Economy

The House is expected to complete work Thursday on legislation that creates a $30 billion fund to boost lending to small businesses struggling to get credit. 

The measure, which is designed to help small businesses hire and expand operations during the economic downturn, was briefly delayed when it headed back to the House Rules Committee Wednesday for minor technical tweaks to a couple of amendments. 

The legislation is set for floor action Thursday, according to a Democratic aide. 

The $30 billion fund could provide as much as $300 billion in lending to small businesses, according to the Independent Community Bankers Association. 

Banks will less than $1 billion in assets could receive capital investments up to 5 percent of their risk-weighted assets. Those with between $1 billion and $10 billion in assets could receive up to 3 percent. 

House leaders on Wednesday postponed votes on legislation providing greater loan opportunities to small businesses. 

The Rules Committee is expected to meet on the bill and "tweak" it, according to a committee spokesman, because there are paygo issues with the proposal.

Speaker Nancy Pelosi (D-Calif.) earlier Wednesday had expected to pass the bill from her chamber that day. 

Home construction plummeted in May to the lowest levels since December, renewing concerns about the sluggish housing market after the expiration of a federal tax credit. 

Housing starts dropped 10 percent last month to a seasonally adjusted annual rate of 593,000 units, the Commerce Department reported Wednesday. 

Housing starts are up 7.8 percent compared with performance a year ago. 

Single-family homes took a big hit, sinking 17.2 percent between April and May to a seasonally adjusted rate of 468,000 units. 

Analysts expected a drop although not one this severe as builder confidence in the market remains shaky with the expiration of the homebuyers tax credit and a higher number of less expensive existing houses for sale. 

Earlier this week, the National Association of Home Builders reported a drop in confidence in June. 

In a sternly worded letter, Democratic Sens. Charles Schumer (N.Y.), Ron Wyden (Ore.) and Mark Begich (Alaska) on Tuesday sharply criticized BP CEO Tony Hayward for possibly depositing the estimated $2.6 billion dividend payment to shareholders in an escrow account to ensure it would eventually be received by investors.

"We find this option as unacceptable as the company's original plan to go ahead with its dividend payment as scheduled," the senators wrote. "A backdoor payment to shareholders would still drain BP of billions of dollars that may be needed to pay for spill-related damages. This proposal seems like little more than a thinly veiled attempt to spare BP a public backlash while proceeding with business as usual." 

House Financial Services Chairman Barney Frank (D-Mass.) on Monday disagreed with Republicans who dubbed legislation providing loan assistance to small businesses "TARP Jr."

"This is very different than TARP," he said, adding, "I will say this, if the banks in this program repay as great as the TARP banks repaid, than we'll make money on it."

The exchange between Frank and Republicans occurred during the Rules Committee debate on the bill. The House is expected to vote on the legislation later this week, assuming it passes out of committee. 

Rep. Peter Welch (D-Vt.) is circulating a letter to lawmakers that urges BP CEO Tony Hayward to divert the company's proposed dividends into the escrow account being created to pay for damages caused by the oil spill in the Gulf of Mexico.

After rallying for most of Monday, U.S. stocks fell following a downgrade of Greece's credit rating amid concerns over debt-riddled European Union countries. 

The Dow Jones industrials were off 20.18 points — 0.2 percent — to 10,190.89 after gaining 118 points before Moody's Investors Service downgraded Greece's credit rating by four notches to junk status today. 

BP stock continued its fall, dropping 9.7 percent to $30.67 as President Barack Obama and congressional lawmakers put pressure on the company to set up an escrow account to deal with the damaging effects of the oil spill in the Gulf of Mexico. 

Senate Majority Leader Harry Reid (D-Nev.) on Monday objected to a short-term extension of expiring provisions offered by Senate Minority Leader Mitch McConnell (R-Ky.) because the proposal's cost was offset by rescinding some of the provisions in the stimulus bill. 

"It's a good program," Reid said of the stimulus bill. "It creates jobs." 

Sen. George LeMieux (R-Fla.) on Monday said he supports the creation of an escrow account by BP to pay for damages caused by the oil spill in the Gulf of Mexico. The senator put forward a similar idea more than a month ago.  

"I think it's a good idea," he told MSNBC's Morning Joe. "I actually sent a letter to BP on May 11th asking for something very similar."

LeMieux in May sent a letter to BP CEO Tony Hayward asking him to set up an account that would pay claims against the company for the oil spill. 

Sen. Harry Reid and other Democrats formally urged BP to set up a $20 billion escrow account with an independent trustee for spill damages.