[Senate Hearing 113-391]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-391

 
                   CLOSING THE WEALTH GAP: EMPOWERING
                   MINORITY-OWNED BUSINESSES TO REACH
            THEIR FULL POTENTIAL FOR GROWTH AND JOB CREATION

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

                               ROUNDTABLE

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS

                          AND ENTREPRENEURSHIP

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             FIRST SESSION

                               ----------                              

                           SEPTEMBER 18, 2013

                               ----------                              


      Printed for the use of the Committee on Small Business and 
                            Entrepreneurship





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20402-0001



            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         JEFFREY S. CHIESA, New Jersey
EDWARD J. MARKEY, 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
Jackson Lee, Hon. Sheila, a U.S. Representative from Texas.......     9
Richmond, Hon. Cedric L., a U.S. Representative from Louisiana...    18

                           Witness Testimony

McKernan, Signe-Mary, Economist, The Urban Institute.............     3
Kochhar, Rakesh, Associate Director, Research and Hispanic 
  Trends, Pew Research Center....................................     4
Powell, Toya, Vice President of Operations, the U.S. Black 
  Chambers, Inc..................................................     4
Hasegawa, Lisa, Executive Director, National Coalition for Asian 
  Pacific American Community Development.........................     4
Hurley, Zenita Wickham, Special Secretary of Minority Affairs, 
  Maryland Governor's Office.....................................     5
Hairston, Darryl, Associate Administrator for Business 
  Development, U.S. Small Business Administration................     5
Taylor, Dr. Shree, Managing Partner, Delta Decisions of DC.......     6
Major, Barbara, lead organizer, The Collaborative................     6
Evans, Connie, President and CEO, Association for Enterprise 
  Opportunity....................................................     7
Balwani, Anisa, President, RCI Technologies, Inc.................     7
Allis, Kevin, tribal member, Forest County Potawatomi Community..     8
Campbell, Jane, staff director with Senator Landrieu's office....     8

          Alphabetical Listing and Appendix Material Submitted

Allis, Kevin
    Testimony....................................................     8
Balwani, Anisa
    Testimony....................................................     7
    Prepared statement...........................................    93
Campbell, Jane
    Testimony....................................................     8
Evans, Connie
    Testimony....................................................     7
    Prepared statement...........................................    88
Fakhoury Law Group, PC
    Report.......................................................   355
Hairston, Darryl
    Testimony....................................................     5
    Prepared statement...........................................    80
Hasegawa, Lisa
    Testimony....................................................     4
    Prepared statement...........................................    66
Hurley, Zenita Wickham
    Testimony....................................................     5
    Prepared statement...........................................    69
Introduction of participants.....................................    45
Jackson Lee, Hon. Sheila
    Opening statement............................................     9
Kochhar, Rakesh
    Testimony....................................................     4
    Prepared statement...........................................    62
Landrieu, Hon. Mary L.
    Opening statement............................................     1
    Prepared statement...........................................    34
    Wealth Gap Report............................................    95
Major, Barbara
    Testimony....................................................     6
    Prepared statement...........................................    85
McKernan, Signe-Mary
    Testimony....................................................     3
    Prepared statement...........................................    47
National CAPACD
    Prepared statement...........................................   349
Powell, Toya
    Testimony....................................................     4
    Prepared statement...........................................    64
Richmond, Hon. Cedric L.
    Opening statement............................................    18
Rubinovitz, Robert N.
    Prepared statement...........................................   160
Taylor, Dr. Shree
    Testimony....................................................     6
    Prepared statement...........................................    83
Wainwright, Jon
    Civil Action No. 12-CV-744...................................   190
Wong, Peter
    Prepared statement...........................................   353


                   CLOSING THE WEALTH GAP: EMPOWERING


                   MINORITY-OWNED BUSINESSES TO REACH

                    THEIR FULL POTENTIAL FOR GROWTH


                            AND JOB CREATION

                              ----------                              


                     WEDNESDAY, SEPTEMBER 18, 2013

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:04 a.m., in 
Room 428, Russell Senate Office Building, Hon. Mary L. Landrieu 
(Chair of the Committee) presiding.
    Senators Present: Landrieu.
    Representatives Present: Lee and Richmond.

