[Senate Hearing 113-309]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-309
 
                    HELPING SMALL BUSINESSES WEATHER 
                    ECONOMIC CHALLENGES AND NATURAL 
                    DISASTERS: REVIEW OF LEGISLATIVE 
                     PROPOSALS ON ACCESS TO CAPITAL 
                         AND DISASTER RECOVERY 

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

                               ROUNDTABLE

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 14, 2013

                               __________

    Printed for the Committee on Small Business and Entrepreneurship

         Available via the World Wide Web: http://www.fdsys.gov

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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                    ONE HUNDRED THIRTEENTH CONGRESS

                              ----------                              
                   MARY L. LANDRIEU, Louisiana, Chair
                 JAMES E. RISCH, Idaho, Ranking Member
CARL LEVIN, Michigan                 DAVID VITTER, Louisiana
TOM HARKIN, Iowa                     MARCO RUBIO, Florida
MARIA CANTWELL, Washington           RAND PAUL, Kentucky
MARK L. PRYOR, Arkansas              TIM SCOTT, South Caarolina
BENJAMIN L. CARDIN, Maryland         DEB FISCHER, Nebraska
JEANNE SHAHEEN, New Hampshire        MICHAEL B. ENZI, Wyoming
KAY R. HAGAN, North Carolina         RON JOHNSON, Wisconsin
HEIDI HEITKAMP, North Dakota
WILLIAM M. COWAN, Massachusetts
                Jane Campbell, Democratic Staff Director
           Skiffington Holderness, Republican Staff Director



                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana.     1
Risch, Hon. James E., Ranking Member, and a U.S. Senator from 
  Idaho..........................................................     5
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire..........    11
Heitkamp, Hon. Heidi, a U.S. Senator from North Dakota...........    16
Cowan, Hon. William M., a U.S. Senator from Massachusetts........    18

                           Witness Testimony

Michel-Kerjan, Erwann, adjunct professor, the Wharton School.....     5
Kunreuther, Howard, professor, the Wharton School, the University 
  of Pennsylvania................................................     6
Needham, John, Assistant Inspector General for Auditing, Small 
  Business Administration........................................     6
Selassi, Sengal, co-founder, Brightwood Capital..................     6
Muhlhausen, David, research fellow, the Heritage Foundation......     6
Hulit, Jeanne, Associate Administrator, Office of Capital Access, 
  Small Business Administration..................................     7
Hardt, Ralph, President, Jagemann Stamping, Manitowoc, WI........     7
Fingarson, Ashley, Manager of Legislative Affairs, National 
  Federation of Independent Business.............................     7
Rivera, James, Associate Administrator, Office of Disaster 
  Assistance, Small Business Administration......................     7
Rich, Jim, President, Greater Beaumont Chamber of Commerce, 
  Beaumont, TX...................................................     7
King, James, State Director, Small Business Development Center...     7

          Alphabetical Listing and Appendix Material Submitted

Association of Small Business Development Centers
    Letter dated February 10, 2013...............................    86
Bay Area Houston Economic Partnership
    Letter dated February 13, 2013...............................    93
Chamber of Commerce of the United States of America
    Letter dated March 14, 2013..................................    96
Cowan, Hon. William M.
    Opening statement............................................    18
Dunkelberg, William C.
    Survey titled ``NFIB Small Business Economic Trends''........   152
Fingarson, Ashley
    Testimony....................................................     7
Greater New Orleans Regional Economic Allaince
    Letter dated March 5, 2013...................................    88
Hardt, Ralph
    Testimony....................................................     7
    Prepared statement...........................................    61
    Jagemann company profile.....................................   139
Heitkamp, Hon. Heidi
    Opening statement............................................    16
Hulit, Jeanne
    Testimony....................................................     7
International Economic Development Council
    Letter dated February 13, 2013...............................    84
JAX Chamber
    Letter dated March 12,2013...................................    91
Kaliannan, Krishna
    Report titled ``Modifying the National Flood Insurance 
      Program to Reduce Flood Losses: Risk-Based Premiums and 
      Affordability''............................................   106
King, James
    Testimony....................................................     7
    S. 1940......................................................    19
Kunreuther, Howard
    Testimony....................................................     6
    Report titled ``People Get Ready: Disaster Preparedness''....    99
Landrieu, Hon. Mary L.
    Opening statement............................................     1
    Questions for the Record for:
        Ashley Fingarson.........................................    63
        Jeanne Hulit.............................................    65
        Howard Kunreuther........................................    68
        Erwann Michel-Kerjan.....................................    71
        John Needham.............................................    72
        Jim Rich.................................................    75
        James Rivera.............................................    77
Michel-Kerjan, Erwann
    Testimony....................................................     5
    Prepared statement...........................................    40
    Report titled ``Redesigning Flood Insurance''................    97
Muhlhausen, David
    Testimony....................................................     6
    Prepared statement...........................................    48
Needham, John
    Testimony....................................................     6
North Louisiana Economic Partnership
    Letter dated February 26, 2013...............................    90
Rich, Jim
    Testimony....................................................     7
Risch, Hon. James E.
    Opening statement............................................     5
Rivera, James
    Testimony....................................................     7
Selassi, Sengal
    Testimony....................................................     6
Shaheen, Hon. Jeanne
    Opening statement............................................    11
St. Tammany Economic Development Foundation
    Letter dated February 19, 2013...............................    94
SWLA Economic Development Alliance
    Letter dated February 25, 2013...............................    95


                    HELPING SMALL BUSINESSES WEATHER
                    ECONOMIC CHALLENGES AND NATURAL
                    DISASTERS: REVIEW OF LEGISLATIVE
                     PROPOSALS ON ACCESS TO CAPITAL
                         AND DISASTER RECOVERY

                              ----------                              


                        THURSDAY, MARCH 14, 2013

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:36 a.m., in 
Room 428a, Russell Senate Office Building, Hon. Mary L. 
Landrieu (Chair of the Committee) presiding.
    Present: Senators Landrieu, Shaheen, Heitkamp, Cowan, and 
Risch.

 OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S. 
                     SENATOR FROM LOUISIANA

