Disaster Loan Fairness Act of 2012

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6296) to amend the Small Business Act to provide the interest rate for certain disaster related loans, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and include extraneous material on the bill under consideration.

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

Just over a year ago, the people of the 11th Congressional District of Pennsylvania endured some of the worst flooding that we have ever experienced. In the aftermath of both a hurricane and a tropical storm, the Susquehanna River and streams flowing into it surged out of their banks, washing out homes and businesses and roads and bridges.

I spent days traveling across my district consoling my constituents. I was with them as they had to throw out photo albums, their children's toys, their clothing, their furniture, their lives' possessions. I stood on muddy porches and cried with my constituents.

Time after time they asked me how the Federal Government was going to help them recover. Time after time, business owners asked me if the Federal Government was able to provide low-interest loans so they could rebuild, reopen, and bring back their workers. Time after time, I would tell them the government of the United States was going to offer them loans at a 6 percent interest rate. That's right, 6 percent.

A 6 percent loan isn't going to help a business owner rebuild and reopen, and the hardworking people of northeastern Pennsylvania knew that. A 6 percent loan isn't going to help a family rebuild a flooded home. I was embarrassed to tell the mothers and fathers and grandmothers and grandfathers and business owners of my district that the Federal Government, through the Small Business Administration, was going to give them a 6 percent loan to help them get back on their feet.

I was even more embarrassed--and even shocked--when I started looking at our budget for foreign disaster relief. This government gave $215 million of flood relief to Pakistan. And what rate do we charge foreign countries when we rebuild their infrastructure? Zero percent. We don't charge foreign countries any interest. The taxpayer money they receive from the United States is a giveaway. But this government was going to charge American homeowners and American business owners 6 percent interest on loans they were going to use to rebuild.

Now, the United States of America is one of the most generous, compassionate countries when it comes to providing global aid. When disaster strikes anywhere in the world, the United States is the first country to help them rebuild. But when disaster strikes right here in our own country, we need to start rebuilding here first. Let's help Americans first. We must restore American lives, save American businesses, and protect American jobs.

Now, I know hundreds of my colleagues have had similar conversations with their constituents after they experienced natural disasters in their districts. Since the start of the 112th Congress, communities in over 200 congressional districts in 46 States have been flooded by a tropical storm or a hurricane, burned by wildfire, crippled by a snowstorm, or destroyed by a tornado, resulting in a disaster declaration by the President. Constituents across the country have heard the same news--the Federal Government can provide help in the form of a high-interest loan.

Fortunately, this is something that we can fix. I introduced the Disaster Loan Fairness Act of 2012, which would dramatically change the way the SBA provides disaster recovery loans. This bill would lower the interest rate for borrowers with no credit available elsewhere to one- half of the prevailing rate, and it would cap the interest rate at 4 percent. For those who can get credit elsewhere, this bill would lower the interest rate to three-quarters of the prevailing rate, again, capping the maximum interest rate at 4 percent.

The Disaster Loan Fairness Act is retroactive to January 1, 2011. This means the SBA is required to refund excess interest payments for disaster loans made since this date. Homeowners and business owners who took out these loans will receive refunds for their excess interest payments.

To offset the direct spending, this bill terminates the use of public taxpayer funds for political party conventions in the elections occurring after 2012. Simply put, this bill prioritizes disaster victims over the subsidizing of political party conventions. We are literally putting the American people ahead of politics.

This bill will provide serious, substantial, necessary help to the hundreds of thousands of Americans who have endured horrible loss during natural disasters. It will provide relief to the millions of Americans who will suffer loss in future disasters.

I ask my colleagues to support the Disaster Loan Fairness Act of 2012, H.R. 6296, and provide relief for so many Americans that need that help.

I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentleman from Pennsylvania (Mr. Marino).

I yield the gentleman 1 additional minute.

Mr. Speaker, I have no more speakers and I am prepared to close.

I reserve the balance of my time.

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

When disaster strikes around the world, America is always the first to help, and I'm proud of that. I'm proud

of our country. I'm proud that when countries need help, we're there.

But when disasters strike right here at home, I do believe that we should help Americans first, and we don't know when or where the next disaster will occur. It could be tonight, could be tomorrow, could be next week. But let's make sure, before we leave here today, that we tell our neighbors and friends back home and around this great Nation that, in their greatest time of need, their country will be there for them.

With all the devastation and destruction that happened from last year's flood, I saw the greatness of America. I saw neighbors helping neighbors. I saw strangers helping people. I saw students helping the elderly. I saw what makes this country great, and I saw the American people come together.

