[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]








      SMALL-BUSINESS LENDING: PERSPECTIVES FROM THE PRIVATE SECTOR

=======================================================================

                                HEARING

                               before the

              SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             JUNE 21, 2012

                               __________



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



            Small Business Committee Document Number 112-073
              Available via the GPO Website: www.fdsys.gov

                                _____

                  U.S. GOVERNMENT PRINTING OFFICE

76-479                    WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001













                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                       ROSCOE BARTLETT, Maryland
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                      CHUCK FLEISCHMANN, Tennessee
                         JEFF LANDRY, Louisiana
                   JAIME HERRERA BEUTLER, Washington
                          ALLEN WEST, Florida
                     RENEE ELLMERS, North Carolina
                          JOE WALSH, Illinois
                       LOU BARLETTA, Pennsylvania
                        RICHARD HANNA, New York
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        MARK CRITZ, Pennsylvania
                      JASON ALTMIRE, Pennsylvania
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                     DAVID CICILLINE, Rhode Island
                       CEDRIC RICHMOND, Louisiana
                         GARY PETERS, Michigan
                          BILL OWENS, New York
                      BILL KEATING, Massachusetts

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                     Barry Pineles, General Counsel
                  Michael Day, Minority Staff Director














                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
 Hon. Mike Coffman...............................................     1

                               WITNESSES

David J. Rader, Business Executive, SBA Lending, Wells Fargo, 
  Minneapolis, MN................................................     2
Brett Martinez, President & CEO, Redwood Credit Union, Santa 
  Rosa, California...............................................     4
Tim D. Dixon, Senior Vice President, Head of Small Business 
  Administration Lending, Citizens Bank, Warrensville Heights., 
  OH.............................................................     5
Robert L. Marquette, President/CEO, Members 1st FCU, 
  Mechanicsburg, PA..............................................     7

                                APPENDIX

Prepared Statements:
    David J. Rader, Business Executive, SBA Lending, Wells Fargo, 
      Minneapolis, MN............................................    19
    Brett Martinez, President & CEO, Redwood Credit Union, Santa 
      Rosa, California...........................................    23
    Tim D. Dixon, Senior Vice President, Head of Small Business 
      Administration Lending, Citizens Bank, Warrensville 
      Heights, OH................................................    36
    Robert L. Marquette, President/CEO, Members 1st FCU, 
      Mechanicsburg, PA..........................................    46
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Materials for the Record:
    Millwork & More Letter for the Record........................    60
    Pekel Construction Letter for the Record.....................    61
    Written Testimony of Christopher G. Hurn.....................    62
    CG&S Design-Build Letter for the Record......................    70
    National Association of the Remodeling Industry Letter for 
      the Record.................................................    71
    Small Business Investor Alliance Letter for the Record.......    72
    A&C Kitchens & Baths Letter for the Record...................    76
    Total Home Letter for the Record.............................    77
    Benjamin Plumbing, Inc. Letter for the Record................    78
    Creative Concepts Remodeling, Inc. Letter for the Record.....    80

 
      SMALL-BUSINESS LENDING: PERSPECTIVES FROM THE PRIVATE SECTOR

                              ----------                              


                        THURSDAY, JUNE 21, 2012

                  House of Representatives,
      Subcommittee on Investigations and Oversight,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Mike Coffman 
(chairman of the Subcommittee) presiding.
    Present: Representatives Coffman, Tipton, West, Schrader, 
and Hahn.
    Chairman Coffman. Good morning.
    On Wednesday, June 6th, the Small Business Committee held 
an oversight hearing with SBA Administrator Karen Mills to 
question this administration about its procedures for setting 
policy for its financial assistance programs. The Committee 
also examined SBA's procedures for lending oversight to make 
sure that SBA is protecting taxpayers by conducting proper 
oversight of its lending partners.
    Today, we are here to follow up on that hearing. Testifying 
today are private-sector lending partners who will discuss the 
effect of SBA policy on loan processing and how SBA can be a 
better partner.
    In addition to reviewing SBA policy and procedures, we will 
also hear about how other financial regulators are impacting 
credit availability for small businesses. The Committee 
consistently hears from both bankers and small businesses that 
the regulatory environment is harming economic growth. This is 
an opportunity to hear more about the regulatory burdens on 
banks.
    We all know that economic growth will be led by small 
businesses. To encourage this important sector to grow and 
create jobs, we need an environment where small businesses can 
access capital and banks have the freedom to lend without 
consistent second-guessing by regulators.
    I would like to thank our witnesses for taking time away 
from their businesses to testify here today.
    If Subcommittee members have an opening statement prepared, 
I ask them to have it submitted for the record.
    I would like to take a moment to explain the timing lights 
for you. You will each have 5 minutes to deliver your remarks. 
The light will start out as green. When you have 1 minute 
remaining, the light will turn yellow. Finally, at the end of 
your 5 minutes, it will turn red. I ask you to adhere to the 
time limit.
    Our first witness is David Rader, head of small-business 
lending for Wells Fargo. Wells Fargo is SBA's top lender by 
dollars lent to small businesses and second in the number of 
loans. So far in fiscal year 2012, Wells Fargo has already made 
over half a billion dollars in loans to small businesses 
through the SBA's 7(a) Loan Program. David has been with Wells 
Fargo for 29 years.
    David, thank you for being here, and we look forward to 
your testimony.