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

    Chair Landrieu. Good morning, everyone. Welcome to our 
fourth annual gathering in this room, and today it is an 
official roundtable so I am very pleased to host a roundtable 
on empowering america to reach its full economic potential by 
closing the wealth gap: I think a very serious challenge to our 
Nation.
    I want to acknowledge that several Members of Congress may 
be stopping by the hearing. I know that Cedric Richmond, 
Congressman from Louisiana, will be stopping in. And of course, 
the annual CBC conference is taking place today through 
Saturday, so there are a lot of members that are doing work 
here on the Hill.
    But this is the fourth year that our Small Business 
Committee has used this particular week as an opportunity to 
focus on one of the most significant challenges, I think, 
before America and that is the wealth gap between majority and 
minority. And more importantly than focusing on the gap is 
focusing on solutions to close that, not by pulling people at 
the top down but by lifting up those on the bottom and mostly 
because it is important for American economic competitiveness.
    Fifty years ago America engaged in a war on poverty. During 
the last 50 years, our Nation has made great strides in a 
number of areas affecting economic opportunity. Education gaps 
have been closed. Income gaps have been closed. There are more 
people of all races graduating from colleges. Income levels 
have risen.
    This is good news. We should be proud of this. But despite 
some of these obvious achievements, the data tells us that this 
progress is, for some reason, not necessarily translated into 
accumulated wealth--and that is what we are going to focus on 
today.
    This Committee is the Small Business and Entrepreneurship 
Committee. We take the entrepreneurship of this title very 
seriously, knowing that entrepreneurship is a core American 
value. It also is a great strategy and tool to create wealth, 
jobs, and economic power.
    So, in that context we are looking at a wealth gap that, in 
fact, has become wider, not narrower, between white and 
minority communities in the last three decades, when this data 
was first collected. This is very troubling.
    Closing the wealth gap is a challenge we must meet for 
America to compete effectively in the 21st century global 
economy. We need all of Americans, not two-thirds, not half, on 
the field competing as workers, as entrepreneurs, as business 
leaders, as corporate leaders to make this economy as strong as 
it can be in our capitalistic system.
    Last September this Committee held a roundtable that 
examined this wealth gap, the reality of it, the details of it; 
and I would call your attention to this chart which you have 
before you which is very troubling.
    You can see that in 1983 the accumulated wealth of all 
white or Caucasian families in America was $81,000. The 
accumulated wealth of African-American families in 1983 was 
$6,012 and in the accumulated wealth of Hispanic families was 
$8,250. It is a pretty wide gap, but more troubling is that 
``X'' number of years later, you know 50, 40, 30 something 
years later, that now has changed. For Caucasian families, it 
has gone up from $81,000 to $110,000, which is good news that 
wealth is speculating. However, with African-American families, 
it has only slightly increased to $6,314; and for Hispanic 
families, it has actually fallen to $7,683 from $8,250.
    So what this gap signals to me and to this Committee is 
that there are potentially some strategies that either the 
private sector, the nonprofit sector, or the government sector 
at the local, state, and federal level could pursue more 
effectively and aggressively to close this wealth gap and to 
basically give all Americans a true opportunity to get on the 
economic playing field.
    We cannot really compete effectively with countries like 
China and India, that have many times more population than we 
have, without all of our people engaging in full economic 
capacity and access to wealth. Earning wealth and using wealth 
to build not only the strength of individual families, but of 
communities and cities, is very important to the economic 
growth of the country.
    So, that is what our roundtable is going to explore today. 
A recent Urban Institute report finds that the wealth gap 
measured the difference in wealth cumulated by majority and 
minorities, unfortunately, is the largest that it has ever been 
since the Federal Reserve started tracking it 30 years ago.
    So, now that we have acknowledged this challenge and our 
Committee has tried, even though it is a relatively small 
committee--not as robustly staffed as some of the larger 
Committees here on Capitol Hill--we have taken a particular 
interest in this and we have looked at the areas that merge 
with the jurisdiction of this Committee: capital accumulation, 
access to capital, access to opportunities for business growth 
and expansion.
    What are some of the ideas that seem to be working out 
there in the local and state governments that we could 
potentially cast some good light on and what are we doing 
wrong; what is the government doing wrong; what is the private 
sector not doing correctly in regard to solving this wealth gap 
issue and why isn't the wealth gap decreasing? The income gap 
is closing, high school completion rates gap is closing, the 
gap in college graduation rates is closing, but the wealth gap 
seems to be widening?
    So, that is what I am going to challenge the panelist today 
to talk about.
    We have your bios. Of course, we know who you are. We 
invited you to come; but for the purposes of this discussion, 
introduce yourself, talk a minute about why this area is of 
interest to you or what aspects you and your team have been 
tackling; and then we are just going to open it up to some very 
general, informal conversation and questions.
    So, when you want to speak after that, you just put your 
placard up faced to me. I will go through a series of 
questions. It is very informal but the great thing is all of 
this is on the record, and we are going to be building a record 
and taking a lot of ideas from people all over the country on 
this important subject and hopefully transmitting some of this 
to the other Committees, whether it is Finance or Commerce or 
the White House itself, on some of the things that we are 
finding.
    And, let me also mention that after our three roundtables 
previously, our staff has issued a wealth gap report which 
brings in all of the information that our Committee has 
received on this, acknowledging that it is real. This is not 
something that we have made up. It is from the census data 
collaborated by many think tanks, liberals, moderates, and 
conservatives.
    The solutions to fixing it are very interesting and diverse 
but that is what this panel is hopefully going to explore, 
things that you know in your own fields are working or other 
comments that you might have.
    So, Doctor, let us start with you and we will be releasing 
this report today.
    Ms. McKernan. I am Signe-Mary McKernan from the Urban 
Institute.
    Chair Landrieu. And you have to speak, kind of lean into 
your mic or pull the mic as close to you as you can so that the 
reporter can pick this up.
    Ms. McKernan. Signe-Mary McKernan from the Urban Institute.
    Chair Landrieu, thank you for the opportunity to be here 
today to talk about closing the racial wealth gap. When it 
comes to economic gaps between whites and families of color in 
the United States, income inequality only tells part of the 
story. Urban Institute research shows that the racial wealth 
gap is three times larger than the racial income gap.
    Wealth is where economic opportunity lies. Wealth is not 
just money in the bank. It is insurance against tough times. It 
is tuition to get a better education and a better job, capital 
to build a small business, savings to retire on, and a 
springboard into the middle class.
    Urban Institute analyses of wealth accumulation over the 
life cycle show that the wealth gap grows sharply with age. 
When people are in their 30s and 40s, whites have about three 
and a half times more wealth than people of color; but by the 
time they reach their 60s, the peak of their wealth building 
years, that gap has doubled. So, African-American and Hispanic 
families are not on the same wealth building pass as white 
families.
    Chair Landrieu. We are going to come back to your 
testimony.
    Ms. McKernan. Okay.
    Chair Landrieu. This is just brief introductory remarks. 
You will get plenty of time to include that in. But thank you.
    Ms. McKernan. Okay.
    Doctor.
    Mr. Kochhar. Thank you, Senator. Good morning, everyone. My 
name is Rakesh Kochhar. I am with the Pew Research Center. The 
Pew Research Center does not take a position on policy issues. 
So, whatever I have to say will focus on evidence.
    I work within the Pew Research Center on the Hispanic 
Trends project where we focus on the outcome, the economic 
outcomes of racial and ethnic groups, bringing context to the 
change that Hispanics are bringing to the United States, the 
racial and ethnic dynamics of income and demographics and so 
on.
    Chair Landrieu. Thank you very much. The Pew research has 
been very pivotal in our examination of this issue and we thank 
Pew for its data that you have provided.
    Ms. Powell.
    Ms. Powell. Good morning, everyone, and thank you, Senator, 
for hosting this roundtable discussion. My name is Toya Powell, 
V.P. of Operations with the U.S. Black Chambers. We support 112 
chambers across the country in 24 states and 240,000 
businesses.
    We do that through five pillars of service: advocacy, 
access to capital, contracting, entrepreneur training, and 
chamber development. One of the things that I would like to 
highlight that is a primary barrier to entry for business 
expansion growth is access to capital; and to kick off the 43rd 
Annual Legislative Conference this week, the Congressional 
Black Caucus Foundation made a $5 million investment in five 
African American-owned banks and that is in partnership with 
the National Bankers Association, the U.S. Black Chambers, 
Inc., and the Congressional Black Caucus Foundation.
    We believe that this major investment is historical in that 
it will set the pace for other individuals to follow our lead. 
Thank you.
    Chair Landrieu. Okay.
    Ms. Hasegawa.
    Ms. Hasegawa. Good morning, everybody. Lisa Hasegawa from 
the National Coalition for Asian Pacific American Community 
Development. We were founded about 13 years ago and we are 
based here in Washington, D.C.
    We have a network of about 100 community-based 
organizations and community development corporations that focus 
on the needs of low income Asian Americans and Pacific 
Islanders around the country. We are in about 28 states across 
the country including Louisiana, so looking forward to talking 
to you more about that and what is going on with a lot of the 
Asian American small businesses in New Orleans.
    We just recently came out with an Asian American and 
Pacific Islander poverty report. I think a lot of folks are not 
talking about poverty, and particularly for Asian Americans and 
Pacific Islanders there is a perception that we are doing much 
better than everyone else, et cetera, and so I am going to be 
presenting more information later about that.
    Chair Landrieu. Let me just make a note. The reason we do 
not have the Asian population here is because it was not 
tracked in the first year which was 1983. But we do have the 
data for 2000 and we do want to talk about that because it is 
