RECOVER Act

Mr. Chairman, I yield myself such time as I might consume.

Today, Mr. Chairman, I rise in opposition to H.R. 1361, the RECOVER Act. While there are many important things that this bill does, there are two provisions in particular, I believe, that unfortunately undermine the good work that has been done by the chairwoman in drafting the legislation.

I want to make clear, I think she has worked very hard. I think the staff has worked very hard to craft what they thought was a good bill, and I think it still has the potential. There are two amendments that we are going to offer subsequent to the general debate argument here, and if those amendments are adopted, I think they fix the bill sufficiently that we can support it because, as I indicated, I think there are many good things in this bill. But without those two provisions being passed, we unfortunately have to oppose it in its current form.

These two provisions, as I indicated, unfortunately make it impossible for me to support it as drafted, and the manager's amendment offered by the chairwoman, while making one of the provisions less problematic, does not assuage our underlying concerns about the two provisions that I just mentioned.

I think everyone can agree that all branches of government failed to respond adequately to the devastation that was Hurricane Katrina, and one of those agencies that did not measure up is the Small Business Administration unfortunately. This is not the conclusion of Democrats or Republicans, or Louisiana or Mississippi Members of Congress. It is a conclusion reached by the GAO, small business owners in the region and even the SBA itself.

While much of the focus on the response to Katrina has focused on the immediate aftermath and the failures of FEMA, the SBA plays a key role in the response to disasters by issuing loans to both homeowners and small businesses affected by the disaster. Thus, an inadequate response by the SBA undermines the recovery of communities devastated by natural disasters. It is vital that the SBA be prepared to handle future disasters, including some worst-case possible scenarios.

Administrator Preston understands this and has taken a number of steps to improve the SBA's readiness and made efforts to ensure that the inadequate response does not repeat itself. Through his efforts, he has reduced backlogs, streamlined loan processing,

improved customer service and identified points where the processing of disaster loans broke down. Administrator Preston also will ensure that the computer systems at the SBA will be improved; establish a reserve corps; utilize non-SBA staff to process loans; establish a new disaster manual that will be finalized by June 1 for the start of the current hurricane season; and continually revise responses to disasters based on the experience of previous disasters.

One may ask why a bill is necessary if Administrator Preston is making these changes. Well, as we have seen, other administrators may not have the same priorities and may reduce preparedness in the future to address other needs of the SBA. Therefore, incorporating many of these changes in statute will ensure that the administrator and SBA personnel will have the appropriate resources and congressional direction to ensure the SBA will have an adequate response to a disaster in the future.

Title I of the bill makes important changes in the SBA's management structure to ensure that the agency is prepared not only for predictable disasters but also the unpredictable ones. Title I requires the administrator to, A, develop a comprehensive disaster response plan; B, conduct an annual disaster simulation exercise; C, maintain a disaster reserve corps; D, create plans to obtain additional office space needed for major disasters; E, coordinate disaster assistance programs with FEMA; and create, from existing personnel, the position of an associate administrator for disaster assistance that has experience in both disaster planning and disaster response. These changes are all beneficial and will ensure that the SBA has the necessary tools and experience to respond to disasters.

These changes are supplemented by section 208, which provides enhanced lending authority to banks and other financial institutions that are preferred SBA lenders to process disaster loans in certain circumstances. Given the expertise of SBA preferred lenders, they should be able to supplement the SBA's capability to process disaster loans when necessary.

There are other important changes in title II that also are beneficial, and I commend the chairwoman, Chairwoman Velazquez, for including those in this legislation. By themselves, these provisions would have made an effective bipartisan bill that ensures the SBA has the current planning and future capacity to respond to a disaster, whether it is a local tornado or an incident of national significance such as Hurricane Katrina.

Unfortunately, the legislation has two critical provisions that, in my view, seriously undercut the otherwise excellent work of the committee in creating a structure that will ensure the SBA is prepared to respond irrespective of the scope of the disaster. The first provision would authorize, according to CBO estimates, $180 million in grants to small businesses that were denied SBA loans. The other provision would grant the administrator the authority to, in essence, create a grant program that replaces grant funds that must be applied against existing disaster loans issued by the SBA. In other words, it allows a double compensation, a person to be compensated for the same damage twice. Given my concern about these two provisions, I will be offering amendments at the appropriate time to strike these two provisions, two amendments that we will be offering.

If these two provisions are removed, I think the House would then be able to pass a sound bill on an overwhelmingly bipartisan basis that dramatically improves the administrative structure by which the SBA responds to disasters in a fiscally responsible manner.

As I indicated before, if the two amendments are not passed, unfortunately I am going to have to oppose this particular piece of legislation.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield such time as he might consume to the gentleman from Ohio (Mr. Jordan) who, as one of the newer members of the committee, has been very active and is really contributing much to the committee already.

Mr. Chairman, we reserve the balance of our time.

Mr. Chairman, we will continue to reserve our time.

Mr. Chairman, we will reserve the balance of our time.

Mr. Chairman, prior to yielding back all our time, if I could just make a comment or two. I will yield myself as much time as I may consume. I will be very brief.

I just want to reiterate that there are things within this bill which I think are very good efforts in resolving some of the difficulties that we saw in Katrina.

First of all, the SBA's response time for loans and other things was unacceptable, and it is absolutely critical that it be improved upon. And I think there are some things in this bill that do just that. For example, better coordination between the SBA and FEMA; the requirement of a plan ahead of time, a disaster plan ahead of time that everybody knows about so you are not looking for a plan or trying to put one together after the disaster has already hit; it makes sense to do that ahead of time. This calls for this.