    Chair Landrieu. All right, we are going to get started.
    Well, good morning, everyone. I really appreciate all of 
our participants joining us for what I think will be an 
exciting and helpful roundtable on some very important issues 
that have been lingering before our Committee, and we would 
like to see them moving forward if possible. And that is why I 
have called this roundtable to order.
    And I thank Senator Shaheen and Senator Cowan for joining 
us. Senator Risch will be here in just a moment, and we will 
have other members that will be joining us.
    Some of you that might not be familiar with roundtables 
versus hearings--this is a lot less formal, a lot more 
informal, and I think a real exchange of information. So while 
you have come prepared, of course, with testimony, that will be 
received into the record, and there will be a lot of back and 
forth, hopefully, with you all and your participants and 
Senators about some of the bills that are on this agenda.
    So let me just begin with a brief opening statement, and 
then we will go right into our roundtable.
    I thank you all again for joining. This is the first 
roundtable of our 113th Congress of the Small Business 
Committee.
    I want to congratulate Senator Risch for becoming Ranking 
Member. He and I have already had a couple of meetings, and our 
staffs have been working to see how we can forge a bipartisan 
agenda for this Committee, which has had a long history with 
Senator Kerry, Senator Snowe and others before that, in a very 
close bipartisan working relationship. We would like to 
continue that.
    As Chair of this Committee and a Senator from a state 
repeatedly hard hit from natural disasters, I believe one of 
the most important responsibilities of our Committee is to 
ensure the SBA, the agency that this Committee oversees, has a 
very robust post-disaster response. Even well insured 
businesses, whether they are in the Gulf Coast area, the East 
Coast, the West or in the heartland of America, struggle to get 
back on their feet after earthquakes, fires, floods, 
hurricanes.
    Hurricanes Rita and Katrina, and the SBA response in 
Hurricanes Katrina and Rita, which is now almost eight years 
ago--the response was slow, painful, inefficient and 
insufficient to that task. So, following those 2005 storms, it 
took 74 days to process a home loan, 66 days to process a 
business loan--far too long to wait--even longer for a 
disbursement of disaster funding. The SBA also pushed disaster 
victims for mountains of paper records when the SBA, which is a 
part of the Federal Government, should have been able to access 
that information without asking for people whose homes were 
under 14 feet of water to produce triple documents in black or 
blue ink in order for their loans to be processed.
    Those days are happily over with.
    Thank you, Senator, for joining.
    Those days are happily over with, but we continue to focus 
and improve on, hopefully, the SBA's disaster programs. We need 
to continue to provide better rules for businesses in the 
Midwest and East Coast as those recoveries are still underway. 
That time frame has been cut significantly, Senator Risch, I am 
happy to say, from 74 days down to 26 days to process a home 
loan and from 66 days to 31 days, but we still have some 
challenges.
    Recently, members, I was at a hearing on your behalf in 
Staten Island in New York. Our Committee heard testimony that 
interest rates on small business loans are still currently too 
high for many of the small businesses to use efficiently. The 
paperwork, in their mind, is still too cumbersome. And the 
rejection rate, which is over 50 percent, in the minds of many 
small businesses and the mayors and county officials that 
represent them, seem to be too high.
    Our small businesses, whether it is in Wyoming or Idaho or 
Louisiana or in Staten Island or along the East Coast, are the 
economic heartbeat or these communities. And after a disaster, 
it is so important for small businesses to get back up and 
operating to give hope and signal to communities that these 
communities will come back even stronger.
    And so, this is a continued focus and priority of this 
Committee. I thank you all for helping me with it. And we will 
continue to see what bills we can pass here, and rules and 
regulations and modifications, that can help the partnership 
between the SBA, the Federal Government and small business.
    So we have a Small Business Disaster Reform Act of 2013. 
Senators Cochran, Gillibrand, Wicker and Pryor introduced this 
bill. It includes two common sense, no-cost disaster reforms.
    It, first, modifies the SBA requirement that borrowers must 
use their personal home as collateral for business disaster 
loans of less than $200,000 when other collateral might be 
appropriate. While, clearly, we have to secure loans and 
minimize the risk to the taxpayer, the SBA has at its disposal 
multiple ways to secure these loans.
    A similar provision passed the House of Representatives 
twice in 2009 by a voice vote on October 29th of 389 to 32 and 
again by a voice vote on November 6th, 2009. The provision 
included in one of the bills pending before our Committee 
passed the Senate 62 to 32 on December 28th, 2012 as part of 
the Hurricane Sandy supplemental. And I want to just say that 
it has bipartisan support and bicameral support from Speaker 
Boehner, Eric Cantor and others on the House side.
    So we also have a bill that will allow the SBA 
administrator to allow out-of-state small business development 
centers, which are in all of our states, to provide assistance 
to small businesses in other areas when there is a 
presidentially declared disaster.
    In other words, it may be surprising to you all to know 
that a surge capability is actually not legal. And we need, I 
think, to have surge capability. So, if some of the Senators 
from the Gulf Coast can help the Senators in the Northeast when 
they are under such pressure because of a natural disaster, 
that--you know, it is just common sense.
    And, again, we have got to authorize that in order for the 
surge capability, which makes much more sense that hiring 
additional people or--you know, it is a right-size issue for 
our natural disaster response.
    Again, this provision has unanimously passed three times.
    So I would love your feedback on that to see what we can 
do.
    Let me move into the second part of the roundtable.
    So the first part of the roundtable is going to be 
responding to disasters. What do you all want to testify to? 
What is working? What is not working? And we will have a good 
back and forth exchange.
    The other is access to capital, and this is where many of 
my colleagues, both from the House--I mean the Democratic and 
Republican sides really have focused a lot of effort on how to 
get capital in the hands of small business. Many of you are 
experts in this field.
    As you all know, we have one bill pending called the 
SUCCESS Act. Success ultimately comes from capital, 
contracting, education, strategic partnerships and smart 
regulation. I think every small business would think that that 
is a true statement.
    The SUCCESS Act has received 57 votes as part of the Senate 
Amendment 2521 to S. 2237, the Small Business Tax and Job 
Relief Act of 2012. It includes some key provisions that I hope 
will be of great interest for our discussion this morning.
    One provision was expanding access to capital for 
entrepreneurial leaders--EXCEL--which was introduced last year 
by myself and Senator Snowe. EXCEL would modify the Small 
Business Investment Company Program, SBICs, to raise the amount 
that we can guarantee from $3 billion to $4 billion as an 
authorization. It would also increase from $225 million to $350 
million the amount of SBA-guaranteed debt for fund managers.
    And the problem is we are actually meeting up against 
limits of our own success. Some of these funds are so 
successful that they have already met the targets that we have 
set for them. And, if we do not allow them to go higher, the 
money will then either not flow or flow to companies that are 
less successful, which does not really make any sense.
    And I am interested in hearing what you all think about 
this program that was created by President Eisenhower.
    It is time, I think, for us to expand this family of funds 
limit as well as expand the program. It has proven to be cost 
effective.
    The Investment Company Act, as I said, was signed into law 
by President Eisenhower. And I will not go into the details of 
that but to only say that we have invested, in partnership with 
private business, $56 billion to over 100,000 small businesses. 
Some of them are no longer small--Apple, Fed Ex, Callaway Golf, 
Jenny Craig and Outback Steakhouse, just to name a few of the 
extraordinary success stories related to this program. When 
these companies were small, they got those first loans, and now 
look at what they have produced for our Nation--a true success 
story.
    Let me mention just one more--actually, two more issues. 
The CREED Act, which Senator Snowe and I dubbed last year, 
called the Commercial Real Estate and Economic Development Act, 
would significantly enhance the use of 504 loans to refinance 
qualified existing debt. The 504 refinance program allows small 
businesses to refinance major fixed assets or real estate debt 
with long-term fixed rate loans to help them lower their 
monthly mortgage payments at no additional cost to the 
taxpayer.
    This is one of the most popular, necessary programs that 
the SBA runs. Some of you will testify to that today.
    Let me give you just one example of one little business in 
St. Martinville, Louisiana. Tuffy's Quick Stop and Deli in St. 
Martinville, Louisiana, purchased its facility in 2010 for $1.2 
million. They put down $200,000, the remaining balance financed 
with a monthly payment of $11,300.
    By going through this program--504 refinancing--they 
financed their debt, and their new payment, monthly payment, is 
$6,100. For a small business, a savings of $5,000 a month--
$60,000 a year--is significant. It was used to save two jobs in 
St. Martinville, Louisiana.
    But if every small business in America could just save one 
job, the recession would be completely over. That is why 
programs like this, I think, are so important.
    I am going to turn this over to Senator Risch for just 
brief opening statements. And then, if the other members do not 
mind, we are going to go right into the question and answer 
session, which is what this roundtable is about.
    Unlike, you know, regular hearings, this is a lot of back 
and forth. We can, you know, ask and answer. When you want to 
speak, you can put your placard, you know, up like this. We 
will recognize you and be as fair as we can.
    After the Senator gives his opening remarks, I am going to 
ask each one of you to quickly identify yourself and give kind 
of a 30-second what your focus is to be here.
    So, Senator, let me welcome you.
    Senator Risch. Well, thank you, Madam Chairman.
    Chair Landrieu. Thank you very much.
    Senator Risch. Why do I only get a brief opening statement?
    [Laughter.]
    Chair Landrieu. Because I took up all the time.
    Senator Risch. Yes, I see that.
    Chair Landrieu. So, take any time you want. Go right ahead.
    I was trying to be brief, but I had so many good things to 
say.
    Senator Risch. Well, it was a fine effort, Madam Chairman.
    Chair Landrieu. Thank you.
    Senator Risch. Unsuccessful but a fine effort.
    [Laughter.]