actually higher than Caucasian wealth and we want to talk about 
that but we will do that as we go through.
    Ms. Hasegawa. Right.
    Chair Landrieu. Ms. Hurley.
    Ms. Hurley. Good morning, Madam Chair and other panelists 
and Committee members. My name is Zenita Wickham Hurley. I am 
the Special Secretary for the Governor's Office of Minority 
Affairs for the State of Maryland, GOMA as we call ourselves.
    We are a cabinet-level agency that advises the governor of 
Maryland on issues affecting small and disadvantaged 
businesses. One of our biggest responsibilities is 
administering the State's minority business enterprise program. 
That is a program that has been in place for over 30 years and 
we just raised our goal to 29 percent.
    We have had a lot of success in seeing growth in the 
program; and because of our long history of having a very 
progressive program, I think we are widely regarded as a 
national leader among states and minority business inclusion; 
and much of what we focus on of late is growing and developing 
MBEs into prime contractors, training MBEs on administrative 
skills so that they are ready for, they can build the capacity 
necessary to take on bigger contracts and grow wealth; and I 
look forward to sharing more of my experiences with the 
Committee in the discussion today.
    Chair Landrieu. Thank you very much.
    Mr. Hairston.
    Mr. Hairston. Good morning, Chair Landrieu, and thank you 
for inviting the Small Business Administration to participate 
in our discussion today. I am Darryl Hairston. I am the 
Associate Administrator for Business Development at SBA where I 
oversee the 8(a) business development program. That program is 
a program designed to assist disadvantaged business owners gain 
access to the economic mainstream.
    Minority communities work were especially hard hit during 
the economic downturn. There are growing disparities in assets, 
education, and experience which has had a negative impact on 
entrepreneurship rates and small business success; and I am 
pleased to be here today to discuss that.
    There are two recent studies that SBA will be submitting 
for the record that look at the competitive disadvantages that 
minority-owned firms suffer when competing for Federal 
Government contracts.
    One is by Dr. Jon Wainwright and another is by the U.S. 
Department of Commerce, and both studies demonstrate the 
continuing need for programs like the 8(a) program. Thank you.
    Chair Landrieu. Thank you. Dr. Taylor.
    Ms. Taylor. Good morning, Senator. Thank you for inviting 
me and it is good to be back again. I participated in the 
roundtable on Bridging the Skill Gap for high-skilled American 
workforce, and it is interesting that it is very closely tied 
to the wealth gap as well.
    For those that, I apologize, that do not know me, my name 
is Dr. Shree Taylor. I am a business owner. Our firm was 
established in 2006. It is totally woman owned. We are also a 
part of the 8(a) program.
    Delta Decisions of D.C. has a focus on analytics. In 
closing the wealth gap and also in trying to find and maintain 
high-skilled workers, what we find is that the pool of these 
applicants is very small. And so, a few of my areas that I 
really advocate for is not only resources and access to capital 
but also education.
    There are programs in the lower grade school levels and 
also in the high school level that introduce students to 
entrepreneurship at a very young age; and those programs are 
instrumental and very key in changing the dynamics of our 
society.
    Chair Landrieu. Thank you, Dr. Taylor
    Ms. Major.
    Ms. Major. Good morning. My name is Barbara Major, and I 
and lead organizer with the group from New Orleans called The 
Collaborative, and I want to thank you, Senator Landrieu, and 
your staff for the invitation.
    We were organized to ensure that of the $3 billion in New 
Orleans to be spent in the next three to five years that the 
African-American community small businesses have access to it.
    But there are also some things that we are concerned about 
in terms of updating, looking at SBA policies and seeing where 
we could correct those policies, coming up with some creativity 
ways that we can ensure access, particularly access to capital.
    And, one of the things that we know for sure is that very 
few things in this country are race and gender neutral; but 
when it comes to responding to historical neglect and lack of 
access, you have got to be race and gender neutral.
    We know that if we could have a legally defensible 
disparities study, then maybe we could look at how we could 
create some race specific programs that can be funded within 
the SBA. And so, there are some things we have done creatively 
working with both our city leadership, our mayor, and our city 
council to come up with a strong DBE policy.
    However, we also understand that DBE does not mean African-
American so like a lot of the programs that have been targeted 
to disadvantaged communities disproportionately benefit white 
women, particularly when I look at DBE programs.
    So, we have to look at how we can become more specific in 
policy and practice and how we really look at how we continue 
to fund an SBA program. As far as we can see, it continues to 
benefit banks. If you loan to a bank and our businesses cannot 
get a loan from a bank, if it is SBA money, they tell us quick 
you are not going to get the SBA money either.
    So, how do we look at community financial institutions 
more?
    Chair Landrieu. Thank you.
    Ms. Evans.
    Ms. Evans. Good morning and thank you, Chair Landrieu and 
members of the Committee, for allowing me to be a part of this 
roundtable. I am Connie Evans, president and CEO of the 
Association for Enterprise Opportunity. AEO is the national 
trade association for U.S. micro-business and micro finance.
    We view entrepreneurship, particularly micro business, as a 
way to generate income and assets as a means of closing the 
widening wealth gap. In fact, a micro-business which is defined 
as having fewer than five employees, we found through our 
research that when individuals partake in micro-business or 
business ownership, our research shows that the median net 
worth of business owners is two and a half times that of non-
business owners. For a black woman, the difference is more than 
10 times. For a Latino man, the difference is five times.
    Now of course, there are barriers but our 450 member 
organizations and partners are working to solve that problem. 
We recently launched a strategy that links diverse stakeholders 
to mobilize capital and to channel technology and other 
resources on behalf of Main Street micro and solo businesses.
    So, I am looking forward to having an opportunity to 
discuss with you and others in the room today that particular 
solution and how all stakeholders can really play in solving 
this particular problem of the wealth gap.
    Chair Landrieu. Thank you, Ms. Evans. That sounds very 
exciting. Thank you so much.
    Ms. Balwani.
    Ms. Balwani. Yes. Good morning. Thank you.
    Chair Landrieu. Good morning.
    Ms. Balwani. It is an honor and privilege to be here today. 
I am Anisa Balwani. I am the owner of a small business, RCI 
Technologies, Incorporated. We are headquartered in Iselin, New 
Jersey, with branch offices in Maryland and in Texas. We 
provide information technology professional services nationwide 
to major corporations and government agencies.
    We have been in business for almost 30 years and I am 
looking forward to add value to our discussion. It is twofold 
for me. Myself I am passionate, of course, about my business 
but I am also very passionate about helping others start up and 
minority and women-owned businesses.
    I serve on many women's board organizations such as Women's 
Business Enterprise National Council and the New Jersey 
Association of women business owners. I am on the board of 
trustees there.
    So, I do have other people who are concerned and I myself 
as a small business owner, you know, sometimes cannot sleep at 
night paying payroll. So, I would like to share my experience. 
I know you have a great data here but I myself am here to tell 
you it is tough, right now in the economic climate that we are 
in and the competition is fierce for small business owners.
    Chair Landrieu. Thank you. We are going to really look 
forward to your prospective.
    Mr. Allis.
    Mr. Allis. Good morning, Senator. Thank you very much for 
having me here. It is very exciting. I am honored to be amongst 
you and this wonderful crowd of very special people.
    My name is Kevin Allis. I am a tribal member of the Forest 
County Potawatomi Community in Wisconsin. I am the son of a 
mother who grew up on an Indian reservation in a one-room log 
cabin with a dirt floor and have intimately been involved in 
Indian country for all of my life.
    I am the chairman of the board of my tribe's business 
development corporation which is the economic development arm 
of our tribe that is designed to generate growth and capacity 
and provide resources to a community that is growing and 
becoming more vibrant.
    I also serve as the Executive Director for the Native 
American Contractors Association which is responsible for 
representing the interests of all Native Americans and tribes 
in the lower 48, Alaska Native Corporations, and Native 
Hawaiian organizations.
    I, like the Asian community, notice that our name did not 
show up on some of the charts but I recognize, you know, some 
of the things that you spoke to. I would say that the people in 
the back would not see any of the stuff that would be on there 
anyway.
    Some of the Native communities are still some of the 
poorest and most depressed communities in the world, and they 
exist right here in the lower 48 and some of our villages in 
Alaska are extremely remote.
    So, I am very excited to speak to this group and to you 
about some of the things that our tribe is doing, some of the 
things that NACA is doing to not only help the Native American 
community but also work with some of the other minority groups 
to grow small business as a whole.
    Chair Landrieu. Wonderful. And let me just for the record 
be clear and particularly Mr. Allis, you can help and then I am 
going to recognize a Congresswoman who came in for brief 
remarks. I do not know how long this wonderful Congresswoman is 
going to be able to stay with us.
    But just to make sure the staff prepares this, the data on 
Asian Americans is here in front of me and it is $89,339 as of 
2011. So, the 110 number, the $6,314, the $7,683 correlates to 
the $89,339 for Asians. So, we are going to have some questions 
about this.
    In other words, the gap between white and Asians is much 
less than it is between African-Americans and Hispanics, and we 
want to hear some details or comments about that. And, I want 
to ask the staff why we do not have the Native American numbers 
on here? Is it that we do not have them? Does anybody know?
    Ms. Campbell. Senator, They did not collect net worth.
    Chair Landrieu. Okay. There was no net worth collected for 
Native Americans. Does the Pew Research have something on this 
that you could add before we get started?
    Mr. Kochhar. The problem is sample size. These are surveys 
that only survey so many people; and when you get down to very 
small populations, and that includes Asian Americans who are 
about five percent of the U.S. population. So, within a survey, 
you get a very small number of people and it is typically hard 
to get to reliable data on certain subgroups.
    Chair Landrieu. Ms. Hasegawa, go ahead.
