Seeking to counter a chorus of unhappy Republicans and nervous Wall Street investors, President Barack Obama and his economic team are taking a cheerier tone while making billions in federal loans available to the nation's struggling small businesses.
Obama and Treasury Secretary Timothy Geithner on Monday planned to announce a broad package that includes reduced small-business lending fees and an increase on the guarantee to some Small Business Administration loans. A day earlier, the president"s advisers said in television interviews that they remained confident in the nation's economic fundamentals, at times adopting upbeat rhetoric the president once mocked.
"The fundamentals are sound in the sense that the American workers are sound, we have a good capital stock, we have good technology,' said Christina Romer, who heads the White House Council of Economic Advisers.
Obama, for his part, has embraced the role of "confidence-builder in chief,' as one business leader asked him to become. One week after his budget director declared 'fundamentally, the economy is weak,' Obama"s economic advisers offered up a buoyant assessment.
Larry Summers, the director of the National Economic Council and an Obama adviser, quoted the president: 'It's never as good as people say it is when they say it's good and it's never as bad as people say it is when they say it's bad.'
Dealing with a severe recession, Obama has turned to a public face that emphasizes the potential for recovery instead of its limits.
To that end, the government plans to take aggressive steps to boost bank liquidity with more than $10 billion aimed at unfreezing the secondary credit market, according to officials briefed on the plan who demanded anonymity to avoid pre-empting the president's announcement.
The new measures taking effect Monday focus on opening up small-business lending, seen as critical to cities' growth. 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.
Under the two-month-old administration's new 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 between $10 billion to $20 billion, one official briefed on the plan said.
The plan also increases the government guarantees on certain loans to 90 percent, up from 85 percent for loans below $150,000 and 75 percent for larger loans. AP