OPENING STATEMENT OF HON. JAMES E. RISCH, RANKING MEMBER, AND A 
                    U.S. SENATOR FROM IDAHO

    Senator Risch. Well, first of all, thank you for holding 
the hearing, and I am glad to be here.
    As the Chairman knows, my focus is also on helping small 
business. I have a little different view of it than my good 
friend and my distinguished colleague, the Chairman.
    First of all, we are in absolute agreement that small 
business is the backbone of this country and really has been 
since the country was founded. Small business has done really 
well over the last two and a half centuries--indeed, have done 
really well over most of that period of time without the help 
of the Federal Government.
    I am interested in helping small businesses. Having owned 
and operated a number of small businesses, and having known a 
lot of people in small business, I hear from them again and 
again and again: Leave us alone.
    If we can lower their taxes, if we can lower the regulatory 
structure, if we can keep the government out of their shops, 
their stores, their books, and everything else, they will 
succeed. They proved it for well over two centuries.
    I want to see us encourage small business. I want to see us 
leave small businesses alone and do everything we possibly can 
to get the government out of their business.
    We have a strong and robust financial structure in this 
country where businesses that are able to get loans go and have 
become very successful over the years.
    I want to see that this robust market is protected and that 
people have the freedom to start and be successful in 
businesses, to keep the fruits of their labors and not turn it 
over to the Federal Government to do what they want with it.
    So, with that, thank you so much for holding the hearing.
    Chair Landrieu. Thank you, Senator.
    Let's start with Dr. Erwann.
    Mr. Michel-Kerjan. My name is Erwann Michel-Kerjan, an 
adjunct professor at the Wharton School. I am also the Managing 
Director of the Wharton Risk Center, which has been in play for 
about 30 years, working exclusively on catastrophic risk 
management--so, from preparedness to crisis management and risk 
financing, who is going to pay at the end of the day. It has 
been a busy, busy 10 years for America.
    I am also Chairman of the OECD Board on Financial 
Management of Catastrophes, which advises 34 finance ministers 
around the world, including, obviously, here in the U.S.
    So I would be happy to talk more about disaster finance.
    Chair Landrieu. Thank you very much. It is a very important 
topic.
    And when you all speak with this mic system, you have to 
sort of lean into your mic for us to pick it up. Thank you.
    Go ahead.
    Mr. Kunreuther. I am Howard Kunreuther. I am a professor at 
the Wharton School at the University of Pennsylvania in the 
area of decision sciences and public policy, and I co-direct 
the Risk Management and Decision Processes Center.
    My interest in being at this hearing is to raise the 
questions with respect to some of the things that could be done 
prior to a disaster, the role of insurance and other ways to 
avoid a lot of the challenges that you have just mentioned, 
Senator Landrieu and Senator Risch, in terms of small 
businesses.
    We feel that there is a real opportunity here to try to 
link the two together, to get an appreciation of what these 
businesses and homeowners face--Hurricane Sandy having brought 
that out--and what they can do to reduce losses in the future.
    Chair Landrieu. Fabulous. Thank you.
    Mr. Needham.
    Mr. Needham. My name is John Needham. I am the Assistant 
Inspector General for Auditing at the Small Business 
Administration, and what I will just talk about today is the 
work that we have ongoing that is related to the proposals.
    Chair Landrieu. Wonderful.
    And if you all could turn your placards so that I can see--
I think it is Mr. Selassie.
    Mr. Selassie. Thank you.
    My name is Sengal Selassi. I am a co-founder of Brightwood 
Capital, which is a small business investment company. And we 
received our first license in 2011 and have made investments in 
11 different states, including Louisiana, Idaho, Nevada, Texas, 
New York, New Jersey.
    I want to thank you for introducing legislation, both 
Chairwoman Landrieu and Ranking Member Risch, the legislation 
that you have introduced to help small businesses and funding 
to them.
    Chair Landrieu. Wonderful.
    Dr. Muhlhausen.
    Mr. Muhlhausen. My name is David Muhlhausen. I am a 
research fellow at the Heritage Foundation. I am also an 
adjunct professor at George Mason School of Public Policy.
    I guess basically what I am going to talk about today is I 
have concern about weakening the requirements for collateral. I 
think there are issues with that that probably the Inspector 
General is going to bring up far better than I can, but there 
are some problems with SBA.
    And our focus should be on making communities more 
resilient, and preventing and mitigating disaster responses, 
instead of creating moral hazards where we come in and we try 
to fix problems afterwards.
    Chair Landrieu. Thank you.
    Ms. Hulit.
    Ms. Hulit. I am Jeanne Hulit, the Associate Administrator 
for the Office of Capital Access at the SBA. I oversee the loan 
programs.
    Thank you.
    Jeanne Hulit, Office of Capital Access--I oversee the loan 
programs. I would like to address your questions and concerns 
about the 504 refinance program and to express the 
Administration's support for the reauthorization of that--it 
was a very successful program--as well as answer any questions 
on behalf of the Office of Investment on the SBIC program.
    Chair Landrieu. Wonderful.
    Mr. Hardt.
    Mr. Hardt. Good morning. I am Ralph Hardt, President of 
Jagemann Stamping, Manitowoc, Wisconsin, a proud manufacturing 
company with 225 employees there. We also have a new subsidiary 
in Murfreesboro, Tennessee, where we have 31 new employees. We 
are just starting that operation up. And I also own a precision 
grinding company in Lake Wiley, South Carolina, with 31 
employees.
    And I am here to talk about the SBI 504 re-fi, which truly 
got us going after the Great Recession.
    Chair Landrieu. Thank you.
    Ms. Fingarson.
    Ms. Fingarson. Good morning. Ashley Fingarson, Manager of 
Legislative Affairs at the National Federation of Independent 
Business. We are the leading small business advocacy 
organization. We represent over 350,000 small businesses across 
the country. As you know, 60 percent of our members employ 
between 1 and 5 employees, and our businesses are independently 
owned.
    And I am here to talk about our research and our research 
foundation's data as it pertains to how our members finance 
access to capital and, most recently, our tax study that just 
got released.
    Chair Landrieu. Mr. Rivera.
    Mr. Rivera. I am James Rivera. I am the Associate 
Administrator in the Office of Disaster Assistance with the 
Small Business Administration. I am here to answer any 
questions in reference to Superstorm Sandy or any other 
disaster-related questions.
    Chair Landrieu. Mr. Rich.
    Mr. Rich. I am Jim Rich, President of the Greater Beaumont 
Chamber of Commerce in Beaumont, Texas, here on behalf of the 
International Economic Development Council, which is the 
largest organization of economic development professionals.
    I do not think I would be here if it were not for two 
disasters that hit Southeast Texas--Hurricane Rita and 
Hurricane Ike--and I bring the experience of those two events 
as well as we are one of two chambers in the country that are 
certified development corporations under the SBA 504 program. 
So we did 10 loans last year, including one refinance.
    So I can offer that.
    Chair Landrieu. Fabulous.
    Mr. King.
    Mr. King. My name is James King, and I am the State 
Director of the Small Business Development Center up in New 
York. I also serve as Chair of the National SBDC Association 
this year.
    And I can tell you I wish I had never learned about 
superstorms, and I wish I did not have to be here, representing 
the disaster. But I am very thankful that Congress enacted the 
Hurricane Relief Bill, and it is going to mean a lot to a lot 
of people.
    Chair Landrieu. Okay, let's start with the 504 program. I 
would really love to hear maybe from any of you that have 
direct experience in using the program, if you could share with 
us as specifically as you can how it helped you, why you think 
you could not have done what you did without it and what it 
might mean to other companies.
    Okay, let's start with whoever has the most direct 
experience. Would that be you, Mr. Hardt?
    Mr. Hardt. I guess it is me.
    As I mentioned before, we have three businesses. We are a 
full----
    Chair Landrieu. You need to speak right into the mic.
    Mr. Hardt. We have three businesses, and we manufacture 
precision metal components, and we are very proud of what we 
do.
    I am also a member of the Precision Metalforming 
Association and National Tooling and Machining Association 
where we have 3,000 member companies working with metal, 
averaging about 50 employees per business.
    We recently completed an SBA 504 refinance. In fact, our 
debentures closed just this week.
    Chair Landrieu. Okay. Ralph, I am sorry. Could you just 
start again with the last 30 seconds?
    Mr. Hardt. That is fine. No problem.
    Chair Landrieu. Okay.
    Mr. Hardt. Okay. As I mentioned, we have three small 
manufacturing businesses. We make precision metal components. I 
have some----
    Chair Landrieu. And you are going to have to answer this in 
one minute or one and a half minutes.
    Mr. Hardt. I will do it very quickly.
    Chair Landrieu. Okay.
    Mr. Hardt. We recently completed an SBA 504 refinance 
program.
    As we exited the Great Recession, that for most 
manufacturers went on from 2008 to 2010, we found ourselves in 
an uncomfortable debt and banking situation. We had utilized 
our line of credit to fund operational expenses through the 
recession, and our bank had concerns as to our outstanding loan 
amounts and several years of poor profitability. We really 
tried to retain every employee we could during that period.
    However, we had substantial equity in our buildings and 
equipment. We were simply upside-down with our balance sheet. 
We had too much current debt, not enough long-term debt, and it 
was very difficult for us to grow and expand.
    Also, half of our business is in the automotive business. 
So, once we came out of 2010, our customers started to grow 
again; we just simply had no access to capital to grow.
    Our bank was under pressure. You know, banks were under 
scrutiny at this time we were under scrutiny. So it was a very 
difficult situation.
    With the SBA program, we were allowed to use our excess 
capital in our assets--basically, refinance that debt into a 
long-term, stable interest rate position. And we had such 
substantial equity in our assets that we were able to put $5 
million in cash back into our business and regrow our business 
dramatically.
    Please remember that it was a loan that was not that risky 
because we had to go through an appraisal process and we had to 
demonstrate cash flows that both our bank--BMO Harris--and the 
SBA had to be comfortable with.
    Chair Landrieu. Ralph, let me stop you right there because 
this is very important testimony.
    Do any of you representing any other views take any issue 
with what Ralph said about his business or want to add 
anything?
    Jim, go ahead. On this subject, go ahead.
    Mr. Rich. Well, our example I think kind of really fits 
what the program can be for, and that is our refinance loan was 
