Kanjorski slams Federal Home Loan Banks for failing to invest in small businesses

Rep. Paul Kanjorski (D-Pa.) on Wednesday sharply criticized a federal effort to boost lending to small businesses through Federal Home Loan Banks.

Kanjorski, a top Democrat on the House Financial Services Committee, criticized the network of government-sponsored banks for failing to extend money collateralized by small business or agriculture loans.

"The failure of too many [home loan] banks and their regulator to make economic development a priority is extremely disappointing and it ignores the reforms adopted by Congress more than a decade ago," Kanjorski said in a statement. "Simply put, the Federal Home Loan Banks must do more to promote job growth."

Kanjorski's comments come after a Government Accountability Office report showed small business and agriculture loans represent a tiny share of the number of loans that are used as collateral for new money lent by the home loan banks. The home loan banks lend money to private banks that pledge collateral, usually home mortgages. In 1999, Congress allowed the home loan banks to accept other forms of collateral, including agriculture and small business loans.

The GAO report showed that the agriculture and small-business loans amount to only 1 percent of the new lending from the home loan banks.

Kanjorski criticized the federal regulator for the home loan banks for neglecting the law's intent to boost small businesses.