1%, 2% interest rate, that is what it was. that was the minimal all lending. -- that is the minimal level of lending. >> senator, i respect your concerns about the program, but i do not agree with that. what we tried it to do and what we were successful in doing was combined investments in banks with incentives to improve the chance to land paid for every bank that capital in this program, they have more capacity to lend than they otherwise would have had.

i am not aware of a more effective way than this, of long said all the other agencies -- alongside all the other agencies, that can get more credit to small businesses. i am supportive, as you are, of sba damage is, but those were not enough. -- sba guarantees, but those were not enough to it not all banks desert capital or are eligible for capital, but 10% of community banks across the country, there was a good economic case for giving them an investment with a return to taxpayer. the evidence shows a very good return to the taxpayer. >> 1.8 billion out of -- those are the facts -- 51% of recipients were going to increase their lending. >> could i respond to those -- >> those are the facts. >> what congress authorized was a $30 billion program, ok?

banks applied for 1/lee of the capital in the program. -- 1/3 of the capital in the program. we cannot force banks to come. only half were eligible. they were only eligible because we had to be careful to make sure that the taxpayers' resources were going to banks that were viable. we were not going to take too much risk. we were going to take some risk, but not too much risk in the resources that were wasted. banks only apply for 1/3 of the 30. only roughly half of those banks were eligible in the eyes of the supervisor -- >> but mr. secretary, you should have known that to begin with. they did not get responses as to why they were ineligible -- >> we never -- we cannot force banks to come -- >> i am saying that you should have been out in advance how this program would work -- should have known in advance how this program would work.

we have an urgent issue in america, and putting your eggs in that basket, you are forewarned about it. >> cbo scorza this initially as making money for the taxpayer. the idea that we put resources in this program -- >> i am talking about job creation. there was a whole issue as to whether or not it would ultimately do that, given the impetus for these banks to turn it over from tarp to a lending fund. even the special inspector general for tarp indicated a. those are the facts. unfortunately -- >> we don't disagree that the banks were allowed by congress to refinance tarp money. that was congress' intent. there was a good case that, because the capital they get on this program comes with a better incentive to lend. congress made that judgment

knowing that people would say -- they do that knowingly and for good reason -- >> the inspector general for the department of treasury said it, in this report, at may 13, that some of the tarp banks, small business lending funds, simply replaces the bonds is made under tarp -- >> that's right, but there is no inside out of the observation, because that is, as -- insight in the observation, because that was congress' intent. >> expanding the lending of this program into the 2011 leveraged law in 2014, 2016 -- people cannot wait. there have been too many faulty assumptions and the stock additions. -- faulty assumptions and miscaluclations. whatever economists you are talking to, i suggested they go to main street, because 74% of

the american people think we are going in the wrong direction. what is it you are not hearing? i would love to take you on a street tour. i have invited you before. i think you need to listen to the average american and what they are facing on main street, which is the decimation. these are all temporary -- that is the point. when-year tax policies are not going to make a major difference. some of those initiatives are worthwhile, but the bottom line, given the mixed message coming hard this administration on tax and a regulatory policy, they don't dare -- i am hearing from everybody, regardless of the side -- i am not making it up. i did not make it up in february, i did not make it up last year. i am trying to get the administration to concentrate on jobs, jobs, jobs. i don't know who you are talking to, i don't know who the president is talking to, but

you need to talk to the average person, unfiltered. what they are talking about is we don't dare make a move, because given the dynamics of this economy -- even jeffrey immelt, ceo of ge, but also president of the president's job council -- he said in dayton, ohio, may 13, "the final priority is improving collaboration between government and business with regard to regulation. decades of uncoordinated regulations create hurdles and increased burdens for businesses large and small across this country it." the point is, that is what is happening. tax reform and regulatory reform. i was in tax reform panel with you back in february 2009 at the white house. we talked about it, we said we needed a.