Larry's Trades Day--Old Time Trades Day--in Winnie, Texas. 
Trade Days happens once a month. Thousands of people come to 
this town, and their economy benefits from this one flea market 
once a month.
    Now for him to get refinance, you know, no conventional 
bank is going to approve a loan. This guy has been doing this 
for 30 years. It is not a new business. He had a high interest 
rate, you know, affected by the storms.
    So, anyhow, that is how we used the 504 refinance--a 
project that is a square peg in a round hole. And there are a 
lot of square pegs out there.
    And for the economy, the 504 program in our view is an 
economic development tool. In this Winnie, Texas, it is their 
economy one weekend a month.
    Chair Landrieu. Does the Heritage Foundation or the small 
business organizations here have a different view of this or 
something they want to add because--go ahead, Ashley.
    Ms. Fingarson. I would just say that, you know, maybe for--
a small minority of our folks reach out to the SBA. I think it 
is about 7 percent.
    And most of our guys from our research have shown----
    Chair Landrieu. Not the SBA. The 504 loan program 
specifically, the refinancing of commercial mortgage.
    Ms. Fingarson. What it shows is that our guys basically go 
after a line of credit or credit cards. That is where----
    Chair Landrieu. And they do not want to use the equity in 
their buildings?
    Ms. Fingarson. They have been, but it has been low from the 
real estate values, from what our research has been showing. So 
it has been harder for them to use that as collateral.
    Chair Landrieu. Correct, which is exactly what makes this 
program--that is exactly the point.
    You know, with real estate values falling through the 
recession, it has been very, very hard for small businesses to 
try to get legitimate equity out of their, you know, physical 
facilities to be able to carry them through to a better day. 
That is why I am such a strong believer in this particular 
program--because I have seen it with my own eyes literally save 
businesses in Louisiana.
    So the point of this discussion today is if anybody thinks 
it is not, speak up now--or if you think you have got a better 
program--because we have got to figure out a way to help this 
little flea market here that kept businesses and Ralph's 
businesses because I am finding a lot of positive comment about 
this.
    Mr. Hardt. Yeah, I would like to just--if I can make a 
couple comments.
    The problem that you just said about using the credit card 
or the line of credit was exactly the problem we were in. We 
could not grow anymore. We had tapped out our current ability 
to grow.
    Chair Landrieu. What was your rate that you were paying on 
your credit card?
    Mr. Hardt. We were paying a pretty decent rate at that 
point in time--prime plus 4--and the banks just simply could 
not look at their collateral on their own.
    We freed up $5 million of capital and put it back into our 
business. We are hiring 101 people this year. We already have 
half of them hired. We have a great success story.
    And financially, as a business owner, I had locked in 20-
year long-term interest rates on 40 percent of my debt and 10-
year long-term rates on my equipment. I mean, it was just the 
perfect thing to do as a business owner.
    And it is a no-cost program to the government. I mean, the 
fees we pay, pay for the loan fund, pay for our local 
development corporation.
    I just do not know why more people use it because it is a 
great program.
    Chair Landrieu. Go ahead.
    I am going to turn it over to the Ranking Member for a 
question in a minute, but go ahead.
    Really, if anybody has any, you know, thing to raise about 
this does not make sense, why it does not make sense, what we 
could be doing better, now is your chance.
    But, Jeanne, go ahead.
    Ms. Hulit. I just wanted to follow up on that.
    The demand is still there. The commercial real estate 
market values have not returned. The banks are still 
constrained in terms of refinancing commercial real estate and 
the loan-to-values that are out there. And at the last day of 
the program, when we had to stop, we had 405 loans that could 
not get process, representing about a half a billion dollars in 
financing that went unmet. So we know that there was demand for 
the program and that demand continues.
    Chair Landrieu. Thank you.
    And I just want to say--Ashley, I will get you in a 
minute--that one of my great supporters of this is Senator 
Isakson, who I think is probably the Senate's most expert on 
commercial real estate since he ran one of the largest real 
estate companies in Georgia.
    And he and I have talked about this, and both of us--with a 
real estate background--are so frustrated that there does not 
seem to be enough capital out there for small businesses to 
access what is their money. It is their money. Sometimes they 
paid cash for their buildings and cannot seem to get it out 
because of I think what Senator Risch said is true.
    The regulations have come down so hard on the banking 
industry, which our Committee cannot fix in this Committee 
because we do not have jurisdiction over banking. We can only, 
you know, give them advice about how they could, you know, 
loosen the regulations appropriately without putting taxpayers 
at risk.
    But--I do not know.
    Senator Shaheen, did you want to say anything on this?
    And this is very informal. So anybody can speak up at any 
time.
    Do you want to say----
    Senator Risch. I thought it was my turn next
    Chair Landrieu. Okay, go ahead. Go ahead. Go ahead.
    Senator Risch. Well, I have got----
    Chair Landrieu. On this subject if we could, and then we 
will go to another subject.
    Senator Risch. Well, I have a different subject. So I 
guess----
    Chair Landrieu. Well, then let Senator Shaheen go on this 
subject, and then we will open up another subject.
    Senator Shaheen. Well, first of all, thank you all very 
much for being here.
    Thank you, Chair Landrieu and Ranking Member Risch, for 
holding the hearing today.
    I share what we have heard so far about the importance of 
the reauthorization of the 504 program. New Hampshire has over 
96 percent of our employers who are small businesses under the 
SBA definition. So we are truly a small business state.
    We had a hearing on this last fall, and we had a small 
business man named Bill Dunnigan from New Hampshire come down 
to say exactly what you said, Ralph--that the 504 refinancing 
program had allowed him to significantly free up cash flow, 
capital, improve his cash flow because of that program.
    And so, my question is for you, Jeanne, and that is if we 
let this program expire, if we do not reauthorize it, can you 
talk about what the impact will be on those?
    You talked about over 500 businesses that were in the queue 
waiting to try and get some help and the amount of money that 
that would leverage--almost half a billion dollars. What will 
happen to those businesses?
    Ms. Hulit. Those businesses would not be able to get 
capital. The criteria for SBA lending is they cannot get credit 
elsewhere on commercially reasonable terms, comparable. So I 
think that those are jobs that would not be created; those are 
projects that would not be financed.
    The 504 program's mission is economic development, and that 
has always been job creation.
    The 504 refinance program was instrumental because it 
allowed for job creation in a different way than under the 
traditional 504 program. It does job creation and retention in 
extraordinary times.
    Chair Landrieu. Thank you.
    I am going to turn it over to Senator Risch who wants to 
talk about insurance, and I think that is what some of you all 
mentioned initially. We will come back to 504, but go ahead, 
Senator.
    Senator Risch. Thank you, Madam Chairman.
    I want to talk a little bit about insurance. Since I have 
been on this Committee, I have been struck by the fact that so 
many people look to the Federal Government as the insurer of 
disasters that they did not insure against.
    I would like to hear your thoughts, Mr. Muhlhausen, and 
anyone else, as to how we convince Americans and small 
businesses in general that they need to buy insurance, that 
risk management is just as important as marketing, financing, 
or anything else. I would like to hear your thoughts on that.
    Mr. Kunreuther. Thank you, Senator Risch. Let me make a 
brief comment on this, and obviously others may want to 
elaborate.
    One of the real challenges in this area is that prior to a 
disaster there is a general feeling that it is not going to 
happen to me. As a result, there are people who do not take 
protection by buying insurance or making their home safer.
    The hearing today offers an opportunity to bring together 
the kind of discussion that we are having as to what will 
happen after a disaster and tie in with insurance and steps 
that could be taken beforehand.
    If there are requirements to buy insurance, if there is a 
way that homeowners and businesses can appreciate this, there 
is an opportunity here to maybe tie together the kinds of 
comments that you have been making, Senator Landrieu, and 
others, regarding insurance so that businesses would take the 
steps beforehand to protect themselves.
    Two things would happen in that regard. One is you would 
have less of a need for those loans because people would have 
had insurance, and secondly, there would be an opportunity to 
aid the businesses afterwards if there were things that were 
not covered by insurance that would require a loan.
    Senator Risch. Thank you, Professor.
    Mr. Muhlhausen.
    Mr. Muhlhausen. Thank you.
    I think one of the issues is this hearing recalls memory of 
a hearing in the House Committee on Small Business 
Administration last year where a business owner was invited to 
testify about his experiences in needing loans for his company 
that repeatedly was flooded by the Susquehanna River.
    And I was amazed that this person had a business that was 
repeatedly flooded, repeatedly destroyed, and he still had his 
business in the same location. So applying for disaster loans 
or trying to fix the problem after a disaster has occurred is 
very costly where, instead, maybe he should have moved his 
business somewhere else or had better preventive efforts, 
preventive measures, to keep the costs down.
    What I think right now is our approach right now is to 
clean up after the fact instead of mitigating before the 
disasters occur.
    Senator Risch. Thank you.
    Anybody else?
    Chair Landrieu. Go ahead.
    Mr. Michel-Kerjan. Thank you. Well, let me echo what you 
just said, Senator.
    If you look at the number of presidential declarations here 
in the U.S. over the past 50 years, then you will see that back 
in the 1950s we used to have about 20 per year on average, that 
is one every two to three weeks. Now, we have them about once a 
week. In 2011, there was a record high of 99 declarations for 
that year alone.
    This has consequences. On the one hand, people have a 
tendency of relying more on the government as Hurricane Sandy 
clearly showed. If you think about who is paying at the end of 
the day, back in the 1950s it was very rare to find any 
disaster where the Fed would pay more than 10 percent of the 
total economic losses. And it would be almost impossible to 
find any disasters in the past 10 years where the Fed has not 
paid at least 50 percent of the losses.
    I am not saying it is good or bad. These are just the 
facts.
    So the next question is, well, what do we do about it?
    For Hurricane Sandy, the American taxpayers paid about 75 
percent of the total losses, including $10 billion for the 
National Flood Insurance Program.