STATEMENTS OF DAVID J. RADER, BUSINESS EXECUTIVE, SBA LENDING, 
WELLS FARGO, MINNEAPOLIS, MINNESOTA; BRETT MARTINEZ, PRESIDENT 
AND CHIEF EXECUTIVE OFFICER, REDWOOD CREDIT UNION, SANTA ROSA, 
CALIFORNIA, ON BEHALF OF THE CREDIT UNION NATIONAL ASSOCIATION; 
TIMOTHY D. DIXON, SENIOR VICE PRESIDENT, HEAD OF SMALL BUSINESS 
 ADMINISTRATION LENDING, CITIZENS BANK, WARRENSVILLE HEIGHTS, 
OHIO, ON BEHALF OF THE CONSUMER BANKERS ASSOCIATION; ROBERT L. 
 MARQUETTE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, MEMBERS 1ST 
FEDERAL CREDIT UNION, MECHANICSBURG, PENNSYLVANIA, ON BEHALF OF 
       THE NATIONAL ASSOCIATION OF FEDERAL CREDIT UNIONS

                  STATEMENT OF DAVID J. RADER

    Mr. Rader. Mr. Chairman, Ranking Member Schrader, and 
members of the Subcommittee, my name is David Rader. And for 
the past 5 years, I have been the business executive of Wells 
Fargo's SBA lending business. I have been employed at Wells 
Fargo for 29 years. Thank you for inviting me here today.
    Wells Fargo, as the Chairman said, is the national SBA 
lender that offers all core 7(a) as well as the 504 loan 
products. We have over 350 dedicated SBA team members, and we 
are a growing and profitable business for the bank, holding 
loan balances of $7 billion.
    As the Chairman said, for the past 3 years Wells Fargo has 
been the number-one 7(a) dollar lender, approving more than 
$1.2 billion in 7(a) loans, representing 3,142 loans. And we 
also made history by becoming the first institution to generate 
over a billion dollars of 7(a) loans in the program. Our 
lending trend continues today, and, through May, Wells Fargo 
remains the number-one 7(a) lender, approving $734 million, and 
we currently are the number-two unit lender.
    These dollars represent significant numbers of both large 
and small loans. We believe that the flow of new dollars into 
our communities represents a very powerful statement for job 
creation and economic development. We want to lend more dollars 
to more creditworthy customers, and we believe the SBA agency 
is aligned with Wells Fargo to achieve that goal.
    As the Nation's number-one SBA lender, we appreciate the 
very constructive engagement of the SBA and the interest it has 
in our lending perspectives. We regularly participate with the 
SBA in an ongoing dialogue on credit policy issues, oversight, 
and program enhancements. We also believe there are 
opportunities to improve the programs and streamline the very 
complex SBA Standard Operating Procedures (SOPs).
    The agency's efforts to reduce regulation and process over 
the years, especially the SOPs, are welcome. In Wells Fargo's 
view, the SOPs can be simplified and clarified further for the 
benefit of all without added risk to the taxpayer. For example, 
the public September 2011 SOPs lack clarity surrounding stock 
ownership rules and Eligible Passive Company/Operating Company 
(EPC/OC) structure rules. As a result, many industry lenders 
sought standard processing approval rather than Preferred Loan 
Program (PLP) approval, resulting in customer delays and added 
processing expense for all.
    When SOPs are made, the agency must provide the industry 
with enough lead time to educate, train, and develop internal 
risk systems so we are equipped to best serve our customers and 
make loans with enforceable guarantees.
    We believe there can be much more transparency in the SOP 
vetting process, both with the SBA and the lending industry at 
large, as well as with the SBA and the SBA Office of Inspector 
General (OIG). From our vantage point, the OIG continues to be 
too deeply involved in the vetting process. We find the process 
unclear, and we are often surprised at the outcome, hampering 
our ability to react and train our teams effectively. We 
suggest that the SBA give lenders an opportunity to change the 
SOPs and give us time, at least 30 days, prior to any final 
release.
    We also recommend that the agency revise the current SOPs. 
For example: Eliminate the requirement for blue-ink signatures 
on necessary SBA forms. Number two, allow loans to individuals 
when there is a change-of-ownership transaction involving a 
stock purchase rather than just an asset purchase. Number 
three, allow 7(a) loans under $350,000 to be approved and 
processed under the SBA Express program using lender's 
delegated authority. Those are just a few suggestions.
    Wells Fargo continues to urge the SBA to focus its 
resources on streamlining existing programs, both 7(a) and 504, 
rather than creating brand-new programs that serve limited 
niches. The recently revised CAPLine program is a great example 
of SBA's progress in this regard.
    Wells Fargo welcomes practical and prudent lender 
oversight. Strong lender oversight will level the playing field 
and make the programs more consistent, cost-effective, and 
easier to use. We view the SBA on-site review process as 
rigorous and an opportunity for us to improve. We take pride in 
our substantial compliance with SBA regulations.
    We welcome the recent appointment of the Office of Credit 
Risk Management (OCRM) director and look forward to a new era 
of transparency and collaboration. OCRM's willingness to 
discuss key portfolio-monitoring tools is a welcome change that 
we appreciate.
    There is much work to do. If we work together and share 
best practices, Wells Fargo continues to be optimistic about 
our ability to help businesses succeed financially while being 
good stewards of the SBA program. We look forward to our 
ongoing dialogue and partnership with the SBA.
    And I would be happy to answer any questions. Thank you.
    Chairman Coffman. Great. Thank you for your testimony.
    Our next witness is Brett Martinez, president and CEO of 
Redwood Credit Union located in Santa Rosa, California. Brett 
is testifying on behalf of the Credit Union National 
Association, where he serves on their board of directors. In 
his 25 years of banking experience, Mr. Martinez served as a 
senior executive with the California Credit Union League with a 
large southern California credit union prior to joining Redwood 
in 2002.
    Mr. Martinez, thank you for being here, and we look forward 
to your testimony.