It calls for a reserve corps of trained personnel, which I particularly like because you are talking about training people ahead of time, but not necessarily hiring them as new government employees that then one has to pay and pay compensation to over a long period of time. So I like the fact that we are talking about training a reserve corps ahead of time.

I think the idea of having simulation exercises called for ahead of time makes a lot of sense so that people are prepared.

As I indicated before, however, there are a couple of, in my view, fatal flaws to this particular piece of legislation, which we are going to address in a few moments here in a couple of amendments. And if they pass, then we would be very supportive of the whole act. If they don't, unfortunately, we would have to oppose the bill.

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I offer an amendment.

Mr. Chairman, I yield myself such time as I may consume.

This amendment is really rather simple. It just strikes section 211 of the bill as amended by the manager's amendment. Even though the manager's amendment addresses the direct cost provision of the original section as

determined by the CBO score, section 211 still is fraught with one major problem. And that is that it allows double compensation for the same injury or destruction or problem that the person had.

As I understand section 211 in the manager's amendment, here is how that provision operates: For example, a homeowner applies for a physical disaster loan from the SBA for, say, $100,000. The homeowner then receives a grant from the State for $50,000 for the same destruction. Under existing law, the homeowner would have to immediately pay back $50,000 of the SBA loan because the SBA loan only covers amounts not otherwise compensated for through some other financial resource. Typically, that is insurance, but it does not have to be. Section 211 does not change the requirement that the homeowner would have to pay down the $50,000 in the disaster loan. Instead, section 211 would then allow the homeowner to apply for a grant from the SBA to replace the same amount of money that they had just paid to the SBA to reduce their loan.

Now you are probably asking yourself why go through this convoluted process. Well, this is the only way for the majority to obtain a program that does not require direct spending, and therefore, it gets around the PAYGO problem. But even though this is an improvement over the bill as reported out of the committee because it has no direct spending and therefore is in compliance with PAYGO, it remains fundamentally flawed.

The disaster loan program is just that: the Federal Government's program designed to provide redress to those homeowners and small businesses injured in a disaster. And it is important to note that the vast majority of loan recipients, both businesses and homeowners, receive loans at heavily subsidized interest rates of 3 or 4 percent interest. It is not a grant program and was never designed to be a grant program. The interest rate subsidy, a 30-year term, and the SBA's authority to suspend payment on principal and interest constitute the compensation needed to rebuild many areas, from Chatsworth in California to Homestead in Florida.

Now, section 211 of H.R. 1361 has the recipient of a disaster loan obtaining a grant from a source other than the SBA, using that money to pay off all or a portion of the SBA disaster loan, and then apply to the SBA for a grant to replace the grant money that the recipient of the disaster loan just paid the SBA. And, again, I know this sounds very convoluted. In essence, there is a determination that double compensation is needed because the rather robust compensation already included in the Small Business Act and sufficient for other disasters is insufficient compensation. It is also important to note that, for victims of Hurricane Katrina, there are billions of other dollars that have been made available to assist these victims on an ad hoc basis, yet it is never enough. And this bill indicates that.

Now comes section 211 of H.R. 1361 in a clear effort to ensure that victims of Hurricanes Katrina, Wilma and Rita receive double compensation. This raises two distinct questions. First, why do victims of these three hurricanes get special treatment of double compensation, and why should not other disaster victims get double compensation? Yes, Katrina was a tragedy, but so were Hurricane Andrew and Hurricane Charley and the attacks of September 11, for example. This seems incredibly arbitrary to select only those three disasters for something as unusual as double compensation.

Second and far more important is the concept, as I indicated, of double compensation. It has been a longstanding tradition of American jurisprudence that a party shall not receive double compensation for the same injury. That concept is codified in the disaster loan provisions of the Small Business Act by prohibiting the SBA from issuing a loan for amounts already compensated for by insurance or other means. Thus under current law, a disaster loan applicant cannot get an insurance claim for $100,000 for a $100,000 loss and also get an SBA disaster loan for the same amount of money.

Mr. Chairman, I ask that Members support this amendment. It is fiscally responsible and continues to recognize that individuals should not be granted double compensation.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield the balance of my time to the gentleman from Missouri (Mr. Akin).

Mr. Chairman, I demand a recorded vote.

Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, this amendment is very straightforward. It strikes section 210 of the bill. Section 210 authorizes the administrator to issue grants of up to $100,000 to small businesses located in areas affected by Hurricanes Katrina, Rita and Wilma, but only if the business was denied a disaster loan by the SBA.

This is really, in my view, the height of fiscal irresponsibility. The SBA's determination of whether to grant a disaster loan is based on its determination of reasonable assurance that you can repay your loan, which is a direct quote from the SBA's rules found in the Code of Federal Regulations. Thus, if the SBA has denied a business a disaster loan, it already has determined that it is unlikely, for whatever reason, to repay the loan. In other words, its capacity as a viable business is seriously called into question.

Section 210 provides that despite this determination, the Federal Government should create a grant program of up to $100,000 to help small businesses whose survivability was highly improbable to survive in the first place.

Again, the SBA has indicated that they don't think this business is viable, that it is going to survive, and then we are going to turn around and give them up to $100,000. It is just not fiscally responsible.

To fully fund all of those eligible, CBO estimates that the costs could be up to $180 million. I want to repeat that: $180 million we are talking about here. This seems again fiscally irresponsible, to fund grants when the SBA already has determined that the businesses are not likely to survive.

