The Administration's "Access to Capital" Conference

Today, the Obama Administration is convening an "Access to Capital" conference. Hopefully the attendees will come up with some actionable ideas to increase the pool of capital in the U.S.

In his opening remarks at the event, U.S. Treasury Secretary Tim Geithner cited three areas where the Administration is currently helping small businesses. Unfortunately, these efforts are falling short because they are so miniscule, targeted or temporary. They are not making much of a difference for America's entrepreneurs.

Secretary Geithner mentioned the Administration's efforts focused on tax relief, as well as a zero capital gains tax rate and a new small business lending fund. However, these initiatives amount to a drop in the bucket or miss the mark in terms of helping the broader small business community.

For example, the temporary zero capital gains tax rate only applies to small C corporations. Most small businesses are not structured as C corporations.

The small business lending fund is just getting off the ground, and appears to be much smaller than the $30 billion that was originally slated for distribution. Apparently, most community banks are not participating in the program because they fear the rules will change mid-game (like they did with the $700 billion bail-out program), and there's a stigma attached to taking government money. Many community banks don't need the government's money -- they only need for economic conditions to improve and for regulators to stop breathing down their necks.

Regarding tax relief, the temporary nature of the provisions continue to drive uncertainty. If Congress and the Administration made these tax provisions permanent, confidence would increase and the economy would strengthen.

As for other solutions that will be discussed, Geithner seemed to bemoan the fact that IPO activity is anemic with U.S. companies going abroad to go public. The cost of going (and remaining) public in the U.S. is prohibitive thanks to Sarbanes-Oxley. The new Dodd-Frank bill, once fully implemented, will be yet another drag on the availability and cost of capital.

It will be interesting to see if the conference produces any good ideas. The bottom line is that government is at the center of the problem -- one hopes that attendees at the conference recognize this, and offer reform solutions.

Karen Kerrigan, President & CEO