The House Small Business Committee convened a hearing on the financial rescue program and found that $1.6 trillion in bailout funds have provided little assistance to small businesses so far.

"Entrepreneurs are facing serious challenges to secure credit on any terms, leaving many to wonder where the $1.6 trillion in bailout assistance has gone," said committee chair Nydia M. Velázquez (pictured), D-N.Y., in a statement. "Our small businesses have historically led our country out of tough times, but now they are unable to secure capital to start up or expand, resulting in lower job creation and growth during a time when we need it.

"The Treasury and the Federal Reserve have created so many new programs, you would think that at least one would directly benefit small firms - but unfortunately this is not the case," she added. "The Treasury and Fed must stop giving small business lip service and actually provide them with the resources they need to survive in this very challenging time."

During the hearing, the committee pressed the Treasury and Federal Reserve to take immediate and bolder actions to assist small firms. One proposal called for the Treasury to use its authority to purchase troubled small business loans so viable enterprises can stay in operation. Another solution raised during the hearing would have the Federal Reserve establish a facility to provide liquidity to the small business financing market, so that lenders are able to replenish their funds more readily.

Finally, committee members demanded that both the Treasury and the Federal Reserve work with the Small Business Administration, which has seen a 50 percent decline in year-over-year loan volume, to jumpstart its lending. These measures would help alleviate the challenges that small firms are facing in the credit markets.

Randall Kroszner, a member of the Federal Reserve Board of Governors, pointed out that some of the Fed's and the Treasury's recent actions could have a beneficial, albeit indirect, impact on small businesses.

"Although small businesses do not themselves issue nonfinancial commercial paper, they nonetheless benefit when large nonfinancial firms can issue commercial paper in well-functioning markets and thus do not have to tap backup lines of credit at banks," he said. "Similarly, improving interbank funding markets and restoring public confidence in banks and other financial institutions benefits small businesses - again, indirectly - by lowering intermediaries' and thereby small businesses' borrowing costs and increasing the volume of loans that banks can extend." 

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