It also remains unclear whether the grants will be sufficient to satisfy the needs of small businesses. How many will be able to survive on a grant of $100,000 if they could not repay a disaster loan of that amount? CBO did not answer that question, but I suspect very few of these businesses will survive.

Although the provision is written to include all small businesses affected by Hurricanes Katrina, Rita and Wilma, there are limitations on which businesses can apply based on the amount of housing stock in a county or parish that is damaged. It is highly likely that only small businesses in Louisiana will qualify. Was this done to reduce costs? If so, why are only Louisiana businesses favored? Were not many small businesses throughout the region devastated by these hurricanes? It seems patently unfair to single out certain businesses for a very generous grant program.

Mr. Chairman, I ask that Members support this amendment. To do otherwise, in my view, is just not a fiscally responsible stand to take. Again, every Member has to stand according to their own vote, and I am sure we will determine this based upon what they consider to be its merits.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I will yield myself such time as I may consume.

After the 2005 gulf coast hurricanes, we witnessed a number of problems with the Small Business Administration's preparation and ability to assist entrepreneurs following a disaster. As the agency responsible for handling the disaster loan program, it was clear they were not adequately prepared.

During that time, there were significant application backlogs, with the number ballooning to 204,000 unprocessed applications by December 2005. Those that were lucky enough to get approved for assistance often waited months to receive any funds. It reached the point where entrepreneurs were simply avoiding the SBA, believing it was more of a hindrance than a help.

There is no question the leading factor in SBA's poor response was its lack of preparation and tools to assist the gulf coast victims. H.R. 1361, the RECOVER Act of 2007, provides for thorough disaster planning and directs SBA to ensure they are prepared for a wide range of disasters.

This legislation will streamline SBA's loan processing and disbursement, as well as establish a bridge financing program. After the gulf coast storms, we saw entrepreneurs not only getting declined for loans but having to wait far too long for relief. This bill requires that within 36 hours of a disaster, qualified small businesses are provided with emergency small dollar financing, allowing them to stay in business and spur economic growth.

For small businesses, success and failure often come down to adequate financing. Nowhere is that more true than following a disaster. The changes made in this bill will ensure we avoid the mistakes in the gulf where 62 percent of small businesses who applied for assistance were not approved.

We cannot leave entrepreneurs with nothing to help them salvage their enterprises. For those that did get approved, the average wait time to receive their loan was 74 days, much longer than the SBA's goal of 21 days.

H.R. 1361 also provides for gulf coast entrepreneurs who still need assistance. The committee just came back from New Orleans, and there is no doubt that this community has a long way to go to get where it was before the hurricanes hit. By helping affected small businesses, we are also significantly aiding in the revitalization of the gulf coast.

The RECOVER Act of 2007 will establish a grant program that allows the SBA to help the most significantly damaged small businesses that have been rejected for a conventional SBA loan. These grants are intended to spur redevelopment in communities directly affected by the 2005 gulf coast storms where ordinary market forces are simply not enough. They will be granted under limited circumstances to provide aid to only the neediest of entrepreneurs that meet a number of qualifications.

The legislation also fixes SBA's one-size-fits-all approach to the disaster loan process that has failed businesses in the gulf coast. To be more responsive to individual disaster victims, H.R. 1361 provides the SBA administrator with the authority to waive the prohibition on duplication of benefits for the 2005 hurricane victims. Taking state- administered grant assistance and replacing it with loans that are not disbursed efficiently or in adequate amounts have left entrepreneurs without assistance to build their homes. Small businesses should not have to choose between their home and their business. This bill makes sure they are not faced with that choice.

Eighteen months has passed since this Nation saw one of its largest natural disasters. There is no question small businesses are still very much in need of assistance. The RECOVER Act of 2007 modernizes and reforms the SBA's disaster programs and addresses key concerns still facing hurricane victims.

H.R. 1361 has the support of America's Community Bankers, Independent Community Bankers of America, American Veterans, Veterans of Foreign Wars of the United States, the Black Chamber of Commerce and the U.S. Women's Chamber of Commerce.

I strongly urge my colleagues to vote for the RECOVER Act of 2007.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield 2 minutes to the gentleman from North Carolina (Mr. Shuler).

Mr. Chairman, I yield 5\1/2\ minutes to the gentleman from Louisiana (Mr. Jefferson) who represents and has been very active in the committee addressing the issues of the Small Business Administration Disaster Loan program.

Mr. Chairman, I yield 2 minutes to the gentleman from New Hampshire (Mr. Hodes).

Mr. Chairman, I yield to the gentlewoman from Texas (Ms. Jackson-Lee) for a unanimous consent request.

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Chairman, I yield 3 minutes to the gentleman from Indiana (Mr. Ellsworth).

(Mr. ELLSWORTH asked and was given permission to revise and extend his remarks.)

Mr. Chairman, I yield 2 minutes to the gentlewoman from New York (Ms. Clarke).

Mr. Chairman, I yield 2 minutes to the gentleman from Iowa (Mr. Braley).

Mr. Chairman, I yield 5 minutes to the gentleman from Louisiana (Mr. Melancon). And I want to take this opportunity to thank him for his leadership in working with us on this comprehensive legislation.

Mr. Chairman, I have no further speakers. If the minority is ready to close, I am ready to close.

Mr. Chairman, I yield myself the balance of my time.

Mr. Chairman, we are now barely over a month away from hurricane season. Many small businesses have been struggling for a year and half to recover after the gulf coast storms of 2005. Following the hurricanes, delays in disaster loans, overwhelming amounts of paperwork and a lengthy application process left many small business owners frustrated and discouraged. In fact, entrepreneurs avoided what is supposed to be their primary source of assistance, the SBA.

