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WASHINGTON: US President Barack Obama announced on Tuesday a new lending fund in a mammoth effort to help small businesses and consumers in a bid to stimulate a recession-hit economy.
"We are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running," Obama told a joint session of Congress.
Obama said that his administration was concerned that if it did not re-start lending, "our recovery will be choked off before it even begins".
"You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll."
He noted that credit had stopped flowing the way it should following financial turmoil stemming from a home mortgage crisis.
"Too many bad loans from the housing crisis have made their way onto the books of too many banks," he said.
"With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other.
"When there is no lending, families can't afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further."
At the same time, he assured Americans their savings were safe, and argued that saving banks did not mean shovelling tax payer cash to avaricious fat cat executives.
"This time, CEOs won't be able to use taxpayer money to pad their pay checks or buy fancy drapes or disappear on a private jet. Those days are over," Obama said. "It's not about helping banks, it's about helping people."
The president also warned that the price for recovery would be a new economy in which people spent within their means, and turned their backs on a chase for easy wealth and quick profits.
- AFP/so
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