News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
November 7, 2007     

CONTACT: Erin Donar,  (202) 225-4038

Committee Explores the Recent Mortgage Crisis and its Impact on Entrepreneurs

For first time, Federal Reserve Governor addresses the effect of market instability on small ventures

WASHINGTON – Today, the House Small Business Committee heard testimony from Governor Frederic Mishkin of the Federal Reserve as to the importance of small businesses in the US economy. Considering that small enterprises create the majority of net new jobs in this country, Chairwoman Nydia M. Velázquez stressed that the needs of small firms must be into account when dealing with the current market instability.

“Virtually every business sector has been affected by the recent volatility in the financial markets, causing widespread uncertainty and doubt,” said Chairwoman Velázquez. “Tightening of lending standards has the potential to drastically impact small firms, so we must monitor this situation closely and ensure that they are afforded adequate access to capital.”

Small businesses play a critical role in the economy, accounting for almost half of employer firms and bringing much needed goods and services to communities across the country. If businesses are unable to access adequate capital, these contributions may be placed at risk, depriving local areas and the national economy of important growth. Governor Mishkin said that while small businesses are currently withstanding recent market turmoil, access to capital is crucial and the Fed is monitoring the situation to try and prevent future problems.

“Financial market conditions began to deteriorate quite rapidly in the middle of August. Although conditions have steadily, albeit gradually, improved over recent weeks, problems could spill over to the market for small business loans,” Mishkin said.

To view further discussion of the market instability, the current mortgage crisis and other economic issues discussed today, click on the link below:

View video highlights from today’s hearing. 

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