    Ms. Hasegawa. But I think that can be changed. My 
background actually is in health research and there is a lot of 
methodologies around over sampling so if there is some planning 
in the beginning around, you know, that you really want to get 
data about particular smaller minority populations, you can do 
that.
    We deal with this all the time also because I think that 
for Asian Americans when you look at it in the aggregate, it 
all looks like we are healthier, wealthier, wiser than everyone 
else, and everyone owns Yahoo.
    So, but I think that that is not, does not to tell the full 
picture. So, I would also say for the Asian American population 
do not look at it in the aggregate alone. We have to look at it 
because we are bimodal, and the folks who are doing really well 
sort of really overshadow what has been happening on the lower 
income side.
    Chair Landrieu. We are going to depend on you to provide 
some accurate data with Pew on this and some strategies for 
getting this data, because when I start to solve a problem it 
is really important to actually identify what the problem 
really is before you start throwing solutions at it.
    So, I think we have got some gap in our research here. And, 
Mr. Allis, would you do the same to help us with the Native 
American community and could you comment just briefly on where 
we could get better data on the economics of some of the tribes 
and some of their situations in the lower 48 as well as Alaska?
    Mr. Allis. Certainly. There are several organizations out 
there that we work with, sister organizations like the National 
Congress of American Indians, the National Indian Gaming 
Association, the National Center for American Indian Enterprise 
Development that we do have information that can be helpful.
    I mean it is hard and I understand the difficulty in 
gathering accurate information especially for Indian country 
because our communities often are in the middle of nowhere. A 
lot of these people do not have a whole lot of methods of 
communication, transportation; and so, you know, they are 
isolated and sometimes it becomes a difficult problem.
    Chair Landrieu. Well, we are going to depend on you to help 
us to try to identify that and bring it into focus as much as 
we can.
    Let me now turn to introductions for the Congresswoman. 
Thank her for coming and open to your remarks.
    Representative Jackson Lee. Thank you. Good morning, 
everyone. I am Congresswoman Sheila Jackson Lee, a neighbor to 
Senator Landrieu in Houston, Texas; and I serve on a number of 
Committees in the House. The House Judiciary Committee and 
Homeland Security, which was born after the tragedy, the 
horrific tragedy of 911.
    But in the context of those Committees, I would tell you 
that on the Judiciary Committee, we are constantly looking at 
issues dealing with the infringement of the rights of Americans 
and the protection of the rights of Americans.
    One of those involves intellectual property and the genius 
that comes much from small businesses. On the Homeland 
Security, I would say that it is the largest department next to 
the defense department and procures a lot.
    We have spent a long number of times working to ensure that 
the process of procurement under Homeland Security is fair and 
open to small and minority businesses.
    I join Senator Landrieu because you could not have a better 
champion for the idea of small businesses. I am reminded of the 
tragedy of Hurricane Katrina. Besides trying to help the State 
of Louisiana as she did and did it superbly, she was dogged 
about the idea of Louisianans and those who had been devastated 
helping to rebuild their State.
    Now, I notice that Mr. Hairston mentioned the $400 billion 
in procurement by the Federal Government. I would almost think 
that it is $400 billion and growing. But I will say that in 
order to make this work and as I look at those numbers they are 
stark and, Lisa, I know you will discern for us the differences 
among the Asian population from Vietnamese to Chinese. I think 
they put Indian Americans and Indo-Americans and Pakistani and 
others in that group.
    But one of the places, Senator Landrieu, that I hope that 
we could work more extensively on the General Services 
Administration. They are the purchasers; and I will say that 
although there are certainly good workers and committed 
servants, public servants there, the toughest time that I have 
had for small businesses is the General Services 
Administration.
    And, their sensitivity to not only purchases but also 
construction, maintenance of our buildings, they are the ones 
that build everything we have from courthouses to otherwise; 
and you will find among the minority populations as you will 
find is that they can do that. They can do a lot of that work. 
You just have to put the pause button on to work with them.
    So, I came today, we are right now in the middle of a 
classified briefing on the Judiciary and so please accept my 
apologies but I really wanted to come to, one, thank all of you 
for the data that I think is going to be enormously important.
    As Senator Landrieu fights for this whole concept of 
embracing small businesses, she is being reaffirmed. This 
morning we met with the head of Dell Corporation, and he said 
that the churning of America's economy is in small and medium-
size businesses. I like to say small minority-owned businesses 
and women-owned businesses that is churning this economy. So, 
she is on the right track.
    And, if I might just add and additional moment, Senator, as 
we met with the head of the OMB for the President this morning 
as well is that we in Washington, Senator Landrieu is looking 
to make the government thrive, grow, invest. We are not looking 
to sequester and withdraw and restraint. We are looking to be 
efficient.
    And, it is through the work of Senator Landrieu that really 
focuses on investment in people, investment in this country and 
I hope that those of you as small business leaders and others 
will understand our opposition to something called sequester so 
that we can continue to invest in this Nation and churned the 
economy.
    I think this is a very important hearing and count me as a 
collaborator on the House side in the ways that we can 
collaborate and work together to build the economy on the most 
important aspect of it and that is small, minority, and women-
owned businesses.
    So, thank you for allowing me to sit in for just a moment.
    Chair Landrieu. Thank you, Congresswoman. We really 
appreciate your comments. We intend in this Committee to try 
our best to build support both in the House and in the Senate 
and among the Democratic and Republican parties for solutions 
to help make the American economy stronger which benefits 
everyone, and that is the spirit in which we start this 
roundtable this morning. So, thank you, and I understand if you 
have to slip out.
    Let us start our discussion, and I am going to throw in the 
first question to Dr. McKernan to talk again about what your 
research is showing about why, although we are making a lot of 
progress, it seems in income, closing the gap, graduation 
rates, and home ownership, you know, the gap is narrowing.
    Why is this not the case for the wealth gap, in your 
opinion, and are there two or three particularly obvious root 
problems that you think this Committee or other policy makers 
in Washington should be focused on?
    And, I want that question for everyone. I am going to start 
with the doctor and then if you all have comments or if she 
says something that you agree or disagree with, please speak 
up. This is very informal and all you have to do is raise your 
placard and I will try to get you in the order in which you 
raise your placard.
    Dr. McKernan.
    Ms. McKernan. Thank you. So, I think that there are three 
key reasons that wealth inequality is not improving. First is 
that wealth disparities are passed from generation to 
generation.
    African-American and Hispanic families start out behind. 
They are five times less likely to receive a large gift or 
inheritance than a white family, and these are dollars that can 
be used for important investments such as in a small business. 
This country has a history of discrimination and the low wealth 
resulting from it is still being passed from generation to 
generation.
    Second, today's skewed federal subsidies exacerbate the 
disparity in wealth holdings and the racial wealth gap. The 
Federal Government spends billions of dollars annually through 
the mortgage interest deduction and through preferential tax 
treatment of retirement savings and because these subsidies go 
through the tax code, they primarily benefit high income 
families, leaving out African-American and Hispanic families 
who have lower incomes. And third, African-American and 
Hispanic families are less likely to be in automatic savings 
vehicles such as homes and retirement accounts.
    So, reforming wealth building policies so that they benefit 
all families and helping families enroll in an automatic 
savings vehicles will help improve wealth inequality and 
promote savings opportunities for all Americans.
    My specific suggestions then would be to make home 
ownership subsidies more equitable; homes can be used to borrow 
against for a small business. Promote automatic retirement 
savings; half of Americans do not have access to an employer-
provided retirement account.
    And then, reauthorize the assets for independence program. 
This is the primary source of funding for individual 
development accounts, which are personal accounts directed 
toward low income households to help them save for investments 
in a small business, education, and also in homes. They do that 
by matching earned income deposits and by providing other 
program supports.
    Chair Landrieu. Thank you very much.
    It is in testing to hear about IDAs. The Clinton 
Administration was very forward leaning on this as well as a 
group that I belong to, the DLC, the Democratic Leadership 
Council.
    Senator Lieberman used to be a big champion of that idea 
here in the Senate. So, it is good to hear it again and it is a 
strategy that, if funded, could work but it has just waned in 
support for any number of reasons. We have a lot of pressures 
on the budget which are obvious and real.
    But, thank you for raising that.
    Ms. Evans, anything you want to add?
    Ms. Evans. Yes. Of course, I would definitely support the 
notion of savings and developing assets. It is critical through 
all portions of one's life. The reason I think it is so 
critical is because we have found that because of the starting 
low wealth of individuals, it literally is serving as a main 
barrier for them being able to access the capital and services 
they need to go into business ownership.
    If people do not have collateral and assets, unfortunately 
they are not able to access not only capital but some of the 
business services that one needs to actually be successful in 
managing your business.
    What we think has to happen, of course, is we need to 
change the risk models. We have seen that with his recent 
recession and the problems in the housing where people who use 
their homes as the main way of equity for business capital, 
that has been decimated. And so, this low-level starting 
position puts them behind even further than they were already.
    Banks do not have to look at these entrepreneurs as so high 
risk. Unfortunately, they are operating under what we would 
call really, you know, 18th century almost business models, 
totally outside what is necessary to actually consider these 
loans.
    We recommend changing the way capital and services flow to 
