Inside Financial Services

Stalling, Ignoring, and Changing the Rules

One banker's experience with the Small Business Lending Fund. It's not encouraging.

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Following my harangue here last week regarding the dismal job the Treasury Department did implementing the federal Small Business Lending Fund, I heard from the CEO of a Florida community bank who had first-hand experience of just how unresponsive and unhelpful Treasury was. After the program ended (and the CEO’s bank was turned down for participation), he sent the following e-mail to Jason Tepperman, the director of the SBLF at Treasury. Our man was not happy, and one can see why. We’ve posted the e-mail below, with his permission. -TKB.

Dear Mr. Tepperman,

After enduring as a bank the tremendous numbers of communications we have delivered via letters, e-mail and telephone with absolutely no meaningful responses, I am compelled to share my frustrations with you in your role and to echo the frustrations I think are felt in these times by many when attempting to work with those in positions of authority within our government.

I think the largest frustration we feel as a bank is in having been almost completely ignored, largely by you personally and your office. While I feel certain that the most likely response will be that we don’t understand just how busy you are, I cannot help but turn that and wonder where we would be as a financial institution if we did not provide timely responses to formal communications from Treasury. I think the question would be answered swiftly, and that’s a shame. As a small business that largely serves the financial needs of other small businesses struggling in an economy we did not create we would certainly not stay in business if we chose to simply not respond to multiple inquiries.

Assuming we understand correctly, we were not considered for final approval under SBLF because we could not obtain a waiver from Federal Reserve to pay dividends without prior approval. This vital piece of information was included in the program well after we initially applied. In other words, the rules changed after we entered the game.

It seemingly made absolutely no difference that we offered to prepay the dividend looking out a total of fourteen quarters (three and a half years). It made no difference that our President/CEO offered to pay this amount personally with no strings. We will likely never know; we received absolutely no response. Again, though we notified your office and you personally, apparently no one could respond.

It is our feeling that this was an excellent program when first announced. I recall our having done the calculations as to how many new jobs we felt would be created in our local market by being able to increase lending to small businesses, our frustrations when Treasury took over a month to tell us how to properly complete the application (though they admitted it was only a best guess, the people in Treasury we spoke with had trouble so they said, getting clear answers from Treasury). They just weren’t sure. We felt SBLF would aid in creating new jobs and lowering at least a bit the tremendous unemployment existing today in our market area.

As our nation continues to struggle through what certainly is an historic downturn and as small businesses continue to be the backbone of our country, it is a shame that viable programs fail over something so small as a seeming refusal to look at an individual situation. We were concerned with SBLF initially, would the government change the game as we entered the program? The clear answer was yes.

What do we seek by writing this letter? At this point, given that the program has ended with only a tiny fraction of funds actually allocated under the program, SBLF cannot be considered a success by us utilizing any stick for measurement. Our hope is that somewhere in Washington, people may start to realize that small business built this country and if we are to recover, it will be on the backs of small businesses, like our bank. The failure of the program lies, we feel, in not recognizing this. In choosing not to respond in any meaningful way to requests, communications or to consider that maybe an applicant for funding under SBLF has innovated, found a way to work within the changing rules of the program they could in fact help the program succeed.

Because no one had the time to respond.

4 Responses to “Stalling, Ignoring, and Changing the Rules”

  1. JRG

    Whats the name of the bank? The fact that they cant pay dividends without fed permission indicates some form of administrative order or sanction . Whats the rest of the story? Sounds like they did not qualify for the program based on financial condition.

  2. MMN

    That doesn’t excuse the lack of any response from the Treasury.

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