                  STATEMENT OF BRETT MARTINEZ

    Mr. Martinez. Thank you.
    Chairman Coffman, Ranking Member Schrader, and members of 
the Subcommittee, thank you for the opportunity to testify at 
today's hearing. Again, my name is Brett Martinez, and I am 
president and CEO of Redwood Credit Union, a $2 billion State-
chartered credit union serving 220,000 members, located in 
Santa Rosa, California. Redwood is the largest credit union SBA 
lender in the country by loan volume.
    Credit unions share the Small Business Committee's goal of 
increasing access to credit for small businesses through the 
reduction of statutory and regulatory impediments. At the end 
of the year, there were over 330 credit union SBA lenders. 
These credit unions collectively have $800 million in SBA loans 
outstanding. The average credit union SBA loan is roughly 
$100,000.
    Since December of 2007, SBA loans have grown by 90 percent 
at credit unions throughout the Nation. SBA-guaranteed loans 
are important to borrowers who otherwise would not be able to 
get a conventional loan, but they are complicated to make. They 
require staff with a special kind of expertise. They cost the 
borrower and their lender more to make than conventional loans, 
and they take longer to complete.
    My written testimony describes how we have been able to use 
SBA loan programs to help small businesses in our community. We 
find ourselves in a fragile economic recovery. Small businesses 
that have survived the recession have largely done so by 
rightsizing their business following a path of declining 
profits. Many have shown losses for several years. As a result 
of their ongoing restructuring, they are beginning to once 
again show profits. Ultimately, they are left with a need to 
restructure their balance sheets, consolidate debt, and free up 
cash flow to grow their business.
    We have used SBA programs, including the 504 Refinance 
Program and the First Mortgage Lien Pool program, to help our 
members stay in business, preserve jobs, and survive through 
the economic recovery. These programs expire in September, and 
we encourage Congress to reauthorize them. Otherwise, small 
businesses will be adversely impacted.
    My written testimony describes efforts that CUNA has taken 
to encourage SBA to improve its programs through reduced 
regulatory burden, increased transparency, and a streamlined 
application program. In general, we have seen improvements in 
this area over the last several years. However, other lenders 
who do not have the experience that we do still may find the 
process very complicated. To that end, it is important for SBA 
to continue its efforts in this regard and continue to engage 
lenders when it modifies SOPs and other policies.
    Enhancing access to credit for small businesses is an 
important part of promoting job creation and the economic 
recovery. There is significant demand for credit from small 
businesses. During the financial crisis, credit unions expanded 
business lending to their members while other lenders pulled 
back. Many credit unions that contributed to the vast majority 
of this growth are now becoming severely constrained by the 
statutory cap on credit union business lending.
    Redwood is one of these credit unions. We are at 75 percent 
of our capacity, and we will only be able to lend to business 
members for the next 18 months. The cap will not only affect 
our ability to offer conventional loans but also our ability to 
offer SBA loans. That is why we are strongly encouraging 
Congress to increase the statutory cap on credit union business 
lending.
    Representatives Ed Royce and Carolyn McCarthy have 
introduced legislation to allow experienced credit unions 
operating near the cap to apply to NCUA for authority to lend 
beyond that cap. We estimate that the Royce-McCarthy 
legislation would inject $13 billion into new capital and to 
small businesses in the first year after enactment and create 
140,000 new jobs, all at no cost to taxpayers. We appreciate 
the several members of the Subcommittee that have cosponsored 
the legislation.
    Some banking trade associations strongly oppose the Royce-
McCarthy bill. They suggest it is unnecessary because the 
guaranteed portion of an SBA loan does not count against the 
cap. However, SBA is not a solution to the cap limitations. 
Notwithstanding their merits, SBA loans clearly are not a 
substitute for conventional business loans.
    At the same time, increasing the cap on credit union 
business lending would almost certainly lead to an increase in 
SBA-guaranteed lending. Some small businesses, both that 
qualify for a conventional loan and those that require a 
government guarantee, would have more access to credit to start 
growing their business and create jobs. We encourage Congress 
to enact the Royce-McCarthy legislation.
    Thank you again for the opportunity to testify today, and I 
am happy to answer any questions.
    Chairman Coffman. Thank you for your testimony.
    Our next witness is Timothy Dixon, senior vice president 
and head of SBA lending at Citizens Republic Bancorp. Citizens 
serves customers in Michigan, Ohio, and Wisconsin. Tim has 
close to 30 years of commercial banking experience, serving as 
executive vice president of commercial banking at SkyBank 
before joining Citizens Republic. Tim is testifying on behalf 
of the Consumer Bankers Association.
    Tim, thank you for being here today, and you have 5 minutes 
to present your testimony.

                 STATEMENT OF TIMOTHY D. DIXON

    Mr. Dixon. Chairman Coffman, Ranking Member Schrader, and 
members of the Subcommittee, my name is Tim Dixon, and I am 
senior vice president and head of Small Business Administration 
lending for Citizens Bank. Citizens Bank serves communities 
located within Michigan, Ohio, and Wisconsin, with 219 branches 
and 249 ATMs. We are a community-oriented institution, with a 
majority of our revenue being derived from our core bank, which 
is heavily oriented toward small business.
    Citizens is a preferred SBA lender, with dedicated 
specialists to fast-track the process, and we also have 
expertise in other State and local loan programs. While we 
utilize a number of the SBA loan programs across the bank, the 
majority of our loan volume is 7(a) Express, with an average 
loan size of $60,000.
    I am also a member of the Consumer Bankers Association's 
Small Business Banking Committee, which includes the top 
business bankers in the country, who share the common goal of 
helping small businesses meet their financial needs.
    Headlines highlighting weak consumer confidence and high 
unemployment have created a great level of uncertainty for 
small-business owners. Many business owners are cautious to 
take on additional debt or to hire new employees with the 
current level of economic uncertainty. Continued reports of a 
possible double-dip recession only further the concerns of 
business owners and the confidence of American consumers.
    SBA lending has played an important role in helping small-
business owners meet their financial needs in difficult times. 
While SBA lending remained strong in the first half of 2012, 
overall numbers appear to be lower than those of 2011, a banner 
year for SBA. Much of the difference can be attributed to the 
expiration of loan enhancements provided under the Small 
Business Jobs Act.
    Short of reinstating these temporary provisions, today's 
hearing is an opportunity to highlight positives and identify 
ways to improve the SBA programs. CBA's Small Business Banking 
Committee compiled a list of recommendations focused on the 
SBA's 7(a) and 504 programs and sent them in a recent letter to 
the SBA and Congress, highlighting our suggestions to improve 
the efficiency and effectiveness of these valuable programs. 
The SBA incorporated a couple of our recommendations in its 
most recent revision of its standard operating procedures, or 
SOP. However, CBA believes there are still a number of changes 
the SBA can make to help increase lending.
    As detailed in our written testimony, the Consumer Bankers 
Association suggests a number of enhancements to the 7(a) and 
504 programs. Most notably, we suggest a streamlined 7(a) 
process by allowing preferred lenders to use Express loan forms 
and processes for all 7(a) loans. For 504 loans, we encourage 
the reauthorization of the Refinance Program, which is 
currently scheduled to sunset in September.
    The SOP is a complicated document, and while having the 
ability to make slight tweaks can be beneficial at times, quick 
and frequent changes to the SOP process can create real-world 
challenges. As the terms of the SOP are ever-changing, it 
creates practical challenges to interpret revisions, train 
staff, update systems, and be in compliance if these changes 
are coming too frequently. The ability of an institution to 
keep up with changes to the SOP can have large compliance cost 
implications, which can adversely affect lending.
    Furthermore, the clarification of SOP terms can be time-
consuming and difficult. For example, the improvements to the 
CAPLine program issued in late 2011 do not provide clear terms 
for loan qualification. In response to industry inquiries, the 
SBA took over 6 months to provide adequate clarification. And 
so we recommend a more methodical and consistent approach to 
SOP policy changes.
    Finally, effective SBA lender oversight is another area of 
concern. Members of the CBA have found that the SBA audit 
process can be a very time-consuming exercise and is not always 
useful to assess and mitigate risk. A more transparent and 
streamlined audit process would go a long way in improving 
lender efficiency. Lender oversight should be a means for the 
agency to identify variances from established lender benchmarks 
and provide a reasonable process for lenders to remedy 
deficiencies.
    We applaud this Committee's continued efforts to improve 
the efficiency and effectiveness of the SBA's programs. I thank 
you for the opportunity to appear here today, and I would be 
happy to answer any questions you may have.
    Chairman Coffman. Thank you for your testimony.
    Robert Marquette is president and CEO of Members 1st 
Federal Credit Union, located in Pennsylvania. Members 1st 
Credit Union has over 200,000 members. Robert is testifying on 
behalf of the National Association of Federal Credit Unions, 
where he serves on their board of directors.
    Mr. Marquette, you have 5 minutes to present your 
testimony.

