Government to Take Tarp Bailout Money and Give it to Small Businesses?

For the first time, the Obama administration is considering an economic policy which makes some sense.

As the Washington Post writes:

The Obama administration is developing an initiative to take money from the $700 billion program for the banking system and make it available to millions of small businesses, which officials say are essential to any economic recovery because they employ so many people, according to sources familiar with the plan.

The new effort — which would represent a striking shift from the rescue program’s original mandate — would direct billions of bailout dollars toward a program that aims more at saving jobs than righting the financial system.

As I’ve repeatedly pointed out, Tarp is not really limited to a certain amount. So – if implemented – the program would not necessarily take a fixed portion of the $700 billion Tarp bailout funds from the banks and give them to small businesses. In theory, the Treasury could give trillions to banks and give billions to small businesses.

Of course, it would be better to give money directly to the taxpayers – that’s the way to stimulate the economy (although others argue for other measures).

But I like the fact that Treasury is at least talking about switching from throwing money at the giant banks to giving some to the little guy.

Maybe the big boys are starting to feel the heat from the populist anger at the fat cats and their sugar daddies at Government Sachs.

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