It's time that this Congress comes together. I urge my colleagues to support this bill.

I yield back the balance of my time.

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

(Ms. VELAZQUEZ asked and was given permission to revise and extend her remarks.)

Mr. Speaker, natural disasters profoundly impacted our Nation this year. From wildfires out west to drought in the Plains to violent storms in the Northeast, millions of households were affected. These unanticipated events leave families and small businesses facing significant costs when rebuilding.

Typically, insurance covers monetary losses, but that is not always the case. To complement insurance coverage, Congress authorized the SBA to provide disaster loans to affected families and small businesses. Since its inception in 1953, the SBA has approved roughly 1.9 million disaster loans, amounting to approximately $47 billion.

Over the years, the program has evolved to better assist victims. As chairwoman of the Small Business Committee, I worked to incorporate bipartisan reforms in the 2008 farm bill to help disaster victims get back on their feet. These included new disaster

bridge loans, greater loan amounts, extending deferment periods, and enabling more private sector involvement.

The current program makes the government the lender of last resort by subsidizing reduced interest rates only for those who cannot get credit elsewhere. The goal is to assist as many victims as possible and ensure risk-sharing remains a public-private partnership. This bill, however, would eliminate the ``credit elsewhere'' test, offering taxpayer- subsidized, low-interest loans to all applicants. At a time when government resources are scarce, we should not be shifting more borrowers and additional risk into this initiative.

This is not my only concern. The bill also arbitrarily limits interest rates--with no empirical data to show why these levels are appropriate. Capping interest rates could greatly increase the taxpayers' burden in the future as costs rise and revenue remains flat. The SBA is also directed to issue refunds on previously approved loans. The bill is silent on how to carry that out, creating an administrative nightmare for the SBA.

Continuing to improve the program is important, but in doing so, we should not create unintended consequences. If the regular committee hearing and markup process had been followed, Members could have addressed this bill's shortcomings. Placing it on suspension has further limited Members' participation.

I would like to direct the attention of my colleagues on both sides of the aisle to the fact that this bill creates $50 million in direct spending. To offset the cost, it will eliminate public funding of political conventions, undoing years of campaign finance reform in the process.

Today, Federal election rules seek to keep soft money and undue influence out of the Presidential race. Since the Supreme Court's Citizens United decision, it's become clear that powerful stakeholders will spend millions to help a candidate win. If public funding were terminated, special interests will once again compete to curry favor with Presidential candidates by bankrolling nominating conventions.

Mr. Speaker, it is certainly appropriate to provide relief to homeowners and businesses affected by a disaster; however, it is inconsistent with the intent of the program to ask taxpayers to subsidize loans for those who can get credit elsewhere. Is this the best use of government resources? I don't know. But I'm confident we could have investigated this and other concerns if the committee process were not bypassed in favor of today's suspension vote.

With that, I reserve the balance of my time.

Mr. Speaker, I yield 1 minute to the gentleman from New York (Mr. Owens).

I yield back the balance of my time.

Mr. Speaker, I rise today in strong support of H.R. 6296, the Disaster Loan Fairness Act of 2012, introduced by my colleague from Pennsylvania, Representative Barletta.

Our districts cross each other in several counties, so we both have experienced the disaster that took place in the 10th and 11th District.

At the end of August 2011, Hurricane Irene caused severe flooding and widespread power outages in eastern Pennsylvania. With the ground saturated and waterways at a very high level, Tropical Storm Lee arrived about one week later, causing historic widespread flooding in most of central and eastern Pennsylvania. The 10th Congressional District that I represent was particularly hit hard.

Ten of the 14 counties in the district were impacted by the flood. The storm knew no boundaries. It hit homes and businesses, government offices and schools, farms, cemeteries, and churches. I visited with families and individuals who had lost everything.

I traveled to many businesses, both large and small, that were affected, like the Knoebels Amusement Park in Northumberland County, where I watched workers and owner clean up four inches of mud that covered the ground across the entire park.

While the people of my district have made heroic efforts to rebuild, they have faced many obstacles. One of these is finding loan opportunities which they need to finance the rebuilding of their homes and businesses.

Unless you have lived through a disaster and visited with families that have been through the experience, it is hard to imagine the hopelessness and desperation that people experience when the rebuilding process begins.

H.R. 6296 will provide critical relief to disaster victims in my district and across the country by lowering the interest rate on SBA disaster loans. This legislation, which will, on average, lower rates on SBA disaster loans by 1\1/2\ to 2 percent, will give Americans impacted by disaster the ability to begin the process of rebuilding their lives and livelihoods.