                STATEMENT OF ROBERT L. MARQUETTE

    Mr. Marquette. Good morning, Chairman Coffman, Ranking 
Member Schrader, and members of the Subcommittee. My name is 
Bob Marquette, president and CEO of Members 1st Federal Credit 
Union, and I am testifying today on behalf of NAFCU. Thank you 
for holding this important hearing. I appreciate the 
opportunity to share our views on small-business lending from a 
lender's perspective.
    Credit unions currently operate under an arbitrary business 
lending cap of 12.25 percent of total assets. This artificial 
cap acts as a barrier to credit unions meeting the needs of 
their small-business members. It should be noted that the 
government-guaranteed portions of SBA loans do not count toward 
the member business funding cap, but the nonguaranteed portions 
do. This could cause a credit union to scale back participation 
in SBA programs as they approach the arbitrary cap.
    A 2011 SBA study indicates that credit union business 
lending increased before and during the financial crisis, while 
banks decreased. This demonstrates that credit unions continue 
to meet the capital needs of their business members even during 
the most difficult of times. In addition, the study found that 
bank business lending was largely unaffected by changes in the 
credit unions' business lending.
    We urge Subcommittee members to support the bipartisan 
legislation, H.R. 1418, the Small Business Lending Enhancement 
Act, which addresses the arbitrary business lending cap.
    Our Nation's Main Street businesses also recognize that the 
artificial cap hurts job creation and their access to capital. 
Like us, they support and urge passage of H.R. 4293, the 
Restore Main Street's Credit Act of 2012, introduced by 
Subcommittee Ranking Member Kurt Schrader.
    At Members 1st, we launched our member business lending 
program in January of 2003 but are unfortunately approaching 
our arbitrary cap today. Our average member business loan is 
$185,000, while the median size is only $60,000. We estimate 
that Members 1st business loans created 52 new jobs in our area 
and helped save 269 more in 2011.
    At Members 1st, we entered the SBA 7(a) program in late 
2010 and have originated two 7(a) loans. We have also 
participated in the SBA 504 program for a longer period and 
have originated three loans in that program.
    Both 7(a) loans were for existing firms that were expanding 
and provided additional capital. However, both loans took 
nearly a year to fund. The SBA 7(a) process was time-consuming 
and burdensome. It left us with the impression that an 
established business lender, such as Members 1st, seeking to 
enter into the SBA marketplace is at the bottom of the SBA 
priority list. The multiple tiers within the SBA 7(a) program 
give larger lenders a competitive advantage over small 
institutions. Members 1st has stopped actively marketing our 
SBA 7(a) loans until we find a solution that can more 
efficiently meet our members' needs.
    Members 1st has had success using the SBA 504 loan program. 
That program and the USDA Business and Industry Loan Program 
have been well received by our members. Both programs treat all 
incoming applications equally, regardless of our history with 
the agency.
    NAFCU is pleased that SBA Administrator Karen Mills has 
been open to meeting with credit unions and hearing our 
concerns about SBA programs. We hope that this dialogue will 
continue and ultimately be productive in addressing our 
concerns.
    One way for the Subcommittee to help address these concerns 
is to support H.R. 4191, the Credit Union Small Business 
Lending Act, introduced by Subcommittee Ranking Member Kurt 
Schrader and full Committee member Representative Steve Chabot. 
This bipartisan bill would amend the Small Business Act to: 
one, direct the SBA Administrator to implement a program to 
increase credit union participation in the SBA small-business 
loan program; two, simplify the application process for such 
participants; and, three, provide a guarantee of up to 85 
percent for loans made in underserved areas. These steps would 
make the process easier for credit unions to become more 
involved in SBA lending and open the door to more access to 
credit for those small businesses and communities served by 
them.
    In conclusion, we recognize that small businesses are the 
driving force of our economy and the key to its success. While 
the SBA lending programs are providing much-needed 
opportunities to businesses, there are still obstacles 
preventing them from reaching their full potential. That is why 
we, on behalf of our Nation's credit unions, their 94 million 
members, and our Nation's small businesses, urge the 
Subcommittee to support legislation such as H.R. 1418, H.R. 
4191, and H.R. 4293 to make it easier for credit unions to aid 
our Nation's small businesses and create jobs.
    We thank you for your time and the opportunity to testify 
before you here today on this important issue to small 
businesses, credit unions, and our Nation's economy. I would 
welcome any questions that you may have.
    Chairman Coffman. Thank you for your testimony.
    The first question is for Mr. Rader and Mr. Dixon. I often 
hear from financial institutions that while entities in 
Washington encourage them to lend more, regulators on the 
ground are in fact requiring them to increase capital reserves. 
Have you experienced this? And, if so, how has this decreased 
the amount of loans that you can make?
    Mr. Rader.
    Mr. Rader. Mr. Chairman, our SBA lending business is 
providing capital to small businesses, and Wells Fargo has 
always been in a good position to provide that capital. So 
while we implore and applaud the SBA to reduce regulation and 
enhance and modify SOPs, we absolutely have not seen a decrease 
in our lending because of capital concerns at Wells Fargo.
    Chairman Coffman. Mr. Dixon.
    Mr. Dixon. Yes, Mr. Chairman, you know, I think we have 
continued to see growth in our SBA loan portfolio. We don't 
feel constrained or feel that the regulatory burden is causing 
us, you know, difficulties in continuing to grow the portfolio 
and support small business.
    Chairman Coffman. Great.
    And a question to all the witnesses. We can start with Mr. 
Marquette. Are small businesses confident, in your view, about 
their ability to access credit and grow their businesses at 
this time?
    Mr. Marquette. What we have heard from small businesses in 
our area, they have seen some kind of a retrenching of business 
lending in our area. For whatever purpose, for whatever reason, 
I am not sure.
    We have seen a significant increase in the number of 
applications that we have received. But because of that 
business cap that we have, business lending cap that we have, 
