By The Associated Press – SEATTLE (AP) A small business seeking to start up a new company is not getting a loan from the Federal Reserve, a Fed spokeswoman said Thursday, after a lawsuit challenging the decision.
A spokeswoman for the Federal Deposit Insurance Corp. said in an email that the bank had received the complaint and is reviewing it.
It said the bank has been assisting businesses and consumers since the beginning of the financial crisis in 2008.
A small business could get the loan without any need for the government, she said.
A Federal Reserve spokeswoman, who spoke on condition of anonymity because she was not authorized to discuss the matter publicly, said she had not yet seen the complaint but was aware of it.
The spokeswoman said the FDIC has a policy that says any small business can apply for a loan but the bank doesn’t have a policy for lending to businesses.
She said the Fed is investigating the matter.
A U.S. District Court judge on Wednesday dismissed a lawsuit from the Center for Responsible Lending, a nonprofit organization that advocates for small businesses.
The lawsuit argued that the FDic shouldn’t be allowed to take a smaller lender to court over the loan.
The Center for Regulatory Policy and Practice at the University of Pennsylvania School of Law said Thursday that the ruling “will prevent banks from getting stuck in this situation.”
The center’s executive director, Scott Hahn, said the ruling could result in banks not getting small business loans and that it would be very costly.