WASHINGTON — The House approved a bill 241 to 182 on Thursday that would create a $30 billion fund that community banks could access for small business loans.
The bill passed after a contentious debate over whether the legislation would spur small business lending or if it should be considered another Troubled Asset Relief Program.
The measure would create a $30 billion fund to provide capital to community banks. Banks would see their dividend on the capital reduced as it increased its small business lending. For example, if a bank boosted lending by more than 10%, the dividend would drop from an initial 5% rate to 1%.
The program would also be free of some of the restrictions of Tarp, such as warrants and executive compensation limitations.
Over the two-day debate, the House adopted amendments to increase disclosure, reporting and oversight of the program.
On Thursday, lawmakers adopted an amendment that would allow construction, land development, and other land loans for offices to be counted as small business loans.
The bill now moves to the Senate, which could consider it within the month. Analysts and observers have warned the legislation faces an uphill battle in that chamber, however. Republicans have argued the bill is another version of the politically unpopular Tarp program.
House Financial Services Committee Barney Frank angrily denounced that argument on Thursday, saying the program was substantially different from Tarp.
"This is an effort to call it Tarp," he said. "It is not Tarp. It's the Pee-wee Herman school of legislating, let's call each other names without dealing with the substance."