    I think it is important, whether it is the SBA or another 
vehicle, that we start having a serious discussion with small 
businesses about not just insurance but proper financial 
protection, and we tend to have that discussion after every 
single disaster. We had that discussion after Hurricanes 
Katrina, Rita and Wilma and Ike and now Sandy, but then we tend 
to forget. Six months after the disaster, we go back to 
business as usual and nothing much has changed.
    I would love to hear from you, sir, as a business owner 
about how you think about buying insurance, whether it is flood 
insurance or wind coverage from the private sector. Is that 
something you purchase, or do you see it as too expensive? Are 
you more likely to purchase that protection now, after Sandy?
    Chair Landrieu. I think that is an excellent question, and 
Ralph, I would like you to answer it. But let me let Jim answer 
it because he represents a variety of businesses that were 
devastated by a storm.
    And, Jim, why don't you answer that and then Ralph?
    Mr. Rich. What I was going to add is the insurance----
    Chair Landrieu. Speak closer in your mic, please.
    Mr. Rich. It is an important answer to this whole problem, 
and businesses that had interruption insurance fared even 
better because really the interruption because of lack of 
electricity can last for weeks--that is really what cripples a 
small business.
    But let me also share with you that--and this is not just a 
Texas problem. You know, the private insurance market is 
abandoning the coast. Yet, 40 percent of our State's wealth is 
created by the people that work there.
    Chair Landrieu. This is the problem.
    Mr. Rich. My daughter, who is a single mother with three 
kids and lives in a small townhouse, her insurance payment for 
wind--only wind--is $2,800 a year.
    So, you know, insurance is great if it is affordable.
    The other thing with Hurricane Ike is we had record surges. 
Places flooded that never flooded before in history. They did 
not have flood insurance, and they were not on the map to have 
flood insurance.
    Chair Landrieu. They were not required to have flood 
insurance if they were not on the flood map.
    Mr. Rich. Right. So it is a little--it is complicated.
    But we would love to have affordable insurance in Southeast 
Texas. We just do not.
    Senator Risch. Well that is going to reflect the risk, is 
it not?
    I mean, if she is paying $2,800, that means the risk is a 
$2,800 risk and a company is going to undertake that risk, by 
putting it in the pool and earning a profit off of it.
    Mr. Rich. That is the Texas State windstorm insurance, and 
it is, you know, basically if there was a storm tomorrow in 
Texas they could not pay off any of their policyholders. They 
do not have enough reserves because it is a state-run entity. 
The private market has left.
    Senator Risch. Do they buy re-insurance?
    Chair Landrieu. No.
    Mr. Rich. No.
    Mr. Kunreuther. And that is changing as we speak.
    Mr. Rich. There are reform bills proposed.
    Chair Landrieu. Well, Texas and Florida are in very bad 
shape right now. Texas and Florida are in very bad shape.
    Jeanne, you had something. Go ahead.
    Senator Shaheen. Well, I just wanted to applaud the 
suggestion that this is a conversation that we really need to 
have because we are in a very different environment than we 
were 50 or 60 years ago, as you pointed out. And, you know, 
whether you want to attribute the basis for the disasters that 
we are experiencing to climate change or not, the fact is we 
are experiencing more disasters. The weather has changed, and 
it is having the kind of impact that you talk about, Mr. Rich, 
where we do need to think about how we are going to act 
differently to address this because it is not likely to go away 
based on what we are hearing from scientists.
    And so, the question is, how do we revise Federal policies 
to better address the current environment that we are in?
    Chair Landrieu. Insurance--let's stay on the Senator's 
point. Senator Risch, go ahead.
    Mr. Michel-Kerjan. One thing we have proposed--and we would 
love to hear your feedback--is to have risk-based premiums so 
insurance is actually a signal of your exposure. Whether you 
like that price or not is another issue, but maybe you are 
actually exposed to that level of expected losses without 
knowing it.
    So the other proposal we have made is the possibility for 
the Federal Government to start an insurance voucher program to 
address the affordability issue.
    For instance, if, people have been living in an area for a 
long time, it is hard for them to just leave that area, and 
they might not have the means to pay for this rapidly 
increasing price of insurance, especially when it doubled or 
tripled over the past 10 years.
    So, what about having an insurance voucher program that 
will compensate part of that price increase for some of these 
people?
    That would be an up-front cost, but at the end of the day, 
given all the Federal relief we have been giving over the past 
10 years and what I expect to come soon next, that might 
actually be the best investment that we can make.
    I do not know whether, Howard, you want to chime in.
    Chair Landrieu. Howard.
    Mr. Kunreuther. To elaborate on the point that Erwann has 
just made, I think there is a real opportunity, in light of 
Hurricane Sandy, to use the Biggert-Waters bill, passed in July 
2012 that reauthorized the flood insurance program for five 
years, where a number of these ideas are now on the table. To 
our knowledge, it is the first time that Congress has actually 
authorized risk-based rates as a basis for insurance. That 
poses problems that we are talking about in terms of 
affordability.
    So we have to couple, as Erwann was saying and as we have 
been writing about over the last few years, some notion of 
affordability. Insurance can then play the role that it is 
designed to play--to let people and businesses know how 
hazardous the area is, and to encourage investments in risk 
mitigation measures.
    And I know this is a Louisiana-Mississippi problem after 
Katrina--how do you build safer homes? And that is exactly what 
New Jersey and New York are facing right now, after Hurricane 
Sandy.
    You can give people a premium reduction, but unless one 
couples the voucher with this, it is going to be very, very 
hard for all the reasons that we are going to hear, as you were 
saying, Senator Shaheen, people cannot afford premiums that 
reflect actual risk.
    And that is, I think, the challenge we face here.
    But, if we can move in this direction, then I think a lot 
of the issues that are being discussed in terms of what happens 
after the disaster can be mitigated and you may not require 
quite the same kinds of loans and collateral payments because 
small businesses will be protected.
    Chair Landrieu. I am going to get to Senator Heitkamp in a 
minute, but I want to really focus our thoughts to the small 
businesses along the coast or in other areas that are 
experiencing these disasters. Okay?
    We think of the coast; think small business.
    Then also think big businesses and about the insurance that 
the Senator has raised because this is a real challenge to the 
sustainability of small business in America.
    The question of: How do you get the right insurance, how do 
you afford the right insurance, to limit the Federal 
Government's exposure but to maximize resiliency.
    Now let me just say one thing, and I will turn it over to 
Senator Heitkamp.
    In Louisiana, I love to say this because it is true. We are 
not sunbathing on our coast. We are not building condos on our 
coast. We are running the Mississippi River for the entire 
country. We are developing oil and gas for the entire country. 
And we are supplying 40 percent of the seafood.
    My small business people--yeah, we have ecosystem tourism 
and hospitality, and we can put on a party when we want. But 
most of the small businesses, Senator, that I represent on the 
coast are people that are fishing, commercial fishermen, you 
know, oil and gas roustabouts, small businesses that are--how 
do we keep them healthy and, yes, having insurance but 
insurance that they can afford for the benefit of the whole 
country?
    And you do not have a coast, Senator Heitkamp, but you have 
challenges, don't you?
    Senator Heitkamp. We have a lot of shoreline, Senator 
Landrieu. It is called Lake Sakakawea. You like to refer to it 
as other things. But we retain a lot of water for the whole 
Missouri Basin, and we are pretty proud of that.
    And when it did not work in 2010, it was pretty scary as we 
watched the water come up and literally pass my house. Sixty-
seven trillion gallons of water went by my house in a twenty-
four-hour period in the Missouri River. Think about that.
    No one ever thought that would happen. It is a discussion 
that we have with the Corps on a regular basis.
    But I want to make a couple points, and I guess to the 
gentleman from the Heritage Foundation. We can always find the 
one or two guys who do not quite get it, who do not mitigate, 
who do not take care of themselves and expect someone to bail 
them out. That is not my experience in North Dakota.
    My experience in North Dakota is people sit and they try 
and think proactively about: Now that I have had this 
experience what do I do to mitigate it? What do I do to protect 
myself?
    We have a record of protecting ourselves in our flood and 
sharing those costs between neighbors and not burdening the 
Federal Government. But sometimes really bad things happen, and 
we need to have a system to recover.
    Now, on business interruption insurance, I can tell you, 
you know, as a member of the Industrial Commission, I ran the 
state mill. You may find that interesting. We mill flour. We 
had business interruption insurance during the Grand Forks 
flood, but the people who worked at the mill had to protect 
their houses.
    The sad fact is for a small business, frequently, in a 
natural disaster, they are not only hampered by the fact their 
business is impacted. Their home is impacted. Their employees 
are impacted.
    And so, you cannot just look at business insurance 
necessarily. You have to broaden the whole scope of how do you 
protect communities.
    And, you know, I just want to make one point about 
insurance and one point about risk mitigation.
    I was asked when I bought a house here to buy earthquake 
insurance. Do you think I should have bought earthquake 
insurance?
    Mr. Kunreuther. In North Dakota?
    Senator Heitkamp. No, no, no, here in Washington, D.C. You 
recently had an earthquake event.
    Mr. Kunreuther. Was it expensive?
    Senator Heitkamp. Well, see right there. And isn't that the 
point?
    The point is that right now we do not know what is going to 
come.
    And when the Missouri River floods and no one thought the 
Missouri River ever would flood given the dam system, how much 
do we blame the person who has not done the right things?
    And so, I think as somebody--I am going to have to leave 
pretty quick, but I just want to mention the economic value, 
the economic downturn. I saw it. And you might find this 
shocking given North Dakota's reputation right now, but during 
the eighties and the nineties we had some tough times. And if 
it had not been for SBA's loan guarantee programs, which are no 
cost in North Dakota because we repay our loans there--we were 
able to invest in businesses now that are enjoying tremendous 
success.
    And so, that is not a handout. That is a hand up.
    And I applaud you, Mr. Hardt, for the work that you have 
done in weathering the storm of this bad economy.