we have to be more selective. We have to operate within that 
cap, and we are about 90 percent of our cap right now.
    So we have seen some retrenchment. It is easing up a little 
bit. And credit unions have really stepped up to the plate in 
order to be that dependable source of business lending that our 
businesses need.
    Chairman Coffman. Mr. Dixon.
    Mr. Dixon. As we talk to business owners and look at the 
research, you know, I think while there has been recovery in 
small business, business owners have learned something. They 
are cautious; they are keeping available credit in their hip 
pocket, if you will, for a rainy day.
    So I think some of the challenge with loan demand has been 
just small businesses not requiring as much credit. But where 
we have creditworthy borrowers, you know, we feel the markets 
are competitive and the access to capital is there, 
particularly partnering with SBA.
    Chairman Coffman. Uh-huh.
    Mr. Martinez.
    Mr. Martinez. We are seeing an improvement in that area. I 
will just give you an anecdote. Redwood Credit Union started 
SBA lending in 2008, and we immediately became the number-one 
SBA lender in our area. That wasn't because we were doing a 
significant number of SBA loans; it was because we were 
continuing to lend. A lot of the local banks had pulled back.
    So we are seeing that start to improve. We are still the 
number-one SBA lender in our area, but improvement is there. A 
big impact over the past 4\1/2\ years, though.
    Chairman Coffman. Mr. Rader.
    Mr. Rader. Mr. Chairman, we are seeing better financial 
statements from our small-business borrowers. We do believe 
their revenue trends and their profitability trends are 
improving. We have in our business, in our SBA business right 
now an increase in applications, an increase in new loan 
activity and submissions for credit. Our approval rates are 
higher this year than last year. And our approved pipelines, 
both in the 504 as well as 7(a), are up.
    So we are encouraged by that activity, and we believe that 
we have the tools, especially with the new revised SOPs on the 
CAPLine program to provide larger working capital loans, that 
we will have the tools necessary to continue that slow 
improvement and progress on borrowing.
    Chairman Coffman. Okay.
    As you go through audits for both banking regulators, in 
the case of credit unions, your regulators, and the SBA, do you 
feel that the two entities are working together, or are they 
just completely separate?
    Anybody who would like to answer that.
    Mr. Martinez. I will go ahead and start.
    I know NCUA is very supportive of SBA and has actually been 
talking to SBA and talking to Congress about their support 
there. So NCUA credit union regulators are very supportive.
    Chairman Coffman. Okay.
    Anyone else?
    Mr. Dixon. Our experience has been that the SBA is 
listening and we have a good working relationship, but we think 
there is work to be done in the audit and oversight area. And 
as we talk among the banks at CBA, we have made some specific 
recommendations to just improve the efficiency of that process.
    Chairman Coffman. Okay.
    Mr. Martinez, according to your testimony, approximately 
2,000 credit unions engage in business lending. Why so few? 
Roughly, I think, 300 are offering SBA business loans and 
products to their members.
    Mr. Martinez. Yes, those numbers are accurate.
    I know this hearing isn't about the business lending cap, 
but it is the number-one impediment for credit unions to get 
into both commercial lending and SBA lending. Those that are 
already in it are managing to a cap, and those that see the cap 
as a reason for them to not get into something that they are 
going to shut down is a reason that they are not getting into 
that.
    Chairman Coffman. Okay.
    At this time, we will make some rounds to the Members. And 
I think we will hopefully have a second opportunity for rounds 
of questions.
    Ms. Hahn.
    Ms. Hahn. Thank you, Chairman. This is actually my first 
hearing as a member of this Subcommittee, so I really want to 
thank you for holding this important hearing on the state of 
lending for our small businesses.
    And thanks to all the witnesses for being here today.
    You know, since I have been on the Small Business 
Committee, I have really made an effort to go out and talk to 
many, many small businesses personally, hundreds personally I 
have talked to. And I wanted to find out, what is it, what do 
you need from us, do we need to get out of the way or do we 
need to get involved, to make it better?
    And the number-one thing my small businesses have told me 
that they needed was better access to capital. They need more 
customers, number one, so they wanted the economy to improve 
and they want folks to have jobs so they can be customers. But 
the second thing was, they felt like if they could get access 
to capital, that they would expand, they would hire, and it 
really would be about job creation.
    One of the things I also heard was the burden of paperwork 
to fill out for an application for a small-business loan. And I 
introduced H.R. 3836, the Small Business Paperwork Reduction 
Act, which would reduce the amount of paperwork needed for a 
loan of, I think, $250,000 or under from 12 pages to 2--
something simple that I think we can do to help folks, you 
know, at least get through the process of application.
    I am really pleased to see our credit union witnesses here 
today. I am a big fan, as you know, of credit unions. I am also 
a fan of Wells Fargo. I am an equal-opportunity borrower. I 
have borrowed from Wells Fargo, and I have borrowed from my 
local credit union.
    But I do think that you made the case very clear, as you 
have in the past, about the lending cap. I am a cosponsor of 
the Small Business Lending Enhancement Act, which will raise 
the lending cap for credit unions. I believe that our credit 
unions really are there in the communities. They are like the 
community banks. They know their members; many of them know 
them by name. They help them, not only with the loan, but just 
with, kind of, overall counseling about becoming financially 
sound in their dealings. So I appreciate that. And I hope 
Congress will pass that.
    You know, Mr. Rader, what I am going to ask you is, one of 
the other things I heard from my small businesses was that 
sometimes the commercial banks will add a couple of 
requirements that the SBA does not require in their loans--for 
instance, collateral, real estate collateral. In other words, 
the Small Business Administration doesn't put that as a 
criteria to make the loan, but then sometimes the commercial 
banks will add that because your auditors would require that.
    Is there a way that we can reconcile that? Because I heard 