these entrepreneurs. TILT Forward, one of our new programs, is 
using technology that is world-class. AEO has partnered with 
one of the top leading technology firms in the financial 
services industry. A private-sector, venture-backed firm that 
has partnered and licensed with AEO to bring their world-class 
technology to the community lending field.
    So, the community development lenders through our TILT 
Forward program now have an opportunity to operate lending 
programs that create wider distribution. We are able to offer a 
working capital loan up to $250,000 with no collateral pledge. 
It is an unsecured loan. And, we have an underwriting system 
that is proprietary to on-deck capital.
    A couple of the features that allow that to happen is that 
daily repayments are made; and so again, it is an issue of 
getting people willing to be innovative in changing the risk 
model.
    Chair Landrieu. Now, where is this happening, Ms. Evans? It 
is very interesting. Where is this happening, the physical 
location?
    Ms. Evans. We launched this program last October in St. 
Louis, Missouri. We are in the process of building out a 
national distribution system so that anyone across the country, 
rural or urban communities, will be able to actually access a 
loan via a platform or through working with any of our 
community development financial institutions and micro lenders 
around the country.
    Chair Landrieu. Thank you. I am going to get others for 
comments, Ms. Major, but let me ask a question. Are you funding 
this with private capital or a combination of private capital 
and some public investment?
    Ms. Evans. Thank you. One of the good things about this 
TILT Forward product is that the whole system. We are also 
trying to change what we realize how capital is mobilized. 
There are many programs that you and the Administration have 
worked really hard to move capital out.
    The problem is not just moving capital though. The system 
is broken; and so, many of the programs where capital is 
sitting in state programs, there is no capacity on the ground 
from the community lenders or the banks or anyone else to get 
that capital into the hands.
    So, what we have also done with TILT Forward is to create a 
special purpose vehicle called the American Dream Fund that 
will aggregate capital from government, from private sources, 
from foundations and philanthropic sources, and then make that 
capital available as low-cost, fairly priced capital to 
entrepreneurs. But just as importantly, low-cost capital to 
these community-based lenders.
    Chair Landrieu. Love this idea. Mr. Hairston, I want you to 
comment on this. This is very interesting, and what would you 
say as the director of a small business about this idea? And 
have you heard of it before?
    Mr. Hairston. I think it is an excellent risk model. Over 
the past couple of years, our Office of Capital Access has been 
looking at a number of models. In that process, they have taken 
on the task of reengineering several of our loan programs to 
try to make capital more accessible to the under served 
communities.
    And particularly, our working capital lending programs have 
been revamped to make them more available and more attractive 
to our lending partners. Of course, we created our Community 
Advantage Program, which is a very similar concept geared 
toward providing lending in our under served communities.
    But I think Ms. Major made a very good point in her remarks 
when she indicated that our lending is primarily through banks; 
and of course, that is exacerbated by the other circumstances 
where we have seen where with the economic downturn where we 
have lost equity in the primary assets, the minority community 
took the largest hit in terms of equity losses in the housing 
area. Over my years of experience at SBA in a variety of 
different roles, our small businesses are more dependent on 
personal savings and equity in their home.
    If I could just make a point going back to the 8(a) 
program, in a recent report--we prepare an annual report to 
Congress on the 8(a) program and we look at new entrants in the 
8(a) program and one of the tests for getting into the 8(a) 
program is economic disadvantage.
    We aggregate that data annually. In looking at that data, 
when we determine economic advantage, we exclude the equity in 
the primary residence and we exclude the equity of business 
owners in their business.
    And, looking at it on average after those exclusions, the 
average net worth of firms approved for the 8(a) program is 
about $58,000 which means that these are companies that have 
been in business and have been operating and we look beyond 
that the average net worth or the median net worth for firms 
that we approve before excluding that is around the $146,000.
    So, that means that they are bootstrapped when they come 
into the program in terms of being able to take the next step 
and move the company forward.
    So, I think the idea about the lending model and taking 
another look at how we look at risk in that respect is not a 
bad idea.
    Ms. Evans. Chairman, may I follow-up?
    Chair Landrieu. Yes. Go ahead, Ms. Evans.
    Ms. Evans. I just want to follow-up on that. In talking 
about the banks, every day banks in this country decline 8000 
small business loans. We could get banks to participate on our 
TILT Forward platform with some encouragement perhaps from the 
Small Business, from the Congress, from the Senator's office, 
because what we can do, we project already that, if you take 
the declinations from banks currently that on this platform we 
could finance 20 to 30 percent of those loan turn-downs by 
banks within 48 hours.
    We project that we could finance another 30 percent within 
four to six weeks by working with our community-based lenders, 
and we anticipate that we could finance out of the balance 
probably about 70 percent of those within 12 months by working 
with mentors and coaching services, et cetera, within our 
network.
    And so again, there is an opportunity here to actually make 
some changes if we could all get people to come together, get 
the stakeholders to work together.
    Chair Landrieu. Ms. Evans, that is exactly what this 
roundtable is and I cannot thank you enough for your enthusiasm 
and your passion; and what I loved about what you said was that 
you are not lowering the risk, you are just changing the risk 
dynamic.
    It is not making the loans riskier; that is not what I 
heard because we cannot do that, but it is changing the risk 
paradigm to make them in some ways, you could argue, almost 
more secure, different than what it is.
    And we hear, believe me. I work very closely with community 
banks as everyone knows, and credit unions, but I cannot tell 
you how many small business owners have sat around this table 
over the last four years and said they have been turned down 
time and time again from banks because they do not fit that 
routine risk model.
    And, if we want to get this economy out of a routine 
sluggishness, and we need to change the way we are doing 
things. To get to an extraordinary economy, we need 
extraordinary actions that are safe but secure.
    Ms. Major.
    Ms. Major. Yes. One of the things too, Senator, is what we 
learned was how federal dollars come through the state even 
when they are meant for people on the ground.
    At our state level, we do not have a DBE mandate. So, money 
hits our state and there is no mandate. $2 billion was spent to 
rebuild schools in New Orleans. $1.2 billion has already been 
spent. Not one percent went to small business.
    So, we have had to organize all over again to make sure 
that the school system then puts its own DBE policy. But if 
federal laws followed those dollars until they hit in the hands 
of the city, it would make a big difference.
    A disparity study is needed because it is not just, I mean 
let us be real, it is not just about risk. It is also about 
race. So, we need a disparity study and that disparity study 
needs to be updated so that we can really embed some race-
specific programs.
    One of the things that we have had to do and as only as we 
have a model. I chaired the Regional Transit Authority of New 
Orleans, and what I did was a disparity study at the authority 
that say why are not small businesses getting contracts?
    And so, you have always got to prove what you already know 
so we have to do a study to prove that they knew that they were 
not getting it. So, what we did was set up a small business 
office. You have got to put your money where your mouth is.
    We set up a small business office in the Regional Transit 
Authority. Then we removed, I took all the money out of one 
bank because nobody again looks at community investment of bank 
policies. I looked at that. Took all the money out of a 
national bank and put in my local bank.
    I have gone back to the local banks and said, okay, now let 
us play. You use the contracts to my small business owners, my 
DBEs as collateral to give them some working capital so that 
they can participate in contracting because they do not have 
capacity.
    The one thing about risk is the CDFIs are probably the most 
accessible for our community because CDFIs, I mean the reality 
is that our people are not as bankable, this language that is 
used.
    So, I think SBA also needs to go back and look at its 
mission because we can keep setting up CDFIs and all these 
outside entities. But how does this federal institution become 
what I think it was in the spirit it was created to be.
    So, if its mission really is to serve small business, then 
the reality is that we have to look at the histories of denial 
of access for small businesses.
    So, create internally I think like when we look at the 
risk, look at CDFIs. The SBA could do a CDFI with a program 
like I am doing at the Regional Transit Authority. So, I am not 
pushing that they do it actually Sewage and Water Board, that 
they do it at, the city is doing it but they do it anywhere 
else they have.
    Where is your money going? So, what we have had to do, it 
is just so much work that the community has to do. Now, we are 
asking our city leadership, where is the city banking and how 
is that bank playing with the community?
    Is it playing fair? If it is not playing fair, you need to 
take your money out or you need to go back to them and say this 
is the way we need to do this.
    So, even those of us, I mean, you can do so much, but there 
are some things that we can do on the ground as well but the 
one thing for me is to make sure that dollars coming States 
like Louisiana maintain the mandate for DBEs because other than 
that we get absolutely nothing, absolutely nothing.
    Chair Landrieu. Very good point.
    Ms. Hurley.
    Ms. Hurley. Yes. Thank you. I wanted to echo Ms. Major's 
point about the importance of disparity studies and race 
conscious, public contracting programs, because in Maryland for 
a number of years now, every five years, we do a disparity 
study and the value of having that statistically significant 
evidence of a disparity for the businesses owned by racial 
minorities in your jurisdiction I just cannot say. It has 
really allowed us to do some really progress of things.
    I think someone mentioned the how do you deal with the fact 
that your program may cover a lot of different minority groups 
but you identify certain groups are suffering much worse than 
others.
    And, one of the things that Maryland has done a few years 
ago is really expand what we call our subgoal policy; and so we 
break our government contracting into different industry groups 