"we cannot do it in two months." why not? president and congress together, both branches. i was here when president reagan was elected, and he would say that these are severe circumstances and we had 10.8% unemployment rate guess what? he had a democratic house and republican senate did we work hand in glove -- he had a democratic house and republican senate. we work hand in glove to get it done for the american people. rome is burning, we are facing decimation of our communities, and they want help and they don't think they are getting any deference from the administration and congress to work together. if you are talking about policies in 2014, 2015, 2016, we have had three years of virtually the same unemployment numbers as we do today, mr. secretary. that is the point. this is nothing new.

we need to get ahead of the curve at some point and make long-term fundamental, unpredictable changes in our tax and regulatory policies. i am hearing it from everybody, from fortune 500's, companies with three, one -- everybody is saying the same thing, they need a certainty and stability. i uncertainty has a huge price tag, and that is being born right now by the americans unemployed, and that is what we have got to correct. i am not here to find blame, i am here to get the job done for the american people. >> we are on your side on tax reform and it super committee vote as a chance to begin the process now. as we are working together on the long-term challenges, don't lose sight of the near term and narratives of the economy not growing fast enough. realistically, we have to focus on things that matter now and that action right now. not just the long-term reforms we think are important. i agree with you about tax reform and i hope we have a

chance, given the parliamentary procedural it manages that the super committee has, to do it more quickly than it might otherwise be the case. >> i know everybody has strong feelings about this, and the secretary is wonderful to give us his time. we will go in order of appearance, with senator lott and reid hour hearing is about that -- with the senator levin. our hearing is about the sblf and credit. these issues are important to small business. senator levin. >> thank you for calling the hearing, thank you for the extraordinary leadership in getting this bill passed. it took your laser-like determination to get it passed. you had to overcome a filibuster, which is almostnow e complaint that it is not being implemented fast enough. a year filibuster against this bill, which was so desperately

needed by small business, supported by community bankers, still supported very strongly by main street bankers? we have lots of kane streets -- main streets in michigan, too, and they talk about two things -- lack of demand, the economic situation generally, and the availability of credit. this bill is aimed at providing credit, and was filibustered by republicans for a year. now the complaint that this is not being implemented fast enough -- if the republicans had their way, it would not be in the books at all. chamber of commerce tells us that lack of demand -- the economic situation is the number-one problem for

businesses. regulation is not at the top, taxes are not at the top. as the secretary of the treasury just pointed out, small business taxes have gone down under this administration. what we are desperately trying to do is provide support for small businesses. we are trying to get collateral support for small businesses. one part of this bill which has not yet been talked about, but which i want to focus on, is something called the state small business credit initiative. 44 states and a number of territories have made use of this initiative. i don't know whether every member of this committee has been used, -- i don't know whether every member of this committee's state has made use, but it is a way of getting support to the collateral that

small businesses provide. i hear this from small businesses, probably more than anything last year, by the way, that is the lack of availability of credit, because the value of their collateral had gone down because the value of all our collateral has gone down. almost all of our homes are worth less now because of this recession than they were before the recession. the same thing is true with assets of small businesses. same thing is true with inventory value, with the building and equipment value. they have gone down because of the recession. when small businesses go to take out a loan, the value of the collateral is less. that does not mean less customers, by the way, it does not mean they have not paid their bills at all. the complete i got more than any other complaint, far surpassing any thing about taxes or regulation, is the collateral support problem, the collateral issue.

it community banks had given them loans all their lives and now could not give them loans because of the requirement of the regulators that the collateral be a certain percentage. if the value of the collateral went down, it is more difficult to take out a loan. community bankers came to us, folks. these are not the big bankers that to us, these are community bankers, to support a bill that would help them lead to small businesses. we have to overcome a filibuster for a year, get it done. parted that we are all frustrated -- we are all frustrated that it is not moving more quickly, by the way. i share senator snowe's frustration with that part of it. but to suggest that this bill is a failure because part of it is being implemented too slowly, when if the republicans had their way, it would not have

been there at all -- that is not ironic, that is kind of counter to tip. -- counterintuitive. now i want to talk, if i at any time left, and i don't think i do, about the small business credit initiative. i want to ask two questions. is it a fact that this initiative is producing the intended effect this is the collateral support program, which is the states, by the way -- we are using the state's -- michigan led the way in this -- we are using the state's funds, adding to them, offering them support, almost all of our states and territories are taking advantage of this bind, and in their view, this is a success. >> i agree, and you are exactly right. as a complement to the federal programs put in place, we would work with a whole range of existing programs, not just in michigan but across the country.

