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Monitor Daily reports on the Current Fed Rate – Still Unchanged

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Fed Holds Rates, Retains ‘Extended Period’ Timeframe

The Federal Reserve left short-term interest rates untouched following the Federal Open Market Committee’s (FOMC) second meeting of 2010.

The FOMC left the fed funds rate at 0% to 0.25%, where it has been since December 2008. As it has said since March 2009, the committee repeated that the rate would probably remain “exceptionally low” for “an extended period.”


Few expected the committee to take any definitive steps on rates yet, but some were watching for a change in the accompanying language that might indicate a change in strategy in the near future.

For the second time Kansas City Fed President Thomas M. Hoenig dissented, saying he believes continuing to express the expectation of “exceptionally low levels” of the federal funds rate for an “extended period” was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.

In its statement the FOMC painted a mixed picture of the economy.

“Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly. However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth,” the Fed said.

In light of improved functioning of financial markets, the Fed said it has been closing the special liquidity facilities that it created to support markets during the crisis. The only remaining such program, the Term Asset-Backed Securities Loan Facility (TALF), is scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities and on March 31 for loans backed by all other types of collateral.

Tuesday, March 16, 2010

Financial Services

Though lending for small businesses is still tight, Obama extends SBA programs

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Though I’ve seen very little in lending for small business loosening. Obama has extended the SBA additional funding. Now is a great time to call PFC to discuss your options if you need any type of small business lending. Phone: 813-835-1253. Pamela Hewett
SBA NEWS RELEASE
Press Office

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SBA Recovery Lending Extended Through May

Administrator Mills presses for longer-term extension for successful programs

Release Date: April 16, 2010
Contact: Hayley Matz (202) 205-6948
Release Number: 10-15
Internet Address: http://www.sba.gov/news

WASHINGTON – President Barack Obama signed legislation yesterday providing
$ 80 million in additional funding to continue important enhancements in the
U.S. Small Business Administration’s two key small business loan programs.
The enhancements, first made available under the American Recovery and
Reinvestment Act, include a higher guarantee on some SBA-backed loans and
small business fee relief.

The SBA estimates the $ 80 million will support about $ 2.8 billion in small
business lending under the 7(a) and 504 programs.

“Small businesses across the country have been able to secure critical
financing as a result of the Recovery Act loan provisions and the continued
interim funding we’ve received for the program,” said SBA Administrator Karen
Mills. “The increased guarantees and reduced fees on SBA loans have
generated more than $ 25 billion in new loans to small business owners and
brought more than 1,200 lenders back to SBA loan programs. In fact, the first
two quarters of the current fiscal year have been our best two opening
quarters ever for the 7(a) program, with more than $ 7 billion in guaranteed
loans. These programs have been successful in helping jump-start our
economy, which is why we will continue to work with Congress on a longer
term extension of the increased guarantee and reduced fees.

“We also know that small businesses could greatly benefit from the additional
tools the President has proposed, including higher SBA loan limits and
refinancing for commercial property mortgages, which could help thousands of
small businesses avoid potential foreclosure. Small businesses need these
improvements to ensure their access to the capital they need to drive
economic growth and create jobs in communities all across the country.”

As part of the Recovery Act enacted on Feb. 17, 2009, SBA received $ 730
million to help small businesses, including $ 375 million to increase the SBA
guarantee on 7(a) loans to 90 percent and to reduce borrower fees on most 7
(a) and 504 loans. The funds for these programs were exhausted on Nov. 23,
2009, and an additional $ 125 million was provided in December. Those funds
were exhausted in late February, 2010, and an additional $ 60 million was
provided subsequently. SBA was authorized for an additional $ 40 million in late
March.

Under the new extension SBA may continue to reduce loan fees in its 7(a) and
504 programs and to provide higher guarantee levels on 7(a) loans through
May 2010, or until the funds provided under the bill are exhausted.

This extension has no effect on the continued availability of financing under
other SBA Recovery Act programs, including SBA’s America’s Recovery Capital
(ARC) loan program and the agency’s Microloan program. Recovery Act funding
still remains available for both of those programs.

Financial Services