    I applaud you, Mr. Rich, for the work that you have done in 
weathering the storm.
    You guys are the guys who are going to make it happen for 
us, and so if we can make this no-cost government program work 
I am all for it.
    Chair Landrieu. Okay. The Heritage Foundation--why don't 
you respond to that directly? And then we will get everybody 
else.
    There was a vote called. There is going to be a vote 
called, I think, in a few minutes. We are going to go for 
another five minutes and then take a break and let everybody 
vote because we have two votes. Then I am going to come back 
and finish up.
    And for anybody--all of you all need to come back, for 
those of you who can come back if you are able to.
    But go ahead. Heritage, go ahead and respond.
    Mr. Muhlhausen. Senator Heitkamp, I think you should be 
commended for coming from a state that has communities that 
help each other. And I think all communities across any state 
are going to have people come out and help each other when a 
natural disaster strikes or any type of disaster strikes.
    But I think the problem with the Federal Government is that 
it pays so much for natural disaster recoveries that were once 
entirely local or just within a state. What we are doing is the 
state governments now, and local governments, are less inclined 
to be prepared as they should to respond and solve these 
problems because the Federal Government is very generous in its 
funding of recovery efforts. And so, I think what happens is 
that you get less of a robust response from state and local 
governments in terms of the long-term recovery efforts.
    Chair Landrieu. Okay. You know, I do not know if that is 
true in other states, but I have to tell you that is not the 
experience in Louisiana.
    What the experience in Louisiana is, is communities--all 64 
parishes--are just frightened to death that Katrina is going to 
happen to them, and they are desperately trying to get 
mitigation money every day.
    Now we just had this debate on the Senate floor when there 
were some people that said that mitigation money had no place 
in a disaster response bill. I do not know if you missed that 
debate.
    And then the other argument was some people thought we 
should not have the mitigation money in the Sandy bill and took 
it out because they did not think it belonged there.
    So I do not know. If it does not belong there, where does 
it belong?
    And, number two, if it had to belong, we had to offset it 
because mitigation either is not a high enough priority or it 
requires a reduction in other expenditures of the Federal 
Government.
    You are talking to a person--you know, with all due 
respect, David--that had a whole city go underwater because the 
Federal Government does not have enough money in the Corps of 
Engineers budget to protect us since the 1950s. And we kept 
saying please help us build these levees. Of course, they did 
not. Then when they built them, they collapsed in 52 places.
    So I am a little bit confused.
    I mean, I understand that you are opposed to--and I agree--
the Federal Government picking up 100 percent of the tab or 
even 90 percent of the tab, but I am not sure it is correct 
that states and local governments are not taking precautions 
and using their own money to try to do this.
    I mean, they are scrambling to build levees in my State, 
not depending on just the Federal Government to come in.
    Let me get--and I will come back to you for response.
    Go ahead, Mr. King.
    Mr. King. I would just like to add, I think, the insurance 
question is one that I wish I were not becoming more and more 
expert at daily. And I am amazed at the number of people who do 
the right thing, who take insurance, and then you find out that 
the coverage does not extend because of this unusual 
circumstance, and all of a sudden the coverage covers 10 
percent of the damages.
    Chair Landrieu. Right.
    Mr. King. And that is something that is extremely 
troublesome, and I am not sure how to resolve it within the 
Committee, but I think it needs to be addressed and really 
explained.
    I mean, I do not know whether we have clear language 
opportunities. But we had people that were absolutely certain 
they were covered, and a very small portion were.
    Chair Landrieu. And found out they were not.
    Mr. King. Right.
    Chair Landrieu. Senator Cowan, and then I want to put into 
the record this affordability amendment that our Committee has 
submitted on insurance. I am not going to go into it, but for 
the record so the members can look. These are some of the 
suggestions that we have made about really focusing on--and you 
all helped us with this--the affordability piece of insurance 
for business and the coverage, et cetera.
    But go ahead, Senator Cowan.
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    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Cowan. Thank you, Madam Chair. I want to thank you 
and Ranking Member Risch for calling the meeting and raising 
these two important and related topics. And I appreciate the 
conversation.
    You know, I am one who believes that the government has a 
role, and it is not to solve everyone's problem, but it is to 
help people help themselves and better their situations. And 
when it comes to small businesses, the issues around insurance 
and disaster relief are critically important, and government 
does have a role to play there.
    I, too, take issue with the suggestion that there is an 
abundance of cities, towns and states who are not thinking in 
advance and trying to do the right thing around these issues.
    You know, I come from the State of Massachusetts where we 
are not known for being a tornado alley, but a couple of years 
ago we had a tornado unexpectedly. And when I say unexpectedly, 
I mean something that had not happened in too many decades to 
count sweep through Central and Western Massachusetts and 
devastate small businesses and homes.
    I can almost guarantee you there was not enough insurance 
or no one had the kind of insurance necessary for that because 
the risk was de minimis, if it existed at all. There is a role 
for government to play in that circumstance, and I applaud the 
SBA who stepped in, as did some other Federal agencies, to help 
those small businesses get back on their feet and bring those 
communities back to life.
    I also take exception--having worked in the government in 
Massachusetts as Chief of Staff of the Governor--to the 
suggestion that we were not prepared or our cities and towns 
are waiting for the Federal Government to give us a handout. We 
have a robust emergency management protocol in Massachusetts, 
but that emergency management protocol was not prepared for 
that situation because it was not on the books before.
    I am all for risk management as a component of business and 
business development, economic development, and I do not know a 
small business owner anywhere in Massachusetts who does not 
think about insurance. But there is a real challenge, as Mr. 
Rich has addressed and others have alluded to; not every small 
business owner can get insurance.
    We are talking about access to capital. There is a separate 
and related conversation about access to insurance.
    And we, too, have a large coastal economy in Massachusetts, 
and we do throw a good party too.
    [Laughter.]
    And I invite you all, please come to the Cape and Islands 
this summer where you are always welcome.
    Chair Landrieu. Where they do sunbathe.
    Senator Cowan. We do sunbathe.
    Chair Landrieu. They also work.
    Senator Cowan. Not so much me, but we do sunbathe.
    Chair Landrieu. Well, that is true, yeah.
    Senator Cowan. But do come because you will see an 
abundance of small businesses--seasonable businesses--who need 
capital, who need coverage. But there are moments in time 
because of severe weather events--and they are increasing more 
often--that the insurance is not there, or if they have 
insurance, as Mr. King has alluded to, it is just not the kind 
of insurance they thought they needed for those circumstances. 
And I think that is why it is important that the SBA and other 
governmental agencies, to the extent they have the resources 
and do the homework, are there for them.
    And it is not easy for everyone to just move their 
business, and frankly, I do not want everyone to move their 
businesses. I need that coastal economy. Right?
    I need that coastal economy. So I welcome the conversation.
    I was actually going to--and I put it to Ms. Fingarson from 
the Independent Business Association. I would love to hear your 
thoughts around this issue, sort of access to insurance for 
those small businesses you represent. Is it a challenge, and 
how do your members meet that challenge?
    Ms. Fingarson. Thank you for the question.
    I was looking at our small business economic trends report. 
It was released on Tuesday. We survey our members every month. 
We have been doing this since 1986 and quarterly since 1974, 
and cost and availability of insurance was 8 percent for the 
single most important business problem.
    How does that compare to everything else on the list? Taxes 
and government regulation tied for 21 percent. So it is just 
not that high up on the single most important problem.
    That is the latest data I have on that. I can also go back 
and see what our research foundation has in response to your 
question and get back to you.
    Thank you.
    Chair Landrieu. Go ahead.
    Mr. Kunreuther. I would like to follow up on several of the 
points that have been raised, knowing we have only a couple of 
minutes. I think what you raised, Senator Heitkamp, is a very 
important aspect in terms of what people can do beforehand and 
then what they have to do afterwards.
    And you, Senator Cowan, elaborated on that.
    One of the really important issues is to understand what 
kinds of insurance are available.
    Can we make it more transparent?
    We can use the Biggert-Waters Act to move in that 
direction, to make insurance more affordable for people who are 
currently in the area--not for people moving in--recognizing 
that most are not purchasing insurance. You may have to think 
about requirements. It will be important to get data on how 
many businesses have been able to get insurance, actually 
purchased it and then later cancelled their policy.
    We have a great deal of data, as Erwann was mentioning, on 
the National Flood Insurance Program where we see that after a 
few years, often those who do not have a claim, cancel their 
policies because they treat this as an investment and it is not 
paying off. They do not appreciate that the best return on an 
insurance policy is no return at all. You should celebrate the 
fact you have not had a loss.
    We need to recognize at least that is a potential problem, 
as you were mentioning, and gain a better understanding of what 
insurance coverage businesses can purchase and whether they see 
hurricanes and floods as a concern. If we do not do that, I 
think we fail to take into account the lack sometimes of people 
saying this is something we should be doing and continue to do 
even if we do not collect on our premiums. And that is 
something, I think, needs to at least be addressed.
    Chair Landrieu. Okay, I am going to get Ms. Hulit and then 
David again, and then we are going to break for the vote. And 
then I will get you, Ralph, when we come back. Go ahead, 
Jeanne.
    Ms. Hulit. Thank you. I just wanted to add some 
perspective.
    I was a commercial lender for 20 years, and we never wrote 
a commercial loan without doing a requirement check for whether 
or not they were in a flood zone and required flood insurance. 
And if they did not require flood insurance because they were 
