Friday, June 03, 2011

Is the $2B from Huntington Bank Courtesy of President Obama?

Yesterday Governor Snyder announced that Huntington Bank has pledged $2B to Michigan in the "largest multi-year lending commitment in its history". Much balloons and fanfare and champange followed I'm sure, Huntington falling all over themselves to kiss up to Republicans and promote their business...

“The economic environment as we see it going forward is changing significantly and the attractiveness of the business environment is changing,” said Dunlap, who has hired about 400 additional employees in Michigan over the past 18 months.

So, they had already hired 400 before Snyder's budget took effect. Curious. And then there is this...

About half of the $2 billion will be targeted toward small businesses that may qualify Small Business Administration-backed loans. The other half will be geared toward businesses with $1 million to $20 million in sales.

There will be no fees on the commercial loans and interest rates will be “competitive,” according to Huntington.

But wait a minute... didn't President Obama put $30B into play with the Small Business Jobs Act, money that originated from TARP, and that the Republicans in Congress fought to have excluded from the Act? Is that where this guaranty is coming from?

Hmmmm. Not sure. I'm just pulling on loose threads here. Did Huntington Bank take advantage of previous policy as well? Looks like they did. The following comes from Oct. of last year, when Huntington was named the "No. 1 SBA 7(a) lender cumulatively" for 2010, leading the way in Ohio, Michigan, West Virginia and western Pennsylvania.

The bank's commercial lenders are helping small-business owners benefit from the Small Business Jobs Act that President Obama signed into law last month, noted Huntington CEO Steve Steinour. The act eliminates fee charged for SBA 7(a) and 504 loans through Dec. 31. It also raises the limits on 7(a) loans to $5 million from $2 million, on 504 loans to $5.5 million from $1.5 million and on 7(a) Express Loans to $1 million from $350,000.

The act also raises the SBA-guaranteed portion of 7(a) loans to 90% from 75% though the end of the year.

Why was Ohio the big winner? Could be because Huntington pledged $1B in credit to them in 2009, using TARP funds and running it through a state government program. It was the first program of its kind in the country, and could be the model for what has followed elsewhere. Sounds like Huntington unleashed the loan flood gates, knowing they had the backing of the feds.

And, even though that snippet has the fee elimination ending last December, it makes you wonder. Huntington (or any bank) is not going to be doing this out of the goodness of their heart or any professed confidence in Snyder's tax schemes that haven't come to fruition yet (or ever) - my guess is they are doing it because the federal government is willing to underwrite those loans made through the SBA funding. The "free market" Republicans are usually very happy to use those taxpayer dollars when it suits their interests. Pretty par for the course.

Spitballing here. I'm no expert in loans through the feds; no time today to dig further. Maybe Haglund or someone at Crain's will follow the money trail back - but wouldn't it be a hoot to find out that it was President Obama's federal small business policy and TARP money that made yesterday's Huntington Michigan announcement possible?

A real knee-slapper if so. Get on it, financial sleuths.