like construction, construction-related services, A and E.
    And, within those groups, we have chosen the top three most 
disadvantaged groups and given them subgoals, recognizing that 
in many categories we may see, for example, African-Americans 
are getting much fewer contracts than others or Hispanic 
Americans or Asian-American, depending on the different 
industry.
    And, while it is difficult for our leadership to put some 
groups at a place of advantage seemingly against their peers, 
we recognize that we have to be really targeted.
    Otherwise if you just kind of throw it out there and hope 
that it will disperse and you will achieve parity in the way 
that you have availability in a community, if you cross your 
fingers, that has not worked.
    And so, while it is something that is new for us, we are 
certainly starting to track of that data and see what impact it 
has. But our disparity study shows significant disparities in 
our community and we have had a program for over 30 years.
    And so, we know that our businesses tell anecdotally while 
our participation Maryland contracting is going there is still 
suffering discrimination. They are still facing hurdles of 
access to capital; and this data that we have, this big 600-
page tome that cost us over $1 million.
    And so, you need to have leadership that says this is 
important in shrinking budgets to pay this money to get this 
evidence so you can have robust programming.
    Chair Landrieu. Excellent.
    Now, Ms. Balwani, did you want to speak because you had 
your placard up and I did not want to not call on you.
    Ms. Balwani. Yes. I wanted to add the comment to Ms. Evans. 
I believe this program is great but I strongly feel that the 
education is not there to small business owners. The awareness 
is not there, but the more awareness that we can provide to the 
small business owners and especially start up companies, they 
are really getting discouraged.
    I have spoken to so many people who say, to your note that 
if I do not have my parents who are going to give me money to 
start up a small business, there is no way I can get a loan 
these days.
    So, your program sounds like it is fantastic and the 
message needs to resonate there, you know, into this 
entrepreneurship level.
    Chair Landrieu. So, what do you tell people that come to 
talk with you if they say, ``I would love to start a business. 
I have got a great idea or I think I have a great product but I 
cannot--my parents are not in a position to lend me the money, 
I do not have any equity in my home.'' What do you tell them?
    Ms. Balwani. I personally have asked them to go to the SBA 
because I do believe that SBA has a very good solid program. I 
am a graduate from the 8(a) program, that my company was an 
8(a) program, and I worked very closely with my district office 
in Newark. And, the SCORE counselors, they really sit down and 
help with the paperwork.
    So, that is my first guidance to a person who is asking for 
my advice because sometimes I believe the commercial lenders do 
not have the time to really sit through and coach a startup 
business and they definitely do not want to take that risk.
    Chair Landrieu. Well, interestingly enough this Committee, 
the majority of members of this Committee have been trying 
without success to convince the minority members that investing 
in SCORE is an important thing to do. So, hopefully your voices 
can be raised.
    SCORE is the not-for-profit, private, entrepreneurial 
mentors. There are 350 chapters for free that exist all over 
the country. Taxpayers are getting a phenomenal deal.
    We invest only $7 million of federal funds. That is it. On 
350 chapters that work for free. These are volunteers but you 
have to have some money to organize them.
    We have yet to convince--hello, Mr. Congressman--we have 
yet to convince the minority members who are not here to 
represent their views. But if they were, I would give them the 
time to step that funding up to $20 million so that we could 
expand the SCORE chapters because I think you have said 
exactly, the banks are not only reluctant, they have new 
regulations. They might not be aware, and they do not have the 
time to counsel small business owners.
    It is really not their job if you think about it. I mean, 
their job is to lend money and to make money, and I am not 
underestimating the help that bankers can be when you come in. 
I have borrowed money from a bank before and gotten good advice 
from my banker.
    But it is not like sitting down with a business owner that 
has built and sold multiple businesses, to say this is what you 
should do, this is how you should do it, et cetera.
    So, that is just one small step but I think it would be an 
important step to expand this volunteer network of entrepreneur 
mentorship in the country. Some of it is being done for profit, 
perfect. Some of it is being done nonprofit. Some of it is 
being subsidized a little bit by the federal taxpayer but for 
great benefit.
    And, I am very happy to see that you yourself were 
beneficiaries of something that this Committee has strongly 
supported along with the SBA programs. But it still does get 
back to Ms. Evans and Ms. Major's comments that even with that 
help, some of the capital is not finding its way to the 
communities to access that economic power that is there. And, 
that really is a problem for America.
    Now, I am going to recognize everybody with a placard up. I 
want to ask the Congressman because I know his time is short. 
We just had Congresswoman Sheila Jackson Lee come by and give 
some brief remarks.
    But as you know, this panel, Cedric, is focused on the 
wealth gap and what a drag this is on the American economy 
because if communities--African American communities, Hispanic, 
Asian, Native American--had equal opportunities, the whole 
economy would be stronger.
    But we are happy to have any introductory remarks and then 
I am going to get back to the questioning at hand. But thank 
you so much for coming on a very busy week.
    Representative Richmond. Well, let me just start with 
thanking the Senator for her effort, and she has been steadfast 
in representing and advocating the importance of investing in 
disadvantage businesses, small businesses, low income 
communities to make sure that, one, living in Louisiana we see 
it every day and living in New Orleans we have seen the good 
and the bad, and first-hand we can see the impact it has when 
everyone participates in the economic system.
    And, what you see when it does not happen is that it 
manifests itself in other areas, in education, in crime, and 
all of those things. So, as we talk about crime in the city of 
New Orleans and other metropolitan areas, you have to talk 
economic development and you have to talk about minority 
participation in businesses because they go hand in hand.
    And, I am a product of a family that had a small business 
with an electrical contracting firm but watching them work and 
do what they did made a lot of sense. And, if you think about 
it now and I go back and think about my childhood, as we 
reenter 15,000 people into the population out of incarceration 
in Louisiana each year, the question becomes who is going to 
hire them. And, small businesses more often than not are the 
ones that will give them a chance.
    As my parents employed people, I do not remember them ever 
running a background check or not hiring someone because they 
were an ex-offender. They interviewed them. If they had a good 
feeling about them, they gave them an opportunity.
    And, now with so many people coming home, we have to figure 
out ways to give them opportunities; and this area is a prime 
way to give them an entry into the legitimate workforce.
    And, it is our obligation as government, I believe, to make 
sure that we give those small businesses every opportunity to 
succeed. So, that means technical assistance. That means 
capital. That means everything we can do; and sometimes it is 
going to mean preference and that is just what it is.
    But the domino effect and the spin off when we do that will 
pay dividends that you cannot measure in all types of ways.
    So, I just want to thank the Senator for again doing this 
because it is so very important and I am so happy that she is 
over here doing it because in the body I serve in, I do not see 
us doing as much as we need to be doing in order to achieve it.
    But I think that if it is not obvious yet it will be 
obvious to the American people that some people ought to just 
not be governing.
    Chair Landrieu. Thank you. Dr. Taylor, we will acknowledge 
you and then Mr. Allis.
    Ms. Taylor. Okay. I just wanted to echo what Ms. Balwani 
was speaking about. After the money makes it to the community, 
let us make the assumption that it does get into the hands 
where it needs to be. Then we are faced with having 
entrepreneurs that have not been properly educated on what to 
do with those funds or how to run a business or how to hire the 
right workforce.
    Having programs in place in schools that teach financial 
literacy is essential; it needs to be taught whether you have 
the goal of becoming an entrepreneur or not because your credit 
starts there.
    In a lot of cases, there is the misconception that no 
credit is okay. No credit equals bad credit. But that is not 
obvious to a lot of the communities that we represent, and we 
should make sure that our communities have that understanding.
    Also, there are programs to teach about entrepreneurship 
for those students that show an interest and there are so many 
creative young people who do not fit comfortably into a 
traditional environmental or educational system.
    What I mean by that is that they go through the school 
system and they do not do so well but they are extremely 
talented and there is no other outlet in the community to take 
their talents and nurture them.
    So, I am a huge advocate of the Network for Teaching 
Entrepreneurship (NFTE) and also the Jump$tart Coalition which 
I know about; I am also a mother at a Title I school in 
Virginia. For those who are not quite familiar with Title I 
schools, these schools have been designated as schools with 
families that have a high number of poverty or low income 
families.
    When I go into my school and I am serving on the PTA, it is 
primarily Hispanic and African-American students in the schools 
and I talk to the teachers and the principal and they have not 
even heard of these programs.
    So, what do you do in that case? They get funding but they 
are not necessarily sure on what to do so there needs to be 
more marketing, if you will, and education on the resources 
that are out there. Therefore, the answer in this case is not 
only to make sure that the capital gets into the hands but to 
also make sure that the community is properly educated.
    Chair Landrieu. Thank you, Ms. Taylor, for sharing that and 
it really hit a chord with me. When I was State Treasurer, I 
started the first ``bank-at-school'' program in Louisiana for 
exactly that purpose--for the third graders. I worked with 
bankers and the CPAs, and the principals and teachers 
association to literally go into dozens of schools and help 
students in third grade understand what a bank account is.
    Many of these families were unbankable. That is the term, 
but they had just not had any relationship with the bank; and 
then the kids would come home and explain to the parents what a 
savings and a checking account was. We did it on a shoestring. 
There are programs that I am aware of that are being done all 
over the country in small scale and I am aware that this is a 