I had the occasion to hear a little of the argument prior to this concerning the conventions getting money, and there was an issue raised about it's only $36 million. Well, there's nobody in this room that doesn't think $1 million is a lot of money, and I certainly think $36 million is a whole heck of a lot of money.

Now, we can send money to conventions. That should be the responsibility of each party, regardless of what side of the aisle you're on.

But we also send taxpayer money to countries that hate us, so I think it's about time we start helping the American people with their own tax dollars.

I urge all of my colleagues to join with me and Representative Barletta in support of this important legislation.

I had one experience that just stuck in my mind. During the flood, I visited a family who wasn't in their house.

I want to share an experience I had touring the same areas that Lou did. And it was a family of six; they weren't able to be in their house. It was a blue collar family. It was half a double.

They wouldn't even be able to sit on their porch or stand in their front yard. That's how bad the flood was. Most of their furniture and belongings were out on the front yard, just totally lost.

They sat on the back of a pickup truck. A 6-year-old little girl, 6 or 8 years old, said to me, Are you here to help, because we don't have a bed to sleep in and we don't have a room to sleep in. What are we going to do tonight?

That is what we're faced with. We're supposed to be helping our people in our district, and I urge my colleagues to support this legislation.

Mr. Speaker, I rise to remember the one-year anniversary of the devastation communities in my district faced when Hurricane Irene and Tropical Storm Lee brought an epic 500-year flood to the Susquehanna River.

In September 2011, when the creeks and rivers first started rising, I immediately returned to Northeastern Pennsylvania to help my constituents. I witnessed firsthand the devastation and destruction caused by this historic flooding. Over the past year, I spent time surveying the damage to our communities, our homes, and our regional economy. I met with people who lost everything: their jobs as local businesses closed; their homes; and their prized possessions and treasured keepsakes, which were destroyed and gone forever. I met with small business owners who didn't know if they would be able to reopen their doors. I met with local officials who didn't know how their towns would afford to repair their streets and keep their police officers, firefighters, and emergency responders working extra hours.

Despite all of this devastation, the citizens of Pennsylvania's 11th District rose above their own needs, though great, and thought of others. I saw neighbors open their homes and wallets to care for flood victims. I met volunteers who spent their evenings and weekends cleaning up senior citizens' basements. I witnessed our community's citizens coming together with hope and determination to repair the destruction from the flood. Even with the enormous strength of our combined efforts, I realized that our Federal Government must provide a better response to natural disasters.

In Washington, I have been working to improve the assistance the Federal Government provides natural disaster victims. For the past year, I have aimed to lower the Small Business Administration (SBA) disaster loan interest rates for all Americans who have been the unfortunate victims of natural disasters. On September 23, 2011, I introduced H.R. 3042, the Disaster Loan Fairness Act of 2011. On August 2, 2012, I revised my original legislation and introduced H.R. 6296, the Disaster Loan Fairness Act of 2012. This measure allows for SBA loans at a discounted market-based interest rate for homeowners and small business owners who were hit by flooding or other natural disasters and in which the president has declared a major disaster. Critically, the interest rate can never be greater than 4 percent, which will make a tremendous difference to those seeking to rebuild their homes and restart their lives. Most importantly, this bill will restore American lives, save American businesses, and protect American jobs.

Mr. Speaker, over the past year, I have seen the very best of humanity in Northeastern Pennsylvania in these people who lost everything. I commend those citizens who have helped their family, friends, neighbors, and strangers in this time of need. Rest assured, I will never forget the devastation caused by the flooding after Hurricane Irene and Tropical Storm Lee, and I will continue to support improved federal natural disaster assistance.

Mr. Speaker, I was a cosponsor of the original version of this bipartisan bill and rise to support the modified legislation we are considering today. I want to thank Mr. Barletta for his work on this important legislation in the aftermath of Hurricane Irene and Tropical Storm Lee.

These two disasters caused millions in damage in northern New York. One year later, small businesses and homeowners are still recovering.

As I walked around my district immediately after, I saw people shoveling out mud, throwing out heirlooms, and struggling to understand what had happened to them. Many of the businesses were ruined, along with homes.

But I also saw something else. I saw people helping people. What we're doing here today is having the government help people. We're following the example of our constituents.

Currently, the Small Business Administration offers disaster recovery loans to small businesses and homeowners for as low as 4 percent and up to 8 percent if credit is available elsewhere. To date, nearly 100 small businesses and homeowners in my congressional district have been approved for more than $5.8 million in disaster loans. But I have heard from many constituents that the interest rates are simply too high to take advantage of these loans.

This bipartisan bill would lower the interest rate on disaster loans.