we thought it would be quicker if we worked with the states and sometimes they have a better feel for how programs work. 54 states and territories submitted the notice of intent to apply to 47 states, five territories, and d.c. submitted applications, five municipalities, 46 states, three territories, approve or nearly 1.3 $5 billion in fines. we are well on the way to getting the money -- $1.35 billion in funds. we are well on the way to getting the money out the door. >> i would suggest to members that a test of the value of this bill, they talk to two people -- their states, their economic development people, talk to their states to see whether or not they have applied, and if so, why they have applied. talk to state governors and economic development people, and to test the value of that part of this bill.

the other test would be to talk to community bankers. they always say that the either got support, and in some cases it they did, not enough, but where they did, they sure would have liked it, they wish we would have taken a look at these regs to see if we cannot modify them, by the way, to make it available to more banks. that is the complete we get, that it is not more banks and got it, not that it is a bad program, but that it was implemented in a very conservative white, as you put it, to protect taxpayers, that it made it less available to banks. that is the complaint i get, not that it is a bad program, but that we wish we could have more banks get the benefit of the program. that is what we ought to focus on. >> thank you. i'm going to recognize senator bidder for a minute, but we want to submit for the record the timing of this bill. we received the bill in june,

were on the floor of july, cannot overcome a filibuster. republican members did not support the bill in the senate. the president signed it september 27. there was a lot of resistance bringing this with the lending program, but we will get it for the record -- >> well i want to correct my statement for a year if it was an actor - -- inaccurate -- >> it came to the floor in july, and that the august recess, and it passed september 16 in the senate and became law -- >> still had to overcome a filibuster. but i do stand corrected on the year. it was a matter of months it was filibustered -- >> it was not a matter of months -- >> it was a matter of 60 votes -- >> we will look back at the record, not just the discussion on the senate floor, but with

the idea came for the small business committee as well. but we will get it in the record, ok? senator vitter. >> i want to focus first on the small business lending fund. you said a few minutes ago that every bank at received the money had more capital and was in a better position to lend. if they traded at that money dollar for dollar for tarp money, they did not have more capital, correct? >> that is correct, but the sblf was designed so that the capital they got, even if the was intended to replace capital, is structured in a way that they are more likely to lead the capital. that is the purpose of the design feature.

home i want _ more than half of the money used a. >> that is roughly what we expected. >> in dollar terms, did that $2.2 billion increase capital in the small banking sector? one of the folks who took advantage of it was heartland. their chief operating officer is quoted in the article senator snowe has mentioned seeing it as a bit of a shell game. they took a $1.7 million and use every penny to prepay part -- to

repay tarp money. >> capital is designed in a way. we expected roughly that amount of financing. we never claimed otherwise. there is no surprise in those numbers. >> it is a very cost effective way to mitigate the pressures that businesses still face. >> i am not suggesting it was a surprise. i'm suggesting it has limited impact when the majority of the money is used to repay tarp. another proponent of the bill, the vice president for small business policy at the chamber, the chamber supported the bill. it is basically a bailout for banks. do you disagree with that. >> diaz this stations that

supported the bill supported this provision. >> i am sure they did. >> why are you concerned about this? if you look at estimates is gone to look very good against -- i think to hold up the program you are going to say it is a good return. nothing is certain in life. i am not sure why are you are so concerned about this because it was the congress secreted the bill designed it said that part of it could be used to refinance tarp. >> let me go to that point of taxpayer return. let me point out a lot of folks noted that of the small banks were all for this provision.

of course they were. i do not know what that prove this. it did have an impact that the small banks like to. let's go to your comment about taxpayer return. when this tax payers' money is used dollar for dollar to repay tarp, on the tarp accounting fraud, is that accounted for in a different way than the banks. >> of course. when we describe the congress with the overall estimates are, we take into consideration the net effect of this program. we make it clear in that context.