that over and over again, that what the Small Business 
Administration put on as a requirement, you all added to that 
and sometimes made that then the breaking point that small 
businesses were unable to comply with.
    Can we reconcile that?
    Mr. Rader. Yes, Congresswoman, I would be happy to 
understand the details of your clients' situation. The SBA 
rules basically say that if a borrower does not have 100 
percent collateral coverage in their real estate loan or in 
what they are purchasing, that we have to take all available 
collateral.
    That is an SOP rule. That is what we follow. And that is 
currently something that is a good lending practice, but also 
it hurts demand and the ability to provide loans for those 
customers who don't.
    So there is a delicate balance of making sure----
    Ms. Hahn. So you are not adding any?
    Mr. Rader. The SBA programs and the rules of the SOP 
require all available collateral.
    Ms. Hahn. Okay.
    And let me go back to the credit unions. Either one of you 
can answer this. You have made it pretty clear on what you 
think we can do. So, specifically, is there anything else that 
you see Congress doing that could increase the amount of loans 
that our credit unions can be making out there to our small 
businesses specifically?
    Mr. Martinez. I will go ahead and start.
    You know, besides the cap--that is to keep people in--is, 
make the entrance easier. It is a little daunting process. We 
were able, over the past 4\1/2\ years, one of the banks in our 
area pulled back, so we were able to attract people that had 
significant experience, so it wasn't as daunting for us. But if 
you don't have that experience, it is a relatively daunting 
process to get involved.
    And then additional training. There are not a lot of people 
out there that are trained in this. You don't take internal 
staff and say, go be an SBA expert. It is very technical.
    So I would say those two things: make the process easier, 
reach out to credit unions; and provide additional training.
    Ms. Hahn. How are our local SBA regional administrators, 
how are they doing on the ground with all of you?
    Mr. Dixon. Our experience is they have been very 
accessible, want to be out in the communities, work with the 
banks, establish a dialogue. So I feel we have a good working 
relationship with the three States we are within in the region. 
It has been a very positive experience.
    Mr. Rader. And, Chairwoman, I would echo that. You know, 
Wells Fargo is a community bank. We have our SBA lending 
officers in most of the communities or big communities across 
the country. We have a very good relationship with the local 
district offices, with the SCORE program, as well as some of 
the most larger CDC organizations. So that is a big part of our 
outreach and an important part of the process.
    Chairman Coffman. Thank you.
    Mr. West of Florida.
    Mr. West. Thank you, Mr. Chairman and Ranking Member.
    Thanks to the panel for being here today.
    A couple months ago, the National Federation of Independent 
Businesses put out a survey that said about 8 percent of small 
businesses are looking to grow and expand. When you talk to 
these individuals, when you have them here in front of our 
hearings, three things: tax policy, regulatory environment, and 
lack of access to capital. Last week in Palm Beach Gardens, we 
had a small-business roundtable with Regents Bank. Once again, 
the exact same thing. And so there is a serious concern about 
the regulatory environment that is out there that is precluding 
the right type of lending.
    So the question I have first is, how have you seen, if you 
have seen it at all, any type of effects from Dodd-Frank and 
what that is having on small-business lending practices and 
procedures in your respective financial institutions?
    Mr. Rader. Congressman, again, the SBA programs are 
primarily driven by the SOPs. So we are focused, as an SBA 
lender, on following those rules and suggesting good changes to 
those rules that prevent the barriers of entry for getting an 
SBA loan. So, at this point, for our lending institution, the 
Dodd-Frank rules impact our larger bank, obviously, but, again, 
we are focused on SBA and the SBA procedures.
    Mr. West. But, you know, one of the recurring things, 
especially--I mean, Wells Fargo is a tad bit bigger than a lot 
of your small community banks, which are the lifeblood to small 
businesses. And what they are having a problem with--and that 
is why I am trying to get an understanding if you all are 
having the same problem--is examiners and regulators coming 
down based upon the rules of Dodd-Frank--you know, this is 
above and beyond the rules of the SBA--that are reclassifying 
good-quality loans that you all have said are okay, and they 
are transferring that over to negative assets, and a lot of 
these financial institutions cannot carry that much negative 
asset.
    So that is my question. Are you all seeing that type of 
trend as well?
    Mr. Martinez. On the credit union side, we are not. On the 
SBA, I agree with Mr. Rader. You know, we are focused on SBA 
SOPs. But Dodd-Frank, on the regular business side and consumer 
side, we are not seeing really much impact to that.
    Mr. West. Okay.
    Then the next question I will ask is, how often does the 
Small Business Administration come down and do reviews of your 
loan portfolios?
    And then also, how often do you have sharing of best 
practices with the SBA so that you have a voice in the 
streamlining of processes and procedures?
    Mr. Rader. Our Wells Fargo SBA business routinely gets 
audited at least once a year. Our last audit, we got the final 
results in August of 2011. So we are most likely due soon for 
another on-site exam.
    We continually have dialogue with the SBA agency personnel 
in policy, in new product development. We wish we had a more 
transparent voice and transparency in understanding their 
vetting process, because we do have a lot of ideas to 
streamline programs and eliminate some of the inefficiencies 
that we see.
    Mr. Dixon. As we talk about the topic, Congressman, in CBA, 
you know, the audit process depends on the type and size of 
institution. But our audits are every other year, and then 
there is a continued quarterly review of our loan portfolio.
    And, you know, we think, as we pointed out in our 
testimony, that there are opportunities to make the process 
more efficient, more timely. And I think that will be better 
for all of us.
    Mr. West. Okay.
    How long is the normal turnaround on an audit report, on 
average?
    Mr. Rader. We had our on-site audit last June, June 2011, 
and we received almost instantaneous feedback on what we were 
doing well. We did receive the official report in August of 