not in a flood zone, if there had been a regulation requiring 
them to purchase flood insurance, I would have had a riot on my 
hands with my borrowers.
    I mean, the fact is if they do not perceive that there is a 
need because there has been no experience of flood, then they 
do not want to pay the cost. So requiring people who may not be 
in an area to, as a small business, purchase insurance for a 
risk they do not expect is a burden to small business.
    Additionally, I was regional administrator in New England, 
as Senator Shaheen knows, and had the opportunity to be in 
Massachusetts when the tornado hit, and in Vermont--not a 
coastal community, a mountainous community. Those communities 
were devastated by floods because of Hurricane, or storm, 
Irene. These were not rivers that had river flood plains. These 
were creeks that overflowed and wiped out businesses and homes. 
And so, the perception that those homes should have had flood 
insurance is, quite frankly, absurd.
    And that is my concern--that we are--you know, the 
gentleman from the Heritage Foundation's position that they 
should have had insurance is concerning because in a 
mountainous region they could not have anticipated that.
    Additionally, on the economic injury side, when in a 
mountainous region, when you have one road that goes this way 
and one road that goes this way, when the road that goes east-
west is wiped out and the truckers who have to get the business 
goods to and fro had to increase their mileage by going all the 
way up north to Burlington and all the way back down and 
increase their costs, that is not business interruption. That 
is not physical damage. That is economic injury, and that is 
what the disaster program funds.
    Chair Landrieu. David.
    Mr. Muhlhausen. Well, let's say that states and local 
governments actually need to do a better job. And what I mean 
is that, for instance, take caps on insurance premiums. When 
you have caps that prevent insurance companies from actually 
charging what the risk is, that is a problem. That is maybe 
beyond the scope of this Committee, but there are a lot of 
things that state and local governments need to do better.
    And in many cases a lot of these disasters are entirely 
local and should be handled by the locals and not the Federal 
Government.
    Chair Landrieu. Well, they are. Local disasters are handled 
100 percent by the locals. It is only catastrophic disasters--
you have to reach a certain threshold.
    Now there is a debate going on right now about maybe that 
threshold is too low, but please do not let the record say the 
Federal Government comes in on every disaster. Local disasters 
are handled 100 percent locally. It is just when a disaster is 
regional in nature or it meets a threshold of injury that the 
Federal Government steps up.
    All right, we are going to have to take a break to go vote, 
but we will come back. You all take 10 minutes. It will take us 
about 10 or 15 minutes, and we will resume.
    [Recess.]
    Chair Landrieu. Welcome back. The other members will join 
us as the votes on the floor allow, but let's continue our very 
robust and I think informative discussion on two major issues 
that are pending before this Committee.
    One is the appropriate response to disasters through the 
SBA loan programs, how those programs are working and in what 
partnership they should be with insurance. I think because 
Senator Risch is very interested in this it got into a very 
good discussion of the problems and challenges for small 
business, you know, getting insurance, the right kind of 
insurance at the affordable levels, et cetera.
    And then we also wanted to focus some time and attention--
and we have about 20 minutes left--on this access to capital 
through the 504 refinancing and the SBIC family of funds issue 
in the Small Business Investment Companies.
    So let's just take one last comment--I think it was Mr. 
Hardt--on insurance that you wanted to talk about, and then I 
would like to move to some discussion of the SBIC programs. Go 
ahead.
    Mr. Hardt. Yeah, I just wanted to give you a perspective 
from the business owner side.
    First of all, when I started the business, we had 10 
employees. And I was doing the payroll, and I was doing 
everything to get us going.
    And things were simpler then. I think part of the insurance 
issue is that things were simpler then.
    We have business interruption. We have every type of 
insurance we can think of--kidnap and ransom, you name it. But 
our policy is probably 300 pages, and there are as many 
exclusions as there are inclusions. And if I did not have the 
size of the business that we have, that we have a very Type A 
CFO that actually reads these things and goes back and fights 
and gets additional riders from the insurance companies to 
mitigate our exclusions, we would not have the type of coverage 
we have.
    So I think some of it is a larger business versus a small 
business issue, and somehow we have to overcome that.
    The second thing, real quick, from a small business issue 
because I was there and still am there--the first thing I am 
going to do is pay my health care bill every month at $12,000 
per family and $6,000 for individual. That comes out first.
    The second thing I am going to do is pay my worker's comp 
insurance. That comes out second.
    Hopefully, there is enough of a pie to have a good 
insurance policy after that.
    Chair Landrieu. Thank you.
    And one thing I would like you to submit for the record--
and for those of you that are experts on it, the 300-page 
insurance form--is that generated by the company, the 300 
pages, or is it 300 pages because the Federal Government or 
state governments require some of this disclosure?
    And I do not want to get into a big discussion of that, but 
since we are really fighting with the SBA and the U.S. 
Government to get their forms down to reasonable, you know, 
clearly understood English, I would like to know if we need to 
push the insurance industry or they can push themselves to get 
that kind of, you know, plain English, big print, you know, 
clear guidelines because, well, yes, Federal regulations can be 
tough at times and we would like to eliminate ones that do not 
work. Sometimes there are businesses that are unnecessarily--
the insurance industry may be making it difficult for some of 
our small businesses to get clarity on what they need.
    Go ahead.
    Mr. Michel-Kerjan. It is probably true for both private and 
public insurance. For flood, residential, and small business 
coverage is typically done through FEMA.
    Chair Landrieu. Flood insurance?
    Mr. Michel-Kerjan. Yes, flood insurance for small 
businesses. One possible challenge, though, is that you do not 
usually deal with FEMA directly, you are dealing with an 
insurance company or agent who is selling you a FEMA policy.
    So because FEMA is the only insurer, there is nothing that 
would preclude FEMA from creating a simpler policy. We just 
need to ask them to do it. There is only one insurance 
company--the Federal Government.
    Chair Landrieu. And how is that application? Have you seen 
one lately?
    Mr. Michel-Kerjan. It is kind of long--maybe with fewer 
exclusions than the private market might have, but still--so I 
think we can do much better right here. It would be a matter of 
bringing FEMA to the table to see what could be done in 
collaboration with them.
    Chair Landrieu. Okay. That is a very good idea.
    Go ahead, Howard.
    Mr. Kunreuther. I think this is a tremendous opportunity to 
push in the direction that you are talking about. The insurance 
industry is more receptive to this now because of all of the 
challenges that it is faced with. If one can make the case that 
unless one can understand what a policy is covering and not 
covering, you have really unfortunate occurrences of homeowners 
and businesses not being protected or thinking they are 
protected when they are not.
    I hope we can take advantage of the dialogue we are having 
today to move in that direction. The Wharton Risk Center has 
advocated that the insurance industry has a responsibility to 
provide the kind of information that makes it easy for people 
to understand the nature of the contract.
    Chair Landrieu. Okay, Mr. Rivera.
    Mr. Rivera. Senator, I just wanted to say for the record 
there was an example about a recurring disaster loan, so forth 
and so on.
    For Superstorm Sandy in a situation--the footprint of 
Sandy--I would say 80 percent of it had not been flooded 
before. So, in these kinds of situations, a lot of individuals 
did not have flood insurance because that is not part of the 
footprint. You know.
    But as a result of the disaster loan, we will require where 
it is required by law to require flood insurance and where it 
is required by policy if they are outside the flood plain. Just 
so we can protect the collateral in the event there is another 
disaster that occurs. So they do not have to come back to the 
Federal Government and get another loan.
    But I would go back to the situation where most of our 
loans are for uninsured or underinsured situations, where the 
gap is the rider that this person did not get because they did 
not anticipate having the earthquake or having, you know, the 
windstorm or having the flood insurance.
    So just for clarity purposes, just to make--I sometimes--
you know, I just want to make sure for the record everybody 
understands that we do require the insurance that is associated 
with the peril that impacted that disaster borrower.
    Chair Landrieu. Okay. I am going to take one more comment, 
and then we are going to move to the SBIC issue.
    Mr. Michel-Kerjan. To one point, I guess it is a question, 
``How long do you require people to keep their policy?''
    We looked at the entire portfolio of the National Flood 
Insurance Program--about five million policies--and we have 
asked the question, how long do people keep their flood policy? 
On average, it is three years.
    Chair Landrieu. Okay. How long do people keep----
    Mr. Michel-Kerjan. Do people keep their flood----
    Chair Landrieu [continuing]. Their flood policy for what?
    Mr. Michel-Kerjan. Well, for protecting their house or 
their small businesses. And the answer on a national basis is 
three years.
    So people--you may ask them to buy that coverage--
    Chair Landrieu. To buy it to get the loan.
    Mr. Michel-Kerjan. Yes.
    Chair Landrieu. But then they do not keep it.
    Mr. Michel-Kerjan. That is the point.
    Mr. Kunreuther. That is not well enforced.
    Mr. Michel-Kerjan. It has been a challenge----
    Chair Landrieu. What is your answer to that?
    Mr. Rivera. So, if you do not keep it, you have assumed the 
risk and you do not get another loan.
    That also applies for grants. If you get a FEMA grant, you 
are going to get a requirement that that property be insured by 
NFIP for the life of the property.
    Mr. Michel-Kerjan. The enforcement aspect has been an 
issue.
    Mr. Rivera. It is very--well, we can ask Craig Fugate to 
come and testify, but I am sure he will say that that is 
enforced.
    We have the same issue if somebody has a FEMA loan--I mean 
a FEMA grant or if we have had an SBA loan. You know, they have 
assumed the risk from our perspective. So we do not provide 
them with another disaster loan.
    Chair Landrieu. One more point because I tell you this is 
getting a little bit out of our jurisdiction, as you know, but 
go ahead.
    Mr. Kunreuther. For the record, we have talked with FEMA 
and they have said explicitly that it is the banks' 
responsibility to enforce this regulation.
    Chair Landrieu. Okay. What I am going to suggest to our 
staff, both Rs and Ds, is let's think about either another 