subject that members of Congress have been talking about, both 
parties, about this financial literacy piece.
    So, I am glad you raised it. This Committee has some 
jurisdiction over that, but it is an important part of our, you 
know, of maybe one of these solutions and it really should 
under the Department of Education to be pushing out 
opportunities to use those Title I dollars which we are very 
familiar with. We get a lot of those in Louisiana because we 
are a relatively poor state.
    But you are right. There is flexibility in Title II and in 
Title I, dollars that could be used for programs like this but 
people do not know about it. So, thank you for making that.
    I am going to get you, Lisa.
    Ms. Hasegawa. You can call me Ms. Lisa.
    [Laughter.]
    Well, two points. I definitely want to talk about the data 
issues but just to continue on with what has been discussed 
around the capacity for targeted technical assistance to 
minority and low income communities and small businesses.
    So, we are a national HUD housing counseling intermediary; 
and before three years ago, there was not such an intermediary 
to really deal with housing counseling for Asian Americans and 
Pacific Islanders and native Hawaiians who were really being 
hit by the foreclosure crisis.
    So, there is a lot of capacity at the National Urban 
League, National Council of La Raza and a lot of housing 
counseling and community-based organizations across the country 
that now have capacity around financial literacy and financial 
coaching.
    And so, a lot of us are having this conversation of how do 
we transition that technical knowledge that is specific now 
right to foreclosure to actually a broader effort that is 
really about economic recovery and it is infrastructure and 
capacity that currently exists in minority communities.
    So, I feel like financial education is necessary but not 
sufficient. It is really important but I think that there needs 
to be infrastructure. There needs to be national community-
based, nonprofit, small business technical assistance 
infrastructure.
    So, there are programs at the SBA, at MBDA. But a lot of 
those funds actually go to local governments; and again there 
are the same barriers though. And, I think that nonprofit 
organizations particularly who have long track records and 
trust with communities of color, I think are really good 
partners.
    And, right now the way that SBA and MBDA programs are 
structured, those opportunities are not there. So, the 
infrastructure to do that capacity building, technical 
assistance, and coaching, et cetera, that is specifically 
grounded in communities of color really I think is not there 
but I do not think it would take rocket science.
    Chair Landrieu. I am going to get Mr. Allis.
    Thank you for making that point, and I want to underscore 
this and make sure the staff has noted it. It is a very 
interesting idea that the capacity over the last five years in 
the country to address this home ownership crisis, and the 
recession of falling home ownership, is we are sort of coming 
almost to the end of that and we hope the end, but that network 
is out there.
    And, with a little bit of tweaking particularly by the 
Small Business, this could really come from a great suggestion 
from the SBA, you could turn that network from its focus on 
housing stability, which is important and still a need, but to 
this financial literacy and connecting, Ms. Evans, the capital 
that is in the community with a little bit of tweaking.
    So, let us explore that very positive idea because it is 
not building a new mousetrap. It is using what is there and 
just tweaking it.
    And I was reminded by my staff to say for the record that 
Senator Enzi and Senator Risch, who are not here, Senator Risch 
is my ranking, do support score. And the opposition is coming 
from House Republican leadership. Do not ask me.
    It is a volunteer organization. It is a private, not 
government, entity. They do not support it. We cannot get it 
passed. So, we are going to keep pushing but it is not coming, 
I have been, told by the opposition of the Republicans on this 
Committee. It is the House Republicans.
    Mr. Allis.
    Mr. Allis. Thank you, Senator. I just want to highlight the 
importance and I know you recognize and the Congressman does 
the importance of minority-conscious federal programs that help 
minority businesses often in rural areas and specific to Indian 
country it is rural.
    And, really, you know, from our voices and our concern it's 
making sure that these programs, their value is recognized and 
it is protected. That some of the attacks that we hear of 
through the courts, that we experience through the court 
systems, sometimes from other areas even up here on the Hill, 
on various parts of the 8(a) program are very harmful and we 
really need to take a deep look at what those are and what the 
long-term impact is.
    For my tribe and as my role at NACA when I look at the 8(a) 
program, that ability to produce small businesses to engage in 
federal contracting has been valuable, in that it has fueled 
growth in these tribal communities.
    And, it is contagious amongst these tribal communities. As 
the tribe is able to be involved, as the Alaskan Native 
Corporation is able to be involved, as the NHO companies are 
able to be involved in this program, their members, tribal 
members, shareholders community members see that value.
    Not only are they the beneficiary of some of the things 
that come out of that, they see an interest in wanting to 
become business owners and entrepreneurs. They see it working.
    When they see it not working or they see attacks on it and 
they see bad things happen, they see resources disappear, they 
get disgruntled too and they are not too confident and not 
overly excited about pursuing that direction because everything 
is on the line when they start putting their own resources into 
an effort to build the business.
    So, we at NACA and we at the Forrest County Potawatomi 
Community recognize the importance of these programs, and also 
recognize being conscious of our peers and the other minority 
groups that are participating in the same program, as well in 
making efforts to bring them together as a collective voice 
that we can promote and support this program.
    I am proud to say that NACA has entered into, the first 
time ever, a memorandum of understanding with the U.S. Black 
Chamber, Inc., and the U.S. Hispanic Chamber of Commerce, 
together moving forward to not only recognize these kinds of 
programs but also work together in other programs, along with 
the SBA, in bringing these groups together and adding that 
knowledge piece that I heard talked about a little bit before.
    But, Senator, there has been a lot of attention given to 
the 8(a) program, not only on the Native side but also on the 
program as a whole; and we really need people to understand 
that this program works and needs to stay there.
    Chair Landrieu. Thank you.
    Ms. Powell.
    Ms. Powell. Yes, thank you. Following up on the opening 
statement that I made earlier in reference to the investment 
that the Congressional Black Caucus Foundation made in National 
Black Banks, I do want to recognize from the audience B. Doyle 
Mitchell, Jr., who is the Chairman of the National Bankers 
Association (NBA) and President of the Industrial Bank, because 
a lot of the comments that are being made here about banks and 
I do not know that the connections have necessarily been made 
to NBA. It will be good for you all to have that conversation 
about how to revamp some of these risk models so that the money 
that went to Louisiana, New Jersey, Chicago, D.C., and North 
Carolina can definitely get to the communities that we serve. 
And, many of these things NBA banks are CDFIs. Therefore, I 
just want to bridge that gap and make that acknowledgment.
    Also, we have a partnership with Ann Sullivan and Madison 
Services Group, who has been instrumental in helping us make 
connections to other corporate partners; and one of those 
partnerships is with American Express Open.
    During our signature conference in July, we hosted our top 
100 business owners from across the country, and they were able 
to meet one on one directly with 25 government buyers.
    These types of activities and initiatives are very 
important in terms of making sure that business owners have 
access to resources and opportunities that they would not 
otherwise.
    Another partner, who you have been involved with Senator, 
is Google. Google hosted a huge technology workshop at our 
conference helping our business owners to increase their search 
engine optimization so that they can better market to the world 
and increase their overall revenues to strengthen their 
capacity to hire and reduce the unemployment rate.
    And then finally, to Congressman Richmond's point, in 
February of this year we launched a hire one campaign to 
encourage all African-American business owners to hire at least 
one additional employee so that we can be at the forefront of 
the ongoing economic recovery.
    Chair Landrieu. And if you did, the recession would be 
over.
    Ms. Powell. Exactly.
    Chair Landrieu. Because you would hire, what is the number? 
I used to know that number. About 2 million.
    Ms. Powell. Exactly. We would hire about 2 million.
    Chair Landrieu. And the recession would be over.
    Ms. Powell. Exactly. We have recently highlighted several 
of our businesses that answered the call and we have also 
highlighted many of the black-owned hotels that have answered 
the call.
    Even the leisure and hospitality sector is one of those 
sectors where everybody can develop a skill that is 
transferable to another job or opportunity. We want to 
encourage our partners around the tables and those that are now 
aware of what we all are doing, to go back to our respective 
communities to raise awareness about these initiatives.
    Dr. McKernan.
    Ms. McKernan. I just wanted to second the Congressman's 
point that wealth inequality matters for everyone, not just the 
poor, because a strong, vibrant, and thriving middle class is 
important for economic growth.
    And then, I wanted to build on the Senator's and others 
comments about the importance of training. I think what is 
particularly powerful is when you can combine capital with that 
training at the same time. That is in part what individual 
development programs do.
    At the Urban Institute, our research with CFED shows that 
IDAs have helped maintain home ownership through the 
foreclosure crisis; foreclosure rates for home buyers who 
bought through an IDA program and received that training at the 
same time as they were doing that saving were one half to one-
third the rate that they were for other low income home buyers 
in the same communities.
    It's the power of combining training with capital. Spending 
on IDA programs represents less than one percent of the federal 
spending on asset development and inefficient funding 
subsidizing large homes and debt such as the mortgage home 
interest deduction could easily make that a revenue neutral 
increase.
    Chair Landrieu. Excellent suggestion.
    Mr. Hairston.
    Mr. Hairston. Just following on with regard to the comments 
regarding the importance of management and technical 
assistance, I believe that understanding how to effectively 
employ capital is as important as having access to capital.
    One of the big impacts of the economic downturn and the 
impact that it has on the minority community is that the fact 
that they do lack capital inhibits their ability to have access 
to those resources that will enable them to more effectively 
