Incoming Administration Signals Strong Support for Small Businesses

This week, the incoming Obama administration gave a strong signal of its commitment to channeling federal economic recovery efforts to small businesses.

On January 12, Lawrence Summers, director-designate of the National Economic Council wrote to the U.S. Congressional leadership asking for the authority to implement the balance of the existing financial rescue plan approved by Congress last October and stating Obama's commitment "to using the full arsenal of tools available to us to get credit flowing again to families and businesses."

In late December, ABA President Gayle Shanks had written Obama and his transition team on behalf of ABA members, urging them "to ensure that the survival and long-range health of ... independent, locally owned businesses are a prominent part of [the] economic stimulus package." In her letter, Shanks called on the Obama/Biden administration to "work immediately to address the credit crisis that threatens U.S. small businesses by implementing steps ... outlined during the campaign."

While the Summers' letter noted President-elect Obama's support for the rescue plan, he also wrote that Obama "shares the frustration of the American people that we have seen too little effect from this rescue plan" on jobs and incomes. He noted, too, the president-elect's belief that the rescue plan lacked transparency and accountability and that there had been "too much upside for financial institutions and executives who acted irresponsibly without providing enough help" for small business owners and others.

As outlined in Summers' letter to the congressional leaders, such efforts are clearly a major goal for the new administration.

Summers noted that: "We must ... do everything in our power to ensure our efforts are more directly reaching Main Street. It is neither right now sound economics policy to allow the small businesses that are responsible for more than two-thirds of job creation and entrepreneurs who have worked hard and played by the rules to be victims of this credit crisis that they were not responsible for creating."

He also pledged that Obama would work "in close cooperation with the Congress, the Federal Reserve, and other agencies" to strengthen financial institutions and to restart lending for small businesses.

Watch BTW for ongoing coverage of this story. --Dan Cullen