09/11/08 Business Start-up Hurdles in Underserved Communities: Access to Venture Capital and Entrepreneurship Training Hearing
09/09/08 Opportunities and Challenges for Women Entrepreneurs on the 20th Anniversary of the Women's Business Ownership Act Roundtable
07/30/08 S.3362, A bill to reauthorize and improve the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs Markup
06/25/08 Examining Solutions to Cope with the Rise in Home Heating Oil Prices Hearing
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July 25, 2007
Kerry Opening Statement on Oversight Hearing on Gulf Coast Disaster Loans and the Future of the Disaster Loan Program
Welcome. We’re here today to take a close look at the Small Business Administration’s Disaster Assistance Program, which serves as the Federal government’s primary source of long term financial assistance to homeowners and business owners in the aftermath of a disaster.
If you read the newspapers, you know all about SBA’s role in the massive failure that occurred in the wake of the 2005 Gulf Coast hurricanes. What you probably do not realize is the frequency with which the SBA responds to smaller scale disasters. In fact, the SBA’s Disaster Assistance program plays an integral role in rebuilding homes and towns in every state across the country.
Small business owners and homeowners from the town of Uxbridge in my home state of Massachusetts know this as well as anyone after a fire ripped through a Mill Complex this past Saturday morning, damaging or destroying 135 homes and businesses. Much of the money that will be used to rebuild this town will come from the Small Business Administration, and I want to personally thank Administrator Preston for his swift response in making a declaration of physical disaster for the people of Uxbridge.
As we all know, however, not every disaster receives such a swift and effective response. Next month will mark the two-year anniversary of the most devastating disaster in the history of this country. The impact of Hurricane Katrina on the Gulf Coast region, particularly the state of Louisiana, was nothing short of catastrophic. Thousands were killed and hundreds of thousands were displaced, left wondering if they will ever be able to return home again.
At every step during the response and recovery process, the federal government was exposed as woefully unprepared to handle a disaster of this magnitude. At no agency was this lack of preparedness more evident than at the Small Business Administration. Insufficient staffing, slow response, lack of leadership, and an inadequate processing system led to the agency’s absolute failure to respond to the needs of Gulf Coast applicants.
On April 25th, 2006—nearly eight months after the storms hit—Mr. Preston’s predecessor resigned, leaving an enormous mess to clean up. On that day, more than 31,000 loan applications remained unprocessed and just 10 percent of the money that was approved for disaster victims had actually been disbursed.
By all accounts, Administrator Preston made it his top priority to get this program on track. In the fall of 2006, he set a goal of reaching each and every one of the roughly 90,000 loan applicants that had been approved for a loan but had not received their money. This aggressive goal had an immediate impact, and to date the agency has disbursed nearly $6 billion to the victims who waited so many months to rebuild their homes and their lives.
Today, we will hear that for all of the success generated by Administrator Preston’s efforts, are also some serious concerns with the methods that were used to carry out the effort on the ground.
Earlier this year, I received two letters from former SBA loan officers, which I sent to the agency’s Inspector General Eric Thorson to consider as part of his ongoing investigation into the agency’s Gulf Coast response. We will hear today from Mr. Thorson that several of the allegations made in these letters were more than isolated incidents. We will also hear from Gale Martin, a former SBA loan officer, who wrote one of the letters alleging misconduct on the part of her superiors.
As Chairman of the Committee, I am gravely concerned both by the allegations made by Ms. Martin and her colleagues and by Mr. Thorson’s findings. One of the many qualities I have come to admire in the SBA Administrator is his sense of accountability, and I hope that we will see that quality exhibited later today. The goal of this hearing—the goal for each Senator on the Committee and for each witness scheduled to testify here today—is to ensure that no victim falls through the cracks, that no one who was relying on the government for a loan to rebuild a business or a home was left wondering why the government let them down.
As we have done since the day Katrina struck, Senators Snowe, Landrieu, Vitter and I will work to make sure that the SBA leaves no stone unturned in providing relief to small business owners and homeowners who are still struggling to make ends meet. I encourage Administrator Preston to work with the Inspector General in the months ahead to address the concerns raised in these reports.
More importantly, I believe an effort needs to be made to ensure that no loan applicant who was approved for a disaster loan was left with an undesired and un-requested cancellation. If there are victims of this storm that were approved for assistance but were later turned away against their wishes, then we have a responsibility to go back and make things right. I am confident that Administrator Preston will make a serious effort to make things right.
Just as we must continue to look at what can be done for the people of the Gulf Coast, we must take action to put in place the tools that will prevent another Katrina-like response in the event of another large scale disaster. The SBA recently briefed congressional staff on its Disaster Recovery Plan, which establishes a framework for how the agency will respond to future events. I look forward to hearing from the Administrator regarding the specifics of this plan.
We’ll also hear from William Shear of GAO, who has made several recommendations through two published reports regarding what steps the SBA needs to take to address the shortcomings exposed over the past two years.
Finally, we are meeting today four months after this Committee voted unanimously to report a bill that addresses many of the holes in SBA’s capacity to execute effective disaster response.
This bill creates an expedited disaster response program to get money in the hands of victims quickly. It authorizes private banks to make disaster loans, so that local banks can get involved immediately with a response effort. It also creates a new level of declaration for the Administrator—a declaration of Catastrophic National Disaster—to allow for businesses outside of the geographic reach of a disaster to access low interest loans if they are adversely impacted.
Despite broad bipartisan support in the Senate and a letter of support from Administrator Preston, this bill remains stalled. We need to pass this bill now so that these tools are available, if and when the SBA needs to respond to another large scale, Katrina-sized disaster.
We are here today because we need to get this right. We’re almost two months into another hurricane season that is projected to be a busy one—the National Oceanic and Atmospheric Administration projects 13 to 17 named storms, with as many as 10 becoming hurricanes. It’s irresponsible of Congress and of this Administration to continue to count on luck to carry us through these months. We owe it to the people that lived through the 2005 hurricanes and to the millions of Americans who are at risk of experiencing a similar fate to fix this program and to ensure that the SBA is in a position to effectively respond to the next large scale disaster.
With that, I would like to turn to Ranking Member Snowe for her remarks.