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Public Statements

Disaster Loan Fairness Act of 2012

Floor Speech

By:
Date:
Location: Washington, DC

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Ms. VELÁZQUEZ. 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.

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