HispanicBusiness

U.S. officials said it is time to help the little guy after a federal watchdog said a bank bailout program had strained the government's credibility.

The program that Inspector General Neil Barofsky criticized was the reasonably visible $700 billion Troubled Asset Relief Program that Barofsky said helped the nation's banks but had "no direct results" in its efforts to help struggling homeowners, one of its legislated missions.

Moreover, "the American people's belief that the funds went into a black hole, or that there was a transfer of wealth from taxpayers to Wall Street, is one of the worst outcomes of this program," Barofsky's 256-page report said.

Officials seemed to take heed, as an official said the Treasury's pay czar, Kenneth Feinberg, was prepared to slash salaries as much as 90 percent for the top 25 executives at seven firms that received extraordinary assistance from the TARP program. In addition, a senior administration official told The Washington Post a "new direction" for economic assistance was in the offing.

Prior to an announcement, President Barack Obama said "small businesses have always formed the backbone of the American economy. The problem is, our small businesses have been some of the hardest hit by this recession."

To punch up support for businesses that don't often find themselves in the same sentence with the word "billion," the TARP program could be retooled to provide community banks with loans at a 3 percent rate, rather than the previous rate of 5 percent, the Post reported Wednesday.

The loans would go to banks with assets of less than $1 billion and come with the caveat that lending must improve for small businesses.

In addition, Obama will ask for approval from Congress to raise the cap on Small Business Administration loans from $2 million to $5 million. The cap on micro loans -- for businesses not often in the same sentence as the word "million" -- would increase from $35,000 to $50,000.

"America will not recover until our small businesses recover. In communities across the country, they are the engines of job growth and lead the way to the industries of the future," Treasury Secretary Timothy Geithner said in a statement.

"Initial programs that sort of defined TARP in the eyes of everybody have been successful enough that we can wind them down and make sure that what we continue on an ongoing basis are more targeted programs directed at what are the principal areas where there's still weakness in access to credit," said Geithner Tuesday night. "Small business is one example, housing is another example."

Global markets Thursday followed the lead of U.S. markets, which turned lower on a Federal Reserve Beige book report that said consumer spending remained weak. The Nikkei 225 index in Japan lost 0.64 percent, while the Shanghai composite in China dropped 0.62 percent. The Hang Seng index in Hong Kong lost 0.48 percent, while the Sensex in India shed 1.29 percent. In Australia, the S&P/ASX slid 0.53 percent.

In midday trading in Europe, the FTSE 100 in Britain lost 0.99 percent, while the DAX 30 in Germany retreated 1.34 percent. The CAC 40 in France fell 1.41 percent, while the pan-European DJ Stoxx 50 lost 1.13 percent.