Our Nation's 25 million small businesses need to know that the next time a disaster happens they will not be left with nothing, but will have efficient and reliable assistance. They need to know that what happened after the gulf coast hurricanes will not ever happen again.

The RECOVER Act of 2007 will require that the SBA have a disaster plan in place, provides assistance to the neediest of entrepreneurs and helps in the redevelopment of the community. H.R. 1361 will given entrepreneurs the relief and assistance they deserve after a disaster.

With 44 days left till hurricane season, we simply cannot afford not to act.

At this point, I want to take a moment to thank the staff who worked on this legislation. From Mr. Chabot's staff, Kevin Fitzpatrick, Mike Smullen and Barry Pinellis; from the majority staff, Michael Day, Adam Minehardt and Andy Jiminez and Tim Slattery.

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I rise in opposition to the amendment.

Mr. Chairman, for the overwhelming majority of disaster victims, the problem wasn't that the Federal Government gave them too much assistance but that they weren't provided with enough. We heard from disaster victims about how the Federal Government was its own worst enemy, giving money to victims on the one hand through state- administered grant programs, then taking it away.

The prohibition on ``duplication of benefits'' was originally established to prevent disaster victims from double dipping. But this can only happen if assistance is given out in the first place. Many disaster victims have been waiting for 18 months and are still waiting today.

H.R. 1361 gives the SBA the flexibility to break from its overly rigid statutory prohibition. Most importantly, however, this provision has been narrowly tailored to ensure that it will only apply for victims of the 2005 hurricanes. It does not carry forward to future disasters and will only be implemented if the administrator feels it is necessary. It is not a requirement.

This amendment will strike that flexibility from the legislation, leaving disaster victims subject to the unworkable standards that currently exist in the statute.

Mr. Chairman, I now yield 1 minute to the gentleman from Louisiana (Mr. Jefferson).

Mr. Chairman, I yield the balance of my time to the gentleman from Louisiana (Mr. Baker).

Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, this amendment will eliminate an important tool for helping otherwise viable businesses rebuild. These businesses need financial assistance that the disaster loan program cannot provide.

The committee has heard victims and experts testify that the SBA's current disaster loan program has been inadequate to help. Largely, this has been the result of pursuing a one-size-fits-all approach to SBA disaster assistance. If the SBA is to be successful in responding to catastrophic disasters, the agency must have tools that are more responsive to victims' needs. The limited grant program in this bill will provide SBA with the authority to help the most severely affected small businesses damaged by Hurricanes Katrina, Rita and Wilma.

This has been very narrowly tailored to ensure that grants only go to businesses located in communities most in need. Only a small number of businesses are expected to meet the requirements for one of these grants. If the administrator feels that grants are inappropriate, he will not need to exercise this authority. Furthermore, this program will not be carried forward to future disasters.

This is an extraordinary tool to address an extraordinary situation, and this is a leading reason why this measure enjoys bipartisan support.

I urge opposition to this amendment.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield the balance of my time to the gentleman from Louisiana (Mr. Melancon).

While not opposed to the amendment, I ask unanimous consent to claim the time in opposition, and I am prepared to accept the amendment.

Mr. Chairman, I want to thank the gentleman for offering this creative solution to a pressing problem. In our hearings, my committee heard testimony on how individuals affected by the 2005 hurricanes were victimized twice, once by the storm and a second time by the SBA.

The SBA routinely provides disaster victims with a 12-month deferment before requiring repayment on disaster loans. Following the 2005 gulf coast hurricanes, however, the SBA was plagued by lengthy delays and a massive backlog of loan disbursements that has taken months to clear. Now, many disaster victims are scheduled to begin repayment on loan amounts that have yet to be disbursed by the SBA. Clearly, this is an unfair and absurd result that we cannot permit to occur.

The amendment offered by the gentleman from Louisiana would provide the SBA with authority to help those victims who have been negatively affected by its delays in loan processing and disbursement. Most importantly, this amendment preserves the discretion of the administrator in deciding which situations should have an increased deferment period. This flexibility ensures that this program will only be applied in appropriate situations, and I support the amendment from the gentleman from Louisiana.

At this point, Mr. Chairman, I would like to yield to the gentleman from Louisiana (Mr. Jefferson) for any comments he may have.

Mr. Speaker, I rise in opposition to the motion to recommit.

What amazes me is if the gentleman from North Carolina is so concerned about this legislation, where were you when the Small Business Committee was considering this legislation? We had a number of Members who do not sit on the Small Business Committee come before our committee to discuss issues related to the disaster loan legislation. Where were you?

And let me say more. Let me say more. If you had come before our committee, you would have learned that what this motion to recommit does is to reinstate policies that the SBA already does. This amendment merely restates what the Small Business Administration does and could actually have the opposite effect and allow more individuals with questionable character to get SBA disaster loans.

The Small Business Administration already has a standard operating procedure that provides that no loans shall be made to individuals of low character. The SBA rules and regulations provide that individuals with criminal records and arrest records or who are on probation are considered to be in that category. Simply put, this means that felons are not able to get SBA loans.

I will also note that adopting this motion will for all intents and purposes kill the bill, meaning a little over 1 month before hurricane season, the Federal Government will not have a plan to respond to disasters. Disaster victims will be trapped in the bureaucracy between FEMA and SBA. Small businesses impacted by disasters will continue to struggle with backlogs that could extend up to 3 months. New programs to leverage the private sector to assist entrepreneurs in days not months will not be available. Economic recovery in the gulf will lag as much-needed assistance continues to be denied.

