Sen. Hillary Rodham Clinton, D-N.Y., has proposed a $150 billion Emergency Stabilization Fund to help small businesses, universities, students and municipalities cope with the credit crisis, with the money coming from the $700 billion financial bailout package.
Clinton wrote to President George W. Bush and Treasury Secretary Henry Paulson outlining the proposal.
"This would be an extraordinary undertaking, but we must take every step to ensure that this market crisis, which is now global, does not threaten to seize our entire economy," wrote Clinton. "It is a matter of necessity and a matter of fairness: we are helping to keep large Wall Street firms afloat with lines of credit and we should do the same for small Main Street businesses."
Clinton said the administration should use the money to make emergency loans and establish temporary lines of credit for small businesses. The fund would also allow schools and universities to receive short-term access to financing to reduce the pressure on tuition, increase direct loans to students as private lending has dried up, and help stabilize municipal bonds. Clinton has also proposed dedicating $100 billion in new Treasury security revenues to take advantage of historically low Treasury bill yields.
The Small Business Administration has reported that problems in the credit market are making it difficult for small businesses to obtain SBA-guaranteed loans from banks. The number of 7(a) loans in fiscal 2008 dropped 30 percent compared to last year.
