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REP. STEVE CHABOT (R-OH): Thank you, Madame Chairwoman. And I first of all want to note and congratulate you on being elevated to chairwoman of the Hispanic Caucus.
REP. VELAZQUEZ: Thank you.
REP. CHABOT: That just happened today, so I wanted to say good luck and congratulations on that. I want to thank you for holding this hearing.
The issues that will be addressed in today's hearing are vital to the economy and the ability of current and future small business owners to lead us to a brighter economic future.
When Congress adjourned early October, there was an expectation in some circles that the bill enacted by Congress would help resuscitate the economy. Those hopes and expectations have been dashed on the rocks of continuing economic turmoil.
Despite promises of better times ahead after passage of the bailout, consumer confidence remains low. Many companies are laying off workers, and three automobile manufacturers with a significant presence in my home state of Ohio, as well as many other states around the country, appear to be teetering on the abyss of failure.
There is no doubt, in these troubling times, that solutions must be found to these financial problems. One glimmering light in these times is the agility, resourcefulness and drive of America's entrepreneurs. As larger enterprises lay off workers, small businesses will help fill the gap, either through hiring of new employees or the creation of entirely new enterprises. But the ideas of America's entrepreneurs require something that has been in very short supply recently, and that's capital.
Today's hearing will focus on the current availability of capital for small business owners and possible solutions to increase liquidity in the small business lending markets. From all that I've been hearing, there is little available capital for small businesses. Banks are cutting back on credit for entrepreneurs. Venture capital remains scarce. And the safety net of SBA lending programs have seen dramatic reductions in loan approvals.
If we are relying on small businesses to lead us out of the current economic situation, the absence of available capital is fraught with serious consequences. During the debate on the financial rescue, there was an expectation that the funds injected into firms would then be loaned to firms requiring new capital. That has not occurred. And the members of this committee are certainly interested in knowing why that has not occurred.
This should not be viewed as laying the basis for blame or recriminations. Rather, it's necessary to ensure that Congress, in future legislative action, does not repeat the errors of the past. I will be very interested in hearing from the witnesses where any mistakes they may believe have been made.
Further efforts to inject capital into the credit markets will increase the debt ceiling and federal borrowing. As I noted in a previous hearing, small business owners cannot compete against the federal government in the market for debt capital. So any solution to the current liquidity crisis and the small business debt market must address the cost of capital to America's entrepreneurs.
Simply making the capital available, which is no doubt important, will be of little use if the cost of such capital is so high that prudent small business owners will not take the risk of the higher debt payments, particularly in uncertain economic times. I'd be very interested in suggestions on how to balance between further liquidity injections and balance those with the cost of debt capital for small business owners.
No one can deny that recent weeks and months are placing a strain on the finances of all Americans, including America's small businesses. Solutions must be found that increase liquidity for small businesses without presenting them with unaffordable capital.
Again, I thank the chairwoman for holding this hearing, and I yield back my time.
REP. VELAZQUEZ: Thank you, Ranking Member.
And before I introduce the witnesses, I would like to take a minute to say that this committee has had a very productive two years, and that was largely thanks to your leadership, Mr. Ranking Member. While we may not have been seeing eye to eye on every policy, I always appreciated your input. I knew that it was motivated by what you deem best for small businesses. Nine times out of 10, we ended up with a better product as a result. And, of course, let's not forget how much, how much you taught me about (ANWR ?).
REP. CHABOT: (Laughs.)
REP. VELAZQUEZ: I now know more about that place than I ever dreamed or hoped to know. So I could go on and on about you, Steve, but I don't want these witnesses to think that they are going to get off easy. But seriously, it has been a pleasure getting to work with you and getting to know you. Thank you for your service. And you have a friend here in the House of Representatives.
REP. CHABOT: Well, thank you very much, Madame Chairwoman. It's been a pleasure working with you. And I think we were able to work together in a bipartisan fashion for the good of the small business community across the country. And I consider you not only a colleague, but a friend. And even though we're different parties and, you know, different philosophies relative to a lot of issues, we did work together. And our staffs did too, and I think we both have excellent staffs. And it's been a pleasure working with you.
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