roundtable or a hearing where we have FEMA--well, let's start 
with the committees. Homeland Security, our Small Business 
Committee and the Banking Committee----
    Mr. Kunreuther. That would be great.
    Chair Landrieu [continuing]. Because Banking has 
jurisdiction over insurance, Homeland has jurisdiction over 
FEMA, and we try to have an advocacy, not that we have 
jurisdiction, but we try to be an advocate for small business. 
And this is a real problem.
    Mr. Kunreuther. It is.
    Chair Landrieu. You know, on one side you are right, David; 
the Federal Government is spending more and more and more money 
responding to disasters.
    On the other side, you know, you want to have an insurance-
based risk management system, but if insurance is not available 
or too expensive or too complicated for businesses to 
understand, or if no one is enforcing them to have it, then the 
whole system gets out of balance.
    That is why I have stayed on this issue--because I know the 
tendency is once the storm is over to forget. I have made a 
promise to my citizens never to forget Katrina or Rita or Isaac 
or Ike or Gustav.
    I mean, we have had so many storms in the Louisiana-Texas 
area. I cannot let--we will not forget.
    And this system is really broken, and it needs some fixing.
    Now there was a House bill that is very interesting, that I 
have not studied, that was just filed on this subject 
yesterday, on a backup insurance. Does anybody know anything 
about that? A backup? Anybody?
    Okay. I just found out about it this morning. So, anyway--
but there are several insurance bills that are filed.
    But I think the Senator has raised an excellent point. I 
was just going to say thank you for raising insurance because, 
I mean, it was part of our roundtable. But what we figured out 
is while our Committee does not have jurisdiction over this, 
Homeland does; Banking Committee does.
    But it is a real problem for small business. So what I am 
going to suggest is we will come back and do something with 
those other committees at an appropriate time.
    Senator Risch. Madam Chairman, first of all, let me say 
that when you start talking about insurance it is a great 
intellectual exercise. When you are talking about insurance you 
have a loss that someone is going to have to sustain the loss, 
either the person who actually sustained or someone else. There 
is going to be pain inflicted on whoever it is that sustains 
the loss.
    The question is, how do you deal with that?
    Is it right to take a loss that is painful to someone and 
force it off onto someone else who had nothing to do with it, 
someone who chose to locate their business in a place that had 
substantially less risk?
    It is a really good intellectual exercise in American 
thinking as to how Americans handle a loss that they undertake.
    After all, whenever we see tragedies like the hurricanes, 
it brings the issue into focus. However, the fact is that every 
day American businesses and individuals suffer from floods, 
fires, and earthquakes if you put all those daily occurrences 
together, it would equal the kind of tragedies that you see 
with a hurricane or other large disaster.
    If you put all the losses together on a daily basis or all 
together on a weekly basis, you would find that the losses were 
very similar to what you get with large disasters, but they hit 
us differently. They are portrayed in our mind differently when 
you see so many people that are affected at once.
    So it is good to have these intellectual discussions and 
see if we really are committed to a free enterprise system, 
where people do not view the Federal Government as being the 
solver of every problem that comes down the pipe.
    It is a good exercise to have.
    Chair Landrieu. No--and more than an exercise. I mean, 
there is actually some possibility of actually changing 
something. That is the great thing because this disaster is 
getting very, very expensive for the taxpayer, very frustrating 
for businesses.
    The single most important problem according to this one 
organization, which is the largest organization--taxes at 21 
percent; inflation at 6; poor sales, which would reflect a weak 
economy, at 18, finance and interest rates, 2; cost of labor, 
4; government regulations and red tape at 21; compensation from 
large businesses at 8; quality of labor at 5; and insurance at 
8; and all others.
    But it still is an important issue to business, I think 
generally, and more importantly to the cost of the Federal 
Government.
    But since we have spent a long time on insurance, let's go 
to FIB.
    I am sorry. Let's go to SBIC. I am getting all my acronyms 
confused.
    Go ahead, Sengal.
    Mr. Selassie. Sure. Well, I just want to give you a 
perspective on the--and it is away from the disasters and sort 
of on some of the successes that are going on in small 
businesses through the Small Business Association.
    So I am here on behalf of the SBIA, Small Business Investor 
Alliance, a premier organization for small and middle market 
investors. And SBIA members provide vital capital to small and 
medium size----
    Chair Landrieu. And how many members are there? A couple 
hundred?
    Mr. Selassie. There are 156 or so.
    Chair Landrieu. Okay.
    Mr. Selassie. And we provide vital capital to small and 
mid-sized businesses nationwide, resulting in economic growth 
and job creation.
    So, as mentioned earlier, my fund has $230 million and 
makes equity investments in small businesses, and we have done 
so across the country in 12 states.
    So I will highlight just one----
    Chair Landrieu. If you can highlight one or two just really 
quickly, and then I would like some comments from everybody 
else.
    Mr. Selassie. Sure. I will highlight a portfolio company in 
Senator Risch's State. We made investment in a company called 
Track Utilities, located in Meridian, Idaho. Track has grown 
since our investment from 109 employees to 155 employees, and 
it provides bundled services. It really lays fiber and cable 
for power companies.
    So Idaho Power is a big customer. CenturyLink, which 
acquired the old U.S. West assets and happens to be 
headquartered in Louisiana, is their largest customer.
    They really provide a vital service, particularly with some 
of the mandates for internet infrastructure and certain minimum 
levels for everybody in the country.
    Chair Landrieu. Now why couldn't those companies go to a 
regular bank, or did they try to, and what was the added value 
that you were able to bring to them?
    Mr. Selassie. Sure. And they do have a regular banker in 
the capital structure. The senior banker who has got a first 
lien on the trucks and the assets and one that looked at what 
is the actual asset value of the business is the old Valley 
Bank Corp which got--an Idaho bank which got acquired by 
KeyBank. And they provided the first $6 million of capital for 
the company.
    We then provided the next $7 million, which was really 
collateralized by cash flows rather than assets. So it is that 
next level of capital below asset-based levels that the 
companies are having a hard time getting.
    Chair Landrieu. And is it because the bank cannot use cash 
flows as collateral?
    Mr. Selassie. Yes. I think with some of the regulation and 
laws that have come about it is very punitive to the bank's 
capital accounts.
    Chair Landrieu. Under Dodd-Frank or even before Dodd-Frank?
    Mr. Selassie. A combination, but I think it has been 
exacerbated with some of the legislation.
    So, you know, for them to make that sort of loan, they have 
to reserve almost 100 percent cash against that, which is not 
an effective model for a bank.
    So what actually a number of banks have begun to do is 
invest in funds like ours with their private capital to help--
--
    Chair Landrieu. I want to be really clear about this 
because I think, Senator Risch, this is a very important issue 
for our Committee.
    I mean, I think what you just said was so important. The 
bank, you could assume, might have wanted to lend the money, 
but they could not lend the money because the regulation would 
require them to keep 100 percent--retain 100 percent. So it was 
not a good model for them.
    That does not negate the fact that the business was a 
reputable business, that the business absolutely could pay back 
the loan, that the business needed the loan to grow.
    So we either have to support a program, in my view like 
this, that helps them get through this while we are trying to 
reduce the regulations that prevented the bank from lending 
them all the money at once.
    Now does anybody have another solution?
    Anybody have another solution to that--because what I 
cannot allow is the small business that could grow from 100 to 
150, whether it is in Idaho or Louisiana, to not be able to 
grow because we will never get out of this recession if we do 
not.
    Senator Risch. I have a solution.
    Chair Landrieu. Go ahead.
    Senator Risch. Repeal Dodd-Frank.
    [Laughter.]
    Chair Landrieu. Well, I am in for relief to community 
banks, yes. I am not in so that big banks can fail and the 
taxpayers have to pick up the tab again, not going to go there.
    Anybody else?
    The taxpayers picked up a huge, huge tab for that.
    All right, is there any other comment you want to make? And 
then we are going to close up, and I will give my Ranking 
Member the final word.
    Mr. Selassie. Sure. And I would say, I mean, this is--our 
fund is anchored and backed by private free market capital that 
has come in. So the SBIC program is a zero subsidy program.
    Chair Landrieu. What does it cost the government?
    Mr. Selassie. It has not cost the government. Yeah, it has 
not cost the government anything.
    And, yeah, if it were our investors who put up in our fund 
$80 million of private capital, they would not have lost 100 
percent of their money before.
    Senator Risch. He would not be here if it had cost the 
government.
    Mr. Selassie. Exactly.
    Chair Landrieu. Yeah.
    Mr. Selassie. And, you know, I would say it is a zero 
subsidy, but you know, it is a--I think it actually is probably 
a positive from a deficit reduction and like perspective 
because a company like Track might have said: Without this 
capital, you know, we will just stay at 100 employees. We will 
maybe cut back--because they are paying with the economy and 
things going on.
    So I think we were able to allow them to invest in 
infrastructure and have some capabilities where that was not 
the case.
    You know, to touch the insurance conversation for a little 
bit, you know, we helped them get--we always do an insurance 
review before we go and make an investment in the company. And 
we have folks on staff who can go through those 300 pages and 
to try to help make sure that we are covered because, again, if 
there is business interruption or disruption, that comes out of 
our dollars.
    Chair Landrieu. Right.
    Mr. Selassie. So we are very incentivized to----
    Chair Landrieu. You have private money invested, and you 
are very, very careful, which makes it a good partnership.
    Mr. Selassie. Right.
    Chair Landrieu. I just want to put a few letters in the 
record, and Senator, you have the last word.
    Senator Risch. Well, thank you, Madam Chairman. I think we 
have had a lively discussion and have probed some of the issues 
that need it. I want to thank you for holding the hearing.
    Chair Landrieu. Thank you.
    The record will stay open for two weeks. Please submit any 
additional comments that you want.
    And thank you all so much for being a part of this.
    [Whereupon, at approximately 12:31 p.m., the hearing was 
adjourned.]
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