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news archives
11/27/2008
Federal Reserve to Extend $200 Billion for Asset-Backed and Small Business Lending
Washington, DC –The United States Hispanic Chamber of Commerce (USHCC)
applauded an announcement made by the Federal Reserve this past Tuesday, November 25th, to provide up to $200 billion toward asset-backed consumer loans such as credit cards, auto loans and student loans, and
guaranteed small business loans by the Small Business Administration (SBA).
"We are encouraged that the Federal Reserve has responded to the voices of Hispanic and
other small business owners,” said David C. Lizárraga, Chairman of the USHCC. “We have
seen continued bailout assistance go to large financial institutions while the interest rates on
small business loans continue to spiral out of control. We cannot let the well of capital run
dry for millions of Main Street businesses laboring to keep their doors open during these
trying economic times. This is a vital first step toward restoring balance in small business
lending."
"Asset-backed securities such as credit cards, as well as small business, auto, and student
loans should not be allowed to dwindle because of lack of liquidity or irrational risk adversity
in the credit markets," said Augustine Martinez, President & CEO of the USHCC. "We are
cautiously optimistic that today's announcement will begin to move us in the right direction."
The Fed's announcement noted that "new issuance of [asset-backed loans] declined
precipitously in September and came to a halt in October. At the same time, interest
rate[s]… soared to levels well outside the range of historical experience, reflecting unusually
high risk premiums. The [asset-backed loans] markets historically have funded a substantial
share of consumer credit and SBA-guaranteed small business loans. Continued disruption of
these markets could significantly limit the availability of credit to households and small
businesses and thereby contribute to further weakening of U.S. economic activity."
The announcement also stated that this plan was "…designed to increase credit availability
and support economic activity by facilitating renewed issuance of consumer and small
business [asset-backed loans] at more normal interest rate[s]."
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