>> that is not repayment of taxpayer dollars? >> the bottom line is these investments you call in, overwhelming positive return. i want to be clear. when you talk about a total number of tarp repayments, this is not included. >> we show both numbers. we showed that tarp payments alone, and then we show what the estimates are. >> so it is a foot in the? >> now we know how many banks and we have exactly the numbers. you will see when we showed that

that the overall return of the tax payers was overwhelmingly positive to a substantial degree. >> i want to submit to the record, and we are by to get this clear, you have a quotation from him that appeared. >> i am instructing the staff to call this tournament and find if he wants to go by this letter or misquotation in the wall street paper. secondly, i want the record to reflect. it was one-third of the banks' refinancing tarp which was designed by those of us who supported this program. it should be no shock that that was done. it was a program that bail banks

out of bad investments. this program was designed differently, and while the numbers were not as high, it seems to have worked for the banks who have stepped up and managed to use it. >> thank you for hearing this hearing. thank you for being here. mr. secretary, could you comment on what you think about occupied wall street? >> thank you for asking that question. my general view, if you look at the challenges the country faces today. very high unemployment. , alarming rise in poverty, deep sense of economic insecurity, loss of confidence in public institutions. a lot there is a huge amount of frustration across the country today about the challenges we

face, and that is why we are trying to work so hard with the congress to get more things in place to make the economy stronger and put in place stronger protections in the financial system, healed the damage, and by any measure we have a lot more work to do. >> i fixed -- frustrated that they think the big banks get access to capital in about 10 seconds and it has taken nearly 10 months for these small businesses to get access through community banks. i know in my state the banks that got access have proven that they have increased lending to small businesses. it was a success. people are frustrated still that main street cannot get access to capital.

are you for reinstating a program like this to get more capital to small businesses through community banks? >> i am a big supporter of those programs and i have said that from the beginning. we have been designing more of them, trying to improve them, and i am willing to work with you and your colleagues on new ways to do that going forward. >> and you would provide some level of transparency about why m.o.u.'s were signed on why certain banks were denied access to capital and why they were not given reason? he would clean up the transparent to problem? >> on the question about why this takes so long, and want to address this. we designed a system, and i do not know with different way to do it, that requires the bank supervisors to make a judgment to was that there were a viable and eligible. it took them a long time to do it.

one other thing. in the laws of the land, we have legal protections with criminal sanctions for the disclosure confidential supervisory information and we were prohibited in the long to share reasons with banks about the niall, but i can tell you today we have worked out arrangements for the supervisors and banks are now getting concrete communications, approved by the regulators come on the reasons why they did not meet the standards of the law. the reason this took so long was because we were careful and we relied on the regulators to approve applications. the reasons why were unable to talk about the reason for denial was because of the criminal sanctions for sharing confidential information. we have a fix that now. >> i did not even know if you could capture the level of frustration that america deals with the fact that big banks did not have to jump through any

of those hoops and get got access to capital. the small banks seeking to loan have been frustrated about not knowing answers are having their questions about programs out there. a continual line of frustration and non-responsiveness. i want to clear up one last point. you stated the reasons for things the administration was looking at doing to try to change this economic equation and you talk about a demand for goods and services as your number one issue. do you think, mr. secretary, there are small businesses out there that have demand? >> the economy now is growing, as most economists think, around 2%. to% growth is not strong up to bring down the unemployment rate. some businesses are growing faster, some less. if you are a small business in

retail, growth is still very weak for you, but those are the averages. they just are not strong enough. >> i would beg to differ on this point. there is demand out there by small businesses. it may not be as a luminous as the resources given to the large banks, but these small businesses can create jobs. they just need access to capital. >> i agree with you. 100%. >> i would hope the administration, instead of just saying we need to create demand, would say we also need to give capital to main street where demand has been seen and get those businesses growing. 75% of the job operation in america. >> i 100% agree. >> thank you. senator paul. >> thank you, secretary geithner for coming. you said lowering marginal tax rates is good for economic

growth and it could not agree more. under kennedy and reagan when we lowered tax rates, and we did significantly lower unemployment. it seems to be rising and the current administration's policies. policies.