Madam Chair, I rise as the designee of the gentlewoman from Florida (Ms. Ginny Brown-Waite) and I have an amendment at the desk. Madam Chair, let me start off with a simple premise: The American economy cannot recover without small…
Madam Chair, I rise as the designee of the gentlewoman from Florida (Ms. Ginny Brown-Waite) and I have an amendment at the desk.
Madam Chair, let me start off with a simple premise: The American economy cannot recover without small business. As such, Congress has rightly taken steps to increase the guarantee amount at the Small Business Administration. But as many business owners can tell you, this has only had a modest effect. In fact, despite these thoughtful measures, the volume of SBA loan guarantees is still only a fraction of what it was last year.
As my colleagues know, the SBA only makes loan guarantees--it does not make loans directly to small businesses. Therefore, if banks decide that even with 90 percent guaranteed, it is still not in their best interest to make a loan, then the small business is simply out of luck.
One credit union president recently pointed out that, in many cases, banks won't seriously consider a small business loan if it is less than $500,000. The interest income simply isn't worth the trouble--even with the guarantee. In these cases, the viability of the business and the value of the guarantee doesn't mean anything.
H.R. 3854 rightly introduces a new program--the Capital Backstop Program--that will authorize the SBA to make loans directly to small businesses as a last resort.
While we are deeply concerned about the Federal Government acting as a bank, the fact of the matter is that Congress has spent $700 billion to resuscitate the lending system, $800 billion trying to stimulate the economy, and yet homeowners--and small businesses especially--still can't get the loans that they need. It is very important that Congress put standards in place to ensure that SBA direct loans are only made to viable businesses.
This amendment establishes this same standard for individuals at the SBA who are directly engaged in loan application evaluation and underwriting. We can only imagine the bureaucratic nightmare that would ensue if Congress actually tried to come up with a laundry list of criteria for viable businesses. As any local banker can tell you, no two businesses are exactly the same--the people matter, the models matter, the market matters.
This amendment ensures that individuals who are evaluating businesses have both the authority and the expertise to make the best decisions for the taxpayer.
We want to thank the chairwoman and ranking member and all of their colleagues on the Small Business Committee for their efforts on this legislation. It is very important work.
Madam Chair, I urge the adoption of this amendment.
I reserve the balance of my time.
Madam Chair, I yield back the balance of my time.
Madam Chair, I rise as the designee of the gentlewoman from Florida (Ms. Ginny Brown-Waite) and I have an amendment at the desk.
Madam Chair, this amendment makes a simple technical correction to the Capital Backstop Program, which we were just talking about.
In short, this underlying bill wisely puts restrictions on when this program can and cannot operate. The bill states two things: First of all, that the National Bureau of Economic Research, the NBER, must have declared the United States to be officially in recession. Second, the SBA loan guarantee volume must be down 30 percent from the previous year. And if these two criteria are not met, then the program is shut down.
As you know, the Federal Reserve recently stated that the recession is already likely over. The NBER is sure to follow suit soon. As well, because SBA loan volume is already down so substantially, the likelihood of another full 30 percent drop next year is very low.
This amendment simply says that the program being created in this bill is authorized to begin operation immediately upon enactment and is authorized to continue through September 2011, even if the recession has been declared technically over.
I would note personally, being from Michigan, whatever they are saying in the Nation, the recession is definitely not over in the State of Michigan.
However, our concern, Madam Chair, is that if Congress is going to take the extraordinary step of authorizing the SBA to make loans directly to small businesses, then it ought to be making these loans now, when they are needed the most.
After 2011, the restrictions that are in the underlying bill will resume. Frankly, Madam Chair, at that time we certainly hope that even stronger restrictions are in place.
Many of our colleagues are skeptical of having the SBA make loans directly to small businesses. Nevertheless, taxpayers have spent nearly $2 trillion trying to fix this situation. It hasn't worked.
If we are going to take the step of creating this program, let us at least make sure that it is helping our constituents and the taxpayers and small businesses now, when they truly need it most.
Madam Chair, I urge the adoption of this amendment.
I reserve the balance of my time.
Madam Chair, I yield back the balance of my time.