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This morning the President discussed a sharp contrast. On the one hand, he invited hard working small business owners to the East Wing of the White House to discuss ways the government could help them stay above water. He lightheartedly lavished praise on the sandwich made for him by Marco Lentini, the owner of a small food company, and commended Cynthia L. Blankenship, a community bank owner who has not only been responsible, but has helped keep credit flowing to other small businesses even as it dries up elsewhere.
I've asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole. (Applause.) I want everybody to be clear that Secretary Geithner has been on the case. He's working to resolve this matter with the new CEO, Edward Liddy -- who, by the way, everybody needs to understand came on board after the contracts that led to these bonuses were agreed to last year.
But I think Mr. Liddy and certainly everybody involved needs to understand this is not just a matter of dollars and cents. It's about our fundamental values. All across the country, there are people who are working hard and meeting their responsibilities every day, without the benefit of government bailouts or multi-million dollar bonuses. You've got a bunch of small business people here who are struggling just to keep their credit line open -- that they are foregoing pay, as one of our entrepreneurs talked about, they are in some cases mortgaging their homes, and doing a whole host of things just in order to keep things afloat. All they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules. And that is an ethic that we have to demand.
And what this situation also underscores is the need for overall financial regulatory reform, so we don't find ourselves in this position again, and for some form of resolution mechanism in dealing with troubled financial institutions, so that we've got greater authority to protect American taxpayers and our financial system in cases such as this.
Returning his focus to small business, he contrasted AIG bonuses with the ethos of small business entrepreneurs, saying, "This is America's story -- a place where we believe all things are possible; where we are limited only by our willingness to take a chance and work hard to achieve our dreams." The President emphasized what has already been done through the Recovery Act: raising the guarantees on SBA loans to 90 percent, eliminating costly fees for borrowers and lenders, and a series of tax cuts for small businesses and tax incentives to encourage investments in small businesses. He noted further that in his budget, he proposes permanently reducing to zero the capital gains tax for investments in small or startup businesses, as well as instituting tax credits for health care as part of his broader health reform effort.
But he concluded that unless credit was unlocked for small businesses to grow, none of this would be successful, and said that he would have the Treasury Department begin purchasing up to $15 billion of SBA loans through the Troubled Asset Relief Program, or TARP. He explained that now "any lender that provides SBA small business loans will have a buyer for those loans." To illustrate who he was trying to help, the President told the story of John Wilson:
That's what the small business owners 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 ago and participated in the meeting we just held.
And John's business, NC Design Group, sells cabinets and interior design services. And not surprisingly, it's been a tough year. Sales have fallen by half. And keep in mind, John had previously doubled what had started off as a very small business, to the point where he's providing a living for -- it was up to 40 -- 48 people. And John did all that he could to save loans. The owners, including John, have taken no compensation. But they had to reduce the size of their company from 48 employees to 34. And John just told the group of us that he personally took the time to speak to each and every person that he had to lay off. And I don't think he minds me sharing that he cried each time he did it, because it's a hard thing when somebody is working hard and committed to helping you build your business, you having to lay them off.
And now, even though they've never been late on a payment to the bank, they're having trouble keeping a credit line. It's putting his small business –- and the 34 jobs left –- in jeopardy.
Now, John is not looking for a handout. He's looking for the opportunity to succeed. And he said it best himself in his letter, and I'm quoting from the letter here: "Small business people are incredibly resilient and resourceful given half a chance," he said. "But we need the chance."
Well, I want to say to John and to every American running a small business or hoping to run a small business one day: You deserve a chance. America needs you to have that chance.
(President Barack Obama, delivers remarks to small business owners, community lenders and members of Congress in the East Room of the White House in Washington, Monday, March 16, 2009. White House Photo, Chuck Kennedy)