What this motion to recommit is is a cheap political ploy to kill this legislation that is so much needed.

Mr. Speaker, I yield 30 seconds to the majority leader, Mr. Steny Hoyer.

Mr. Speaker, I yield the balance of my time to the gentleman from Louisiana (Mr. Melancon).

Mr. Speaker, I demand a recorded vote.

Mr. President, I ask unanimous consent that the Senate proceed to Calendar No. 139, S. 163; that the committee-reported amendment be withdrawn, and I have a substitute amendment at the desk; that the Bond amendment to the substitute amendment be considered and agreed to, the substitute amendment, as amended, be agreed to, the motions to reconsider be laid upon the table, and that the bill, as amended, be read the third time; that the Senate then proceed to the consideration of H.R. 1361, the House companion, which is at the desk; that all after the enacting clause be stricken and the text of S. 163, as amended, be inserted in lieu thereof; that the bill be read the third time, passed, and the motion to reconsider be laid upon the table; that the Senate insist on its amendment and request a conference with the House on the disagreeing votes of the two Houses; that the Chair be authorized to appoint conferees, with the Committee on Small Business and Entrepreneurship appointed as conferees; that S. 163 be returned to the calendar, and the above occurring without intervening action or debate.

Mr. President, let me speak for a minute about this legislation. I understand Senator DeMint's need to object on behalf of the Senator from Oklahoma. This is legislation that has broad--I do mean broad--bipartisan support. It was passed out of the Small Business and Entrepreneurship Committee on a unanimous vote. It now represents a very broad compromise worked on with the administration and with all of the members of the committee, both Republican and Democrat.

I will review very quickly what this bill does. As everybody knows, when Katrina hit, we had a terrible time getting small business assistance to the countless thousands of small businesses that were impacted, not only in New Orleans but in Baton Rouge and across into Mississippi, Alabama, and elsewhere, where there were many services being provided by other folks. A lot of small businesses were impacted.

We learned there was not an adequate capacity within the Small Business Administration to deliver this kind of assistance in a rapid way. So we have worked now, after a series of hearings and over the course of 2 years, to pull together the Small Business Disaster Response and Loan Improvement Act. It does a number of things.

It creates a new elevated level of disaster declaration, referred to as catastrophic national disaster. That triggers nationwide economic injury disaster loans for adversely affected small businesses.

In addition, it requires the SBA to create an expedited disaster assistance business loan program to provide businesses with expedited access to short-term money.

A lot of the businesses in New Orleans could have survived and might have survived or chosen to try to if there had been some bridge money or available working capital. But the absence of it forced a lot of them to close their doors. If we can provide assistance in a timely fashion, obviously subject to the administration's approval--and there is discretion in the bill--we would have the ability to do a better job.

In addition, there are improvements to the existing loan program which have been written in the bill. There is improved agency coordination and marketing. It directs the SBA to coordinate with FEMA in a more effective way. It directs the SBA to create a proactive marketing plan to make the public aware of the disaster response services.

In addition, it provides improved planning and oversight and directs the SBA to update the hurricane response plan to address all future disasters.

This is, as I say, with bipartisan support. I have a letter from the Administrator of the SBA, Steve Preston. He writes saying:

I am writing to express my thanks for the efforts you and

your colleagues have made to work with the Small Business

Administration and to address the administration's concerns

with some of the provisions in S. 163, the Small Business

Disaster Response and Loan Improvement Act of 2007. At this

point, if amended by the Bond amendment--

And that is what we just sought to do--

the administration has no objections to Senate passage of S.

163. However, the administration would consider a longer

extension of the authorization language in section 3 to avoid

the need for concern over unintended expiration of programs

and activities.

We would obviously love to do that. It appears there is one person in the Senate, the Senator from Oklahoma, who is opposed to moving forward with this legislation. As I say, there was a unanimous vote by our committee, which wants to see if we could achieve this disaster assistance. Nobody understands how critical this is more than the Senator from Louisiana, Ms. Landrieu, who has been fighting from the moment Katrina hit to try to get this kind of disaster assistance.

I wish to ask the Senator if she would share with us her observations as to why this legislation is so critical and what specifically we have done to address some of the concerns of those who had previously expressed those concerns in order now to have a consensus about this legislation. I ask the Senator from Louisiana if she would explain the situation in New Orleans, not just then but now, and why this legislation is so critical.

Mr. President, I thank the Senator from Louisiana. She has been not only a terrific member of the committee but has represented to the whole Senate countless numbers of times on the floor the plight of those folks down in New Orleans and in the immediate surrounding area.

I wish to emphasize what she has said and what I said previously, and that is this has been worked on now for 2 years in a bipartisan way. Senator Snowe, the ranking member, who was, incidentally, the Chair when we first began working on this legislation, has supported the efforts to try to make certain that we address these concerns. Other Republican members of the committee have contributed significantly to this effort. Senator Bond had concerns about the energy program. We have addressed those concerns.

I hope we can move forward. We tried actually to reach out to whatever opposition there is with respect to this bill. We are happy to sit down and address any legitimate concerns. But at this point, this is long overdue. We are into the hurricane season now, about a month and a half into it. Our predictors have been pretty accurate in these past years, and they are suggesting we are going to have a very significant number of named storms and maybe as many as 10 projected full-blown hurricanes this year, with 13 to 17 named storms.

Last year, they hit the number of named storms and hurricanes, but we were very lucky; they didn't blow into the shore and we didn't get hit. Obviously, we cannot sit around and be lucky all the time. We cannot afford another Katrina-like response. There are specific actions this legislation empowers the SBA to do to take steps proactively, to be in a position to address the concerns of small businesses rapidly. In addition, this bill helps private lenders get in early on and be immediately on the scene and assist in the process of providing those loans. So it streamlines that process.

