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Relief For Entrepreneurs: Coordination Of Objectives And Values For Effective Recovery Act Of 2007

Floor Speech

By:
Date:
Location: Washington, DC


RELIEF FOR ENTREPRENEURS: COORDINATION OF OBJECTIVES AND VALUES FOR EFFECTIVE RECOVERY ACT OF 2007 -- (House of Representatives - April 18, 2007)

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Mr. CHABOT. 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 Velázquez, 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.

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