Obama will be back on the campaign trail yet again today in Nashua, N.H. This will be his second town hall event since proclaiming in the State of the Union, "We can't wage a perpetual campaign."

He'll talk about his plan to use $30 billion from TARP to spur lending to small businesses:

Citing the disproportionate impact of credit freeze on small business, the White House wants to give banks with fewer than $10 billion in assets a discount that would prompt them to boost lending to small businesses in exchange for lower dividend rates.

"These are the small, local banks that work most closely with our small businesses -- that provide them their first loan, and watch them grow through good times and bad," Mr. Obama will tell the crowd, according to excerpts of his speech provided by the White House.

The proposal comes with an name, which will undoubtedly become a permanent fixture of D.C.'s alphabet soup lexicon: Small Business Lending Fund.

The Hotline calls it part of Obama's new populist pitch: "The fund will give capital to community banks, and the more those banks lend to small businesses, the better rate they will get from the feds."

But small business leaders are skeptical that arbitrarily asking businesses to hire and pay more will help if there's simply no more business to be had:

"We are skeptical," said Bill Rys, tax counsel for the National Federation of Independent Business. "Until you have customers coming in the door, you're going to have less of a reason to hire."

Ken Sickmen, who owns Belmont TV stores in Arlington, Wheaton and Laurel, said he wouldn't take on new employees unless there was work for them to do. His sales have suffered as consumers cut back spending, and he recently laid off employees for the first time in the company's 65 years. "We could've continued to pay them, but we didn't need them," he said. "The business wasn't there."

And, banks themselves are confused about what exactly the administration would like them to do:

Lenders say they are caught between conflicting government demands. On one hand, the administration is telling them to boost lending. But regulators are also pressing them to build up their capital reserves to prepare for an expected sharp downturn in commercial real estate. That saps the amount of money they can lend to small businesses, many of which are risky borrowers.

"You get this schizophrenic message coming out of the administration and Congress," said Camden Fine, president of the Independent Community Bankers of America. "In any given week, you may hear them say, 'Lend, lend, lend.' And then you may hear, 'We have to crack down on these bankers.' . . . What happens? The bankers hunker down."

The New York Times has an interesting story about how the free market has been filling the vacuum since banks cut down on small-business lending:

Mr. Eitelberg says he doesn’t care much about his customers’ credit scores or their past financial problems. He simply wants to know that they have a solid deal in the works and a purchase order to prove it. “We look for a viable transaction when we do business, not the net worth of the company or the balance sheet,” he says. “We say we look past the balance sheet.” ...

These days, he says, Hartsko’s customers fall into three categories: start-ups that have little or no collateral, growth companies that may be profitable but can’t get enough financing from banks, and troubled companies that nonetheless have viable purchase orders.

It's the kind of thing liberals hate— "gouging" I believe is what they call it— but the business of making risky loans to folks who need them in hard times is risky. As such, the Eitelbergs' cost of doing business is high. They are lending money to many businesses that grow as a result but they can only because their pay-off is worth the risk. And, they do it without subsidies from the U.S. taxpayer.

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