I wish to comment on Senator Landrieu's reference to that cleaning place we visited in East New Orleans. We made arrangements to go down and see that place because we knew it needed help. We had talked with the CEO before going there. About a week and a half later, when we got there, we went into this cleaning facility, which had been completely flooded, as the Senator said. They cleaned it out themselves. They worked diligently to get the equipment up and working, what they could. Much of it was ruined and was going to have to be disposed of. But these folks were working this place.

Since they were dependent on the services of hotels and others for the work they did, they were at the time mostly doing the hospitals that had reopened, and that was it. But the CEO was so despairing in the span of that week and a half or so between our making the appointment and getting there that when we arrived, the CEO had left with his family, taken off; that was it, he had enough, and left in charge was one of the workers who was the ``acting CEO'' who was desperately trying to hold onto this business.

When people are working like that and run into that kind of desperation, we have to be able to look them in the eye and say we have done everything possible. We put in place the mechanisms they pay for and that they have a right to expect will be there to assist in that kind of an emergency. That is what we are trying to do here, in a bipartisan way, to make certain we don't lose CEOs, lose jobs, lose workers, and lose hope as a consequence of our inaction in the Senate. So I hope we are going to be able to come back to this in short order. As I say, I think we have worked in good faith with every legitimate question that has been raised with respect to this legislation. We will happily sit down if another Senator still has a concern, but we certainly will not tolerate--and at some point I hope the leader will allow us to take the time in the Senate to continue on the floor with this legislation. There is one Senator who is opposing it, without any rationale whatsoever.

I will yield to the Senator.

Mr. President, I thank the Senator from Louisiana. As I said previously, she has been tireless on this. Louisiana has been lucky to have her intervention every step of the way. The billions of dollars that have gone down there is a consequence of the hard work she has done.

Let me summarize what is being obstructed. First, expedited assistance from the SBA to small businesses injured by a disaster; second, private disaster loans. Private disaster loans. The ability of private-sector lenders to become involved in the process quickly, extending credit to the folks who need it as a consequence of that disaster, which, incidentally, can only occur when the President of the United States has legitimately declared a disaster; third, improvements to the existing program; why we wouldn't want to improve the existing program after we saw how it was incapable of meeting the problems of Katrina is beyond me. That is what we are doing here in a complete and total bipartisan, unanimous committee vote that suggests these improvements are important and will make a difference; improved agency coordination in marketing. These are the things that make a difference. When you can get the bureaucracy out of the way, when you can streamline, you are getting better production for the taxpayers' dollars, and that is exactly what we are doing; improved planning and oversight and disaster assistance staffing, necessary to be able to deliver the services because we didn't have sufficient personnel to be able to process the loan requests that came in.

Mr. President, I ask unanimous consent to have printed in the Record a letter from the Small Business Administrator, Steve Preston.

Mr. President, I yield the floor, and I suggest the absence of a quorum.

Mr. Chairman, first, I want to thank Chairman Velazquez for the continued commitment to helping rebuild the gulf coast. Over a year and a half has passed since Hurricanes Katrina and Rita devastated south Louisiana and other Gulf Coast States. I am pleased my colleagues remain committed to seeing us fully recover and rebuild.

I come to the floor today to support H.R. 1361, the RECOVER Act. Recovering from the two hurricanes that devastated our State and the gulf coast in 2005 is the biggest and most important challenge Louisiana and the gulf coast have ever faced. Katrina was the biggest natural disaster ever in the United States, and Rita, which may have been dubbed the ``forgotten storm,'' was the third worst disaster. First and third in our Nation's history, and they hit the same region within one month each.

After these storms hit, it became very clear that SBA was not prepared for a disaster of this caliber. SBA was understaffed, poorly trained, poorly managed and, overall, unprepared to respond effectively to the urgent need of disaster relief loans. The SBA's disastrous response effectively discouraged small business owners from applying for business or home loans.

Also, inadequate and inaccurate communications from SBA's employees kept many customers from finishing applications. I have personally heard of several instances in which small business owners were frustrated to the point of giving up on the SBA and the hope of getting financial assistance. I remind my colleagues again that this was a critical time, when these people needed help more than ever.

H.R. 1361 addresses those serious shortfalls experienced in the aftermath of Katrina. The RECOVER Act will better prepare the SBA to handle and fund disasters by requiring, among other things, that the agency develop a comprehensive disaster response plan, improve employee training, streamline their information tracking systems and follow-up process, and more efficiently distribute disaster loans by partnering with the private local lenders. SBA's unwillingness to immediately and effectively delegate responsibility to qualified private lenders created a critical choke point in loan disbursements following these hurricanes.

H.R. 1361 includes a commonsense solution that will cure this problem and allow for large, maximum loan amounts and create a more streamlined application process by allowing private, local, SBA-approved bankers to administer these loans. These private lenders have the unique advantage of being on the ground and knowing the community and, more importantly, the people in the businesses within them. By allowing these private lenders to participate, it will greatly increase the speed and efficiency in getting the funds in the hands of the small businesses after a disaster.

Another problem we faced after the storms was SBA's unwillingness or inability to provide maximum flexibility in the administration of these disaster loans. Instead of nurturing struggling businesses as they adapted to the new environment following Katrina and Rita, the SBA often strangled them with red tape and bureaucratic hurdles.