2011.
    Mr. West. Okay.
    Mr. Dixon. You know, there is an exit conference after the 
on-site audit is completed, but in talking with members of the 
Committee, you know, the full closure could be out as much as 
12 months. When you receive a final report and respond to the 
open questions and bring it to close, it could be that long.
    Mr. West. Good or bad?
    Mr. Dixon. We think that is a little lengthy. And there are 
opportunities to compress that timeframe, working with SBA.
    Mr. West. Thank you, Mr. Chairman. I yield back.
    Chairman Coffman. Thank you, Mr. West.
    Mr. Schrader of Oregon.
    Mr. Schrader. Thank you, Mr. Chairman.
    I appreciate the panel's being here today. You guys are all 
star actors in the lending program as we try and get small 
businesses, medium-size, and even large businesses back on 
their feet again. So I really appreciate all the work you are 
doing.
    I appreciate the comments by both Mr. Rader and Mr. 
Martinez that Dodd-Frank is not impacting small banks, the 
community banks, or credit unions. That is not where it was 
intended to. We want to keep our attention on that, though. You 
know, sometimes our good folks in the agencies sometimes have a 
tendency to extrapolate what is supposed to be for the larger 
institutions, and I think that might be what Mr. West was 
getting at. So if we can be in assistance in making sure you 
are not in the cross-hairs of those that pose a systemic risk. 
So I appreciate that clarification.
    Having said that, I am curious about improvements. We are 
dealing with the small-business side of things in this 
Committee, and we have gotten a new Administrator in the last 
few years. It would appear to most of us, I think, on the 
Committee that things have turned for the better. Some of your 
testimony would seem to indicate that. So, as you go through, I 
would like your ``yes'' or ``no,'' it has gotten better or, no, 
it is still a little Byzantine progress.
    A comment for Mr. Rader, in particular. Talking about the 
SBA being responsive, you list some things in your testimony, 
you mentioned a few. Has the SBA responded to those? And what 
do you think their tendency has been recently in terms of 
improved regulatory framework?
    Mr. Rader. We are seeing a positive new era of transparency 
within the agency, so my vote would be, yes, it is getting 
better. We have constantly talked to the agency officials about 
credit policy and process. We think we have a good dialogue 
there.
    However, we do not understand the vetting process. There 
needs to be more clarity. And I believe the agency is intending 
on providing that, and we are making slow progress.
    Mr. Schrader. Good. Good, good.
    I guess, Mr. Chair, I hope we kind of follow through on 
that to make sure that that is occurring and work with both the 
agency and the lenders out there.
    Mr. Martinez, you talked a little bit about, as did Mr. 
Marquette, about trying to improve our opportunities with 
credit unions. They got left out of the Small Business Lending 
Fund last cycle, if you will. And I was pretty disappointed 
about that, because, as you have indicated, you also are, like 
our community banks, very interested in getting this economy 
back on track and our small businesses up and running.
    And I was concerned about the testimony that, you know, Mr. 
Marquette also talked about, of the 2,000 banks, credit unions 
that are doing small-business lending, 500, almost 25 percent, 
are at their cap. Could you guys talk a little bit more about 
how important it is, as, you know, frankly, you have seen an 
influx perhaps of new customers, that raising that small-
business cap might be?
    And I don't want to take business away from one outfit, you 
know. I think all boats should rise here, at this point in 
time.
    Mr. Marquette. We have seen a significant demand coming in. 
And we, too, are at about 90 percent of our cap, so we have to 
be more selective. We do that through pricing and be more 
selective in terms of the loans we grant. But we are also 
trying to expand the communities that we serve, too, and the 
cap is an impediment.
    The SBA programs are helpful, in that, again, the 
guaranteed portion of the 7(a) programs don't count toward the 
cap. But, again, the process that we go through, since we are 
not a preferred lender, is very time-consuming, so it is very 
burdensome to us. We have not been as successful as Mr. 
Martinez in terms of getting expertise that specializes just in 
SBA loans in our particular area, and that would be very 
expensive for us to do.
    So anything that SBA could do to help us streamline that 
process and maybe have it work a little bit more efficiently, 
like the 504 program, would be much helpful in terms of our 
even expanded effort in that program.
    Mr. Schrader. Mr. Martinez.
    Mr. Martinez. Yes, thank you for the question.
    We are seeing increased requests for SBA loans. There are 
two programs that I mentioned, the SBA 504 refi program and the 
First Mortgage Lien Pool program. Those two programs are very 
important to us, and both of those sunset in September. The 
refi program, for those businesses that their loan is becoming 
due and their loan-to-value is upwards of 90 percent, the SBA 
program is really the only product for them.
    For our credit union, we are having to sell our 504s. We 
have the sunset coming up in September for the First Mortgage 
Lien Pool program. We are having to sell our 504s to the 
secondary market just to give us room to create some room in 
our cap. Unfortunately, it is only going to give us about 6 
additional months at the rate that we are going.
    But those programs allow for a little bit of levers to be 
pulled, and I think that they are very important. If those 
programs weren't there, we wouldn't be able to help businesses 
that are refi-ing, and we would hit our cap sooner if the 
pooling program goes away.
    Mr. Schrader. Thank you.
    Could I ask one more question real quick, Mr. Chairman?
    Chairman Coffman. Yes, go ahead.
    Mr. Schrader. I appreciate that.
    Mr. Dixon, you talked about the loan enhancements. Everyone 
has talked about the value, I think, a little bit of the credit 
loan guarantees. Sometimes I get feedback from folks back home, 
some of the lenders back home, that that is not as important. I 
mean, you always want a sound loan; that is the real bottom 
line.
    But could you comment, real briefly, because I am over my 
time limit, real briefly on how important those loan guarantees 
are that are expiring, whether it is in the refi program or 
whatever?
    Mr. Dixon. Yeah, let me speak, Congressman, to the 504 refi 
program. Our experience, in just talking with the CBA member 
banks, is that program is continuing to gain momentum. It has 