After the storm, some businesses along the gulf coast were denied sufficient loans because the SBA judged their application solely based on their prestorm capabilities, rather than on the new realities they were trying to adjust to or their ability to meet poststorm demands. The RECOVER Act will make the SBA a more flexible agency and will permit them to approve larger grants for businesses that become major sources of employment following disasters.

The RECOVER Act also addresses one of the most notorious problems that arose after the storms, the duplications of benefit provisions. Under current law, storm victims who took the initiative to apply for SBA loans are now being forced to repay their SBA loans with Road Home money. Hurricane victims in Louisiana and along the gulf coast need all the help they can get with rebuilding their homes and getting their lives back to normal. They don't need the Federal Government giving with one hand and taking with the other.

Rebuilding in the wake of Hurricanes Katrina and Rita has been the biggest challenge the people on the gulf coast have ever faced. In order to continue to recover and rebuild, recovery money must stay in the disaster regions, not sent back to Washington.

I understand the administration does not want people to double dip and must be effective stewards of taxpayers' money, but in this instance, victims of catastrophic disaster are essentially being punished for receiving these disaster loans before they get their recovery grants. Under this bill, borrowers will still have to repay their SBA loans; they will just be able to pay them over the extended time frame they originally agreed to when they got the loan.

I am a fiscal conservative, but this policy is absolutely ridiculous. It is dooming the recovery to failure, and it is time that we correct it.

I urge my colleagues to support the RECOVER Act today. With hurricane season approaching fast, this bill is critical to the survival of small businesses. Small businesses are the lifeblood of this country, and we must be ready to protect them from another, possible, future disaster.

Mr. Chairman, I thank the chairwoman for yielding.

Mr. Chairman, this bill has the potential to help thousands of small businesses and business owners still struggling to recover from these hurricanes that devastated the U.S. gulf coast.

I rise today in opposition to this amendment. After surviving Hurricanes Katrina and Rita, two of the

worst natural disasters in our country's history, the citizens of the gulf coast were then faced with a man-made disaster, one of the most disorganized, chaotic Federal responses that anyone has ever seen. Many of the Federal agencies that were created to help these people recover wound up making matters worse. One of these agencies was the SBA.

After these storms, 81,000 businesses were economically impacted. Over 18,000 were completely or severely destroyed. Astonishingly, however, following these hurricanes, only 38 percent of small business disaster loans were approved. In hearings, the SBA admitted that after ``typical'' disasters, they approved 60 percent of these business loans. After Katrina and Rita, conversely, over 60 percent did not receive SBA assistance and were left with nowhere to turn for help.

One of the many reasons that the SBA failed the people of the gulf coast was because it did not have the proper tools nor the flexibility it needed to sufficiently and adequately address the demands caused by the extraordinary storms. These were unprecedented natural disasters and they called for unprecedented response. This was not a one-size- fits-all storm, as my colleagues on the other side of the aisle seem to perceive.

In the resourceful, self-sufficient economy of south Louisiana and Mississippi, small businesses are the lifeblood of the local economy. Many of these mom-and-pop shops are homegrown and family-run businesses, such as those in the shrimping industry in south Louisiana and Mississippi that do not fit the traditional mold of current SBA loan qualifications. These are the businesses that are being denied assistance, yet these are the businesses that are the local economy's most critical assets. I am a fiscal conservative, but this policy is ridiculous. It's dooming the recovery to failure, and it's time that we correct it.

To these business owners, these grants are critical investment capital which will help them pay utilities, keep the lights on, rent to keep the doors open and new equipment expenses to continue to recover and grow despite the incredibly difficult business climate that continues to persist in this area. Without this grant program, these small businesses will remain too debt-burdened to take the next decisive step required to move from recovery to rebuilding.

I strongly urge my colleagues to oppose this amendment today. Help these small businesses along the gulf coast get back on their feet and help America be the proud Nation that it should be.

Mr. Speaker, here we go again.

We had a similar motion to recommit, the gentleman is right, 2 or 3 weeks ago, and 50 people fell for it. They fell for it because it came to the floor just minutes before we had to vote, and it sounded like people such as myself would condone felons getting loans, when the law already prevents that.

For God's sake, the people in the gulf coast of the United States have suffered enough. And now we want to take

away or at least put some procedures in this just to screw with them some more. Let's vote this bill straight up and down. Let's kill this motion to recommit. It is a fallacy. It is fake. It is there just to disrupt. The people of this country and the people of the gulf coast need your help. Support the bill.

Mr. Chairman, I rise today as a proud cosponsor of H.R. 1361, the RECOVER Act.

I want to thank Chairwoman Velazquez for her leadership in crafting this important piece of legislation and in bringing it to the floor.

The storm that hit the gulf coast nearly 2 years ago exposed major flaws in the disaster planning system across all agencies of the Federal Government. Perhaps most appalling is that these storms exposed the fact that so many agencies had no plan at all for disasters such as Hurricanes Katrina and Rita. The Small Business Administration was just one of many agencies caught behind the curve, and the RECOVER Act aims to ensure that this never happens again by providing commonsense remedies for the many problems brought to light by the storms.

We are all quite familiar with the problems of the SBA in the aftermath of Hurricanes Katrina and Rita. Six weeks after the storms, there had been about 54,000 disaster loan applications received from the region. Ninety-five

percent of these applications were denied, while only 1,050 loans were approved, and only 58 checks, totaling $533,400 or so, were sent out. During the 6-week period that followed Hurricane Charley in 2004, the SBA disbursed four times the amount that was disbursed after Hurricanes Katrina and Rita.

Additionally, many people in the gulf coast region fell victim to long delays in the process of the applications, and their paperwork was lost because the SBA lacked a fully functioning disaster processing system, as well as the required staff. The SBA lacked adequate service and support for its information and telecommunications systems. Only one vendor in the region of the SBA's primary telecommunications hub could service the type of phone system that the SBA uses. The SBA also failed to completely stress test the agency's sole loan processing system prior to its implementation.

The RECOVER Act mandates that the SBA develop a comprehensive written plan in order to deal with catastrophic disasters of this magnitude, as well as test the capacity of the system at least once each year.

Administrator Steve Preston came before the Small Business Committee and made the claim that the problems involved in the loan processing system have been solved through a team case management solution. Yet in talking with various small business owners and homeowners as well, and in closely examining the loan processing numbers, doubt is cast on this assertion.

One such example is Donna Colosino of New Orleans, who came before the committee and demonstrated the serious flaws that exist that this bill aims to remedy. After the storms flooded her electrical equipment business under 12 feet of water, she applied for a disaster loan from the SBA and was approved for $250,000. After 15 months of resubmitting paperwork lost by the SBA, she finally received a disbursement of $10,000 in May of this year.

Under the current repayment structure, she would have to begin paying back her loan as if she had received the full $250,000, though she has only received $10,000 to date. This is just one more nonsensical policy of the SBA Disaster Loan program the RECOVER Act will change by altering the payment schedule so that repayment only begins on the money received.

Perhaps the most troubling aspect of the current program to me, as well as to many of my constituents back home, is the requirement that money received from the Road Home program must be used to repay any outstanding loans from the SBA.

Assume your home has a pre-Katrina value of $150,000, and it was completely destroyed by the storm. You qualify for an SBA loan in the amount of $100,000. The Road Home grant comes through in the amount of $50,000, enough perhaps to cover your pre-Katrina value, but you must then take the $50,000 Road Home grant and use it, not to complete your home, but to pay down the SBA loan by $50,000. The result is, you end up with only $100,000 in your hands to rebuild, $50,000 short of what you need.

The truth is, replacement cost of a home now is much, much more, given the spikes in the cost of rebuilding with building materials and insurance far exceeding their pre-Katrina value. The requirement to pay down the SBA disaster loan to the extent of the Road Home grant will leave the homeowner with less than is needed to replace the lost home no matter the Road Home grant award.

This SBA requirement has also kept many people from closing on their Road Home awards as they wait for this body to resolve this situation. The RECOVER Act would address this serious problem by allowing the SBA administrator to provide grants to replace compensation that has already been taken by the SBA as a duplication of benefits, as well as going forward to assist those who have yet to receive the Road Home awards to fully recover.

The requirement in the bill to impose discretion in the SBA administrator not to treat a Road Home grant as an automatic double dip is safeguard enough to prevent true double dipping from occurring. Grants are authorized in the bill to selective businesses that have been in business 2 years, who are, in fact, true pioneers in going back, because there is no guarantee that they are going to have customers there to meet the demand is a reasonable addressing of the problem there.

The flaws of the SBA Disaster Loan program have been exposed by the 2005 storms, and it now falls to this body to remedy these flaws. We have long since moved past the rescue phase. We are now focused on recovery. Yet we cannot recover under the existing structure, as 77,000 small businesses were damaged, along with 275,000 homes.

Operating under the idea of business as usual is not enough. It is only through the passage of this bill and careful oversight in the coming months that we can ensure the SBA fulfills its obligations, not only to the victims of the storms of 2005, but also to deal more responsibly and efficiently with future disasters.

I urge my colleagues to oppose any amendments that would weaken this bill and to vote on this bill for its final passage.

Mr. Chairman, I thank the gentlewoman for yielding.

The flaw in Mr. Chabot's argument and in this amendment is that the present statute automatically assumes in every instance where one receives a grant and a loan that there is double dipping. That is just not true. In the case where there is double dipping that is true double dipping, this bill permits the administrator to make a decision about that and to prevent it. In a case where there has been an insurance award, one would assume the SBA would not make a disaster loan award if there is sufficient insurance. Only in a case where the insurance isn't sufficient will we assume that the loan would be justified.

So fundamentally here what we are doing is taking away the automatic assumption that is built into this law that, every time you receive a payment of this or that nature, it is a double dip. We remove that notion from the statute and put in place a more reasonable and commonsensical one and one that gives the administrator flexibility where he determines whether or not a double dip may take place. If it doesn't, then he permits the victim of the storm to receive the award. If it is, then, of course, he denies it.

So I think there is no danger here of double dipping in this bill. None of us agree to double dipping in this bill.

I thank the gentlelady for yielding.

I also would like to thank the gentleman from Louisiana (Mr. Jindal) for offering this amendment. If anyone has been to the gulf coast recently, particularly if anyone has been to New Orleans recently, you will see that there are still many businesses that are still shuttered from the storm that happened now going on close to 2 years, and they are not at all ready to begin repaying loan obligations. There are still many obstacles to their recovery. This rightly recognizes that the reality is that these businesses will take a long time to get themselves back together.

It is very important to understand one simple thing here. This is not just a call from the people of our State for humanitarian assistance in the wake of a natural disaster. The Corps has admitted that its negligence in constructing, maintaining and designing our levees is the major reason why our city drowned and why so many businesses were put out of business. And so there is a special responsibility, it seems to me, to make special rules to overcome these problems. I really appreciate this solution that is being offered here because I think it helps to address this extraordinary devastation we have caused in great respect by the action, or lack of action, the negligence, of an agency of our Federal Government.

I thank you for the amendment. I really urge the Members to support it.