been a great tool to help small business in this interest-rate 
environment. It allows them to get access to very attractive 
capital. And we would really like to see that program extended. 
We think it does nothing but gain momentum.
    Mr. Schrader. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Coffman. Mr. Tipton of Colorado.
    Mr. Tipton. I am fine, Mr. Chairman.
    Chairman Coffman. Very well.
    Let me, since they are going to call a vote soon--and if 
anybody has any additional questions, I will come back around.
    This is a question for all of you. Do you encourage small 
businesses to apply for an SBA loan because of concerns that 
banking regulators will question the loan if made 
conventionally? Would anybody like to respond to that?
    Mr. Martinez. I will comment.
    When we have a business come in, we sit down and look at 
them and explain all the loan options. We don't push them into 
any particular loan. If they can go conventional, that is the 
best product for them, and we go conventional. And then on the 
SBA program, it is laying it out and not driving them into a 
specific product because it is better for us.
    Mr. Dixon. Congressman, I think we find that we let that 
decision be made one client at a time as we look at a loan 
request and decide if any of the SBA programs will make the 
difference in getting that small business the credit that it 
needs.
    Mr. Rader. Mr. Chairman, I believe the best course of 
action for our clients and our borrowers is to give them 
financial options--so, conventional, 7(a), 504--making sure we 
profile the borrower for what their needs are and where they 
are going with their business. And so, we do not steer.
    Chairman Coffman. Okay.
    For additional questions then, Ms. Hahn of California.
    Ms. Hahn. Thank you, Mr. Chairman.
    Mr. Marquette, in your testimony, you talked about the 
process that your credit union went through to begin offering 
SBA loans, and you said new lenders were feeling like they were 
on the bottom rung of the SBA priority list.
    What do you think SBA could and should do to encourage, you 
know, new lending partners out there in this quest that I think 
we are all having to provide small businesses with more access 
to capital?
    Mr. Marquette. As I mentioned, we have been having 
discussions with the SBA Administrator, Karen Mills. She has 
been very open.
    The issue is the 7(a) process. It seems that they are more 
interested, in our perspective anyway, in the larger loans and 
larger institutions and larger employers. In our particular 
area, our niche is the smaller loans, the smaller employers. 
About two-thirds of our business loans are to employers that 
have less than 20 people working for them. So that is our 
particular niche.
    They could reach out more to smaller institutions. They 
could ask those smaller institutions, what are the impediments, 
what are the processes. We can't afford to put an SBA expert on 
staff. We worked very closely with a community development 
corporation to help us with the 7(a) program, and even with 
their assistance it took us 1 year for the two S-7(a) programs 
that we did.
    We do, however, on the 504 programs, since we go through 
the CDCs, they seem to have a better relationship with SBA in 
terms of processing those loans and have been much more 
successful in those.
    Chairman Coffman. Thank you, Ms. Hahn.
    Mr. West of Florida.
    Mr. West. Last question. You brought up a lot of great 
recommendations that you were discussing. Have you provided any 
of those recommendations over to the SBA, Mr. Rader?
    Mr. Rader. Yes, we have, Congressman.
    Mr. West. Okay.
    And the next thing: When the SBA--I know they have come up 
with some new practices and new procedures. Do they send those 
out to get maybe a buy-in or a comment from financial 
institutions first and foremost? Or do you kind of get the, you 
know, ``surprises are not just for birthdays'' effect?
    Mr. Rader. As I have spoken in my testimony, the agency 
could do a better job of giving us a better lead time when they 
do make changes. We have to do a lot of training and investment 
in education and develop risk controls for these programs. And 
when we get a new SOP that is announced, for example, on May 
25th with an effective date of June 1, it doesn't give us the 
proper time to train our people to help our customers.
    Mr. West. And last question: The preferred lending status, 
do you find that is an easy status to attain? A little bit 
difficult?
    Do you understand how to attain that status? Across the 
board.
    Mr. Rader. Yes, we understand how the process works and how 
the process doesn't work. So, yes.
    Mr. Martinez. We are a fairly new preferred lender. We 
started in 2008. And we were actually kind of cautious to go 
into that preferred-lender status, so we could have gotten it 
earlier than we did and felt comfortable with the process of 
having SBA continue to look. So I don't think it was 
burdensome. It was a decision that we made when we were ready 
for it.
    Mr. West. Okay.
    Mr. Dixon.
    Mr. Dixon. Congressman, we have been a preferred lender for 
many years. I think we find it works well, and that status is, 
you know, reviewed and renewed each year. But that process 
works pretty smoothly for us.
    Mr. Marquette. As I said, we are just new in the 7(a) 
program, and our experience has been less than acceptable. So 
we are still exploring it, and we will look into that in the 
future.
    Mr. West. Thank you, Mr. Chairman. I yield back.
    Chairman Coffman. Ms. Hahn of California for an additional 
question.
    Ms. Hahn. I just wanted to follow up on what Congressman 
West asked Mr. Rader.
    Would it be possible for you to provide to the members of 
this Subcommittee the list of the SOPs that you are encouraging 
the SBA to look at? And then maybe we could follow up with the 
Administrator to see where they are at, what is the status, and 
if there is anything that we could do to follow up on that.
    Mr. Rader. Absolutely. Wells Fargo can provide that.
    I would also encourage the chair and Committee to check out 
the National Association of Government Guaranteed Lenders 
(NAGGL) Association recommendations, as well.
    Ms. Hahn. Thank you.
    Chairman Coffman. Very well. I want to thank all the 
witnesses for testifying today.
    For us to get this economy moving, it is going to take 
small business. And for small business to lift us out and 
create some jobs, it is going to take access to capital. And 
you are all integral to that process, so thank you for what you 
do.
    The hearing is adjourned.
    [Whereupon, at 11:00 a.m., the subcommittee was adjourned.]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