run their businesses and do, in fact, have access to the 
networks that are important in developing and sustaining a 
business.
    A lot of people do not realize that when we talk about the 
8(a) program, everybody thinks about Section 8(a) of the Small 
Business Act but the 8(a) program was actually legislated under 
two sections of the Act.
    The other part of the Act which is really the premise of 
the program which is business development is section 7(j) of 
the Act; and under section 7(j) of the Act, we have the ability 
to provide management and technical assistance to not only 8(a) 
firms but other disadvantaged-owned companies.
    And through that program, we provide a lot of assistance 
hands-on, a lot of training, and a lot of directed assistance 
in terms of direct developing marketing plans, teaching 
individuals how to manage their companies, teaching them how to 
develop their business plan, how to manage their assets.
    So, that is an important asset that we have available and I 
am glad that the Chair mentioned our SCORE program but we have 
a lot of other technical assistance programs as well through 
our small business development centers, our women's business 
development centers, and we work very closely with the PTACs as 
well.
    But I just think it is very important that we do not forget 
the affect of the widening of the income gap has on the ability 
not only to access capital but to access the knowledge base 
that is necessary to effectively run businesses.
    Chair Landrieu. Thank you.
    Ms. Hasegawa. If I may comment?
    Chair Landrieu. I'm sorry. I asked the staff to go get a 
chart I wanted to put up on your point but I wanted to make 
just a couple of comments.
    This CDFI has come up time and time again and I wanted to 
say that I am very proud that this Committee has voted out 
President Obama's recommendation, and it was our own as well, 
to increase CDFI authority from $3 billion to $4 billion and to 
increase the family of funds limits from 250 to 350 I think.
    Somebody on my staff has to correct me, and the reason is 
because some of these very successful CDFIs that Ms. Major has 
talked about and Ms. Evans has talked about have reached their 
capacity to lend and it is an arbitrary cap that the Federal 
Government has put on them.
    And so, it is a very important piece of legislation again 
having great difficulty getting through the other body. But I 
do think that there is support because it passed out of our 
Committee with Republican and Democratic support to increase 
the authorization. That is another billion dollars that could 
find its way to communities and increase the fund limit of 
those that are hitting up against their limit and basically 
rewarding the more successful CDFIs that are actually lending.
    Some exist and are not doing anything. Fine. They can just, 
well, we would like to eliminate them but we definitely do not 
want to tap down the successful CDFIs, and these are lenders 
that are non-bank lenders.
    So when I look at the country as Chairman of this 
Committee, I think of the 8000 banks that are out there, 
community banks--I am not talking about your big banks--8000 
community banks, thousands of credit unions, hundreds of CDFIs.
    And then, outside of CDFIs there are other non-bank 
lenders, nonprofit organizations that this Committee tries our 
best every day to strengthen that network, to push capital out 
through that network. But as a Barbara Major said, it is the 
last mile that is the hardest.
    It is almost like when you put up an electric grid for the 
country. You can put it up on the main highways. That is the 
easy thing. But getting that last mile. It is the same way with 
the post office. It is the most expensive to deliver the post 
to the house itself on a rural country road.
    So, do you see what I am saying? That is the same way 
capital flows, and we are doing a pretty good job of getting it 
out there generally. But getting it into the communities that 
need it the most to lift the economics of the country is what 
our challenge is. And I think you are coming up with some 
really good ideas.
    Ms. Major and then Ms. Evans.
    Ms. Major. Yes. One of the things too, speaking of CDFIs, I 
headed a CDFI that we created after Katrina.
    Chair Landrieu. And there are a thousand of them. So, go 
ahead. I wanted to make sure.
    Ms. Major. Right. That money came through HUD. So, I think 
there needs to be some collaboration between HUD and SBA around 
the issue of CDFIs because also what I have noticed is that the 
bigger CDFIs are the ones that keep getting. The smaller CDFIs 
who have feet on the ground in the community do not get the 
same kind of access. I am just putting it out.
    Wherever the bank guy is in here, I will talk to you later 
because the banks have to be willing.
    Chair Landrieu. I think you will actually like him. But go 
ahead, Barbara.
    Ms. Major. The banks have to be willing. It seems to be an 
assumption that the banks are going to be willing to do the 
right thing and that has not been the case.
    So, one is develop a comprehensive approach because often 
what I hear is when we start talking about wealth gap, we start 
talking about jobs. Jobs are important but jobs alone is not 
what is going to close that gap. So, when we talk about wealth 
building, we are talking about the ability to create wealth 
over generations.
    After Katrina--I would think in New York and New Jersey as 
well--the wealth in the African-American community is based on 
what you own. It is property. We lost all of that so it kicked 
us back a generation.
    The assumption that, you know, like you just have good 
credit. You have got to understand history and why folks do not 
have good credit in the first place.
    So, it is still set up that if you have you can still get. 
If you do not have you cannot get. So, you cannot speak of any 
of these issues in the absolute of understanding the history in 
these communities.
    A comprehensive approach is one. We have got to have 
literacy. But I am dealing with businesses who say, look, I 
already have the literacy. I need the money. Do you know what I 
am saying? So, we have to have a place that deals with where 
can I access some capital, how can I enthusiastically encourage 
big business to do business with me.
    So, one of the things we are doing is, like I said, it is 
going to be $3 billion in the next 24 to 36 months. Anybody 
here know some big contractors? Tell them to come to New 
Orleans. They want to play right with our small businesses, we 
will deal with them because we cannot--and the other thing is 
prompt payment.
    A simple thing. I did a policy on the RTA board that DBEs 
get paid within 15 days. I had no idea of the impact that that 
was going to have on small business. If nothing else, you go 
back to your community tell your boards to pay DBEs quicker. 
Thirty days hurt; 45 days kill. So, so prompt payment.
    And the mandates on federal. When you get federal dollars, 
you ought to be mandated to pay people, especially small 
businesses, before 30 days. I know they will not go there but I 
will say it 15 days.
    Chair Landrieu. Ms. Evans and then Ms. Lisa.
    Ms. Evans. I just want to make a couple of comments. One, 
AEO released its report last year that documents that those 
businesses that receive technical assistance and business 
support from nonprofit organizations in their community 
actually experience growth 30 percent times more than those who 
do not. So, their revenues grew actually 30 percentage points 
higher.
    But I actually want to make a more provocative statement 
and that is that size matters. As we sit here and talk about 
closing the wealth gap, I think it is important to make sure 
that we are proposing solutions to fit the size of where most 
minority businesses actually are.
    Ninety-two percent of all businesses in this country are 
micro. Nearly 99 percent of all African-American businesses in 
this country are micro; and so when we talk about small 
business, I think size matters in that we have to make sure we 
are talking about where these African-American Hispanic and 
other minority-owned businesses really are. Small business 
strategies may miss them entirely because we are talking about 
micro is where they really are based and formed.
    Lastly, I want to also, AEO in November will be releasing 
research on the national economic impact of micro-business 
which I hope you will attend and everyone here will attend. Our 
release of that data.
    But one of the pieces of that data that I think is so 
important for this conversation, and particularly to those of 
you who are doing the disparity report, the disparity studies, 
what we have found out is that the concentration of African-
American and Latino particularly business are in industry 
sectors that actually have low revenues; and so we need to have 
strategies that actually focus on how do we move more African 
Americans, Latinos, Native Americans and Asian-Americans into 
higher gross things industry sectors because we are seeing that 
the participation rates really are clustered in some of the 
lowest revenue producing industries that are there.
    Then lastly, although I agree about your point about jobs 
and that it is about assets and wealth, what we know is that 
most of the job creation, as others have said here, that are 
going to take place like the people your parents hire. I am the 
product of a self-employed mother from Tennessee and the people 
who my mother hired, they would not have had jobs had it not 
been for neighborhood, local business owners.
    In fact, as of today, if one in three main street micro 
businesses hired just one employee, just one, not all of them 
have to hire, one in three main street micro businesses hired 
just one employee, we would bring the country to full 
employment.
    Chair Landrieu. It is an amazing statistic, Ms. Evans, and 
thank you. Let me ask you. How would you define micro-business? 
Under 10?
    Ms. Evans. A business with five or less.
    Chair Landrieu. Five or less?
    Ms. Evans. Yes.
    Chair Landrieu. I am going to get back to the SBA to ask 
specifically what they are doing today or what you have planned 
to help micro-businesses, five or less. Be thinking about that.
    Ms. Balwani.
    Ms. Balwani. I would just like to comment on Ms. Major 
about the payment structure. I would love to get paid in 15 
days but honestly it is 60 days, and now it is 90 days.
    So, you tell me how can small business owners like myself 
survive if I have to pay people every two weeks. So, it is an 
astonishing and it discouraging a lot of small businesses. They 
are actually hurting very much.
    I am fortunate that my business is well established. I have 
a positive cash flow; but if I had not, there is no way. I 
would have to close my business absolutely.
    So, there has to be an awareness that these companies are 
really stretching us. It is the major corporations. It is the 
largest pharmaceutical companies that are there who are saying 
take it or leave it. It is 60 days now. They have increased it 
to 90 days.
    Chair Landrieu. I really want to underscore this, and I am 
sure we are stepping on some territory of some other 
Committees. But the question is. Is the Federal Government a 
slow payer? Are state governments slow payers?
    Are local governments slow payers? And are major 
corporations slow payers?
    And that hurts all small businesses and the question would 
be: Why should the smallest businesses in the country be 
basically floating, why should they be riding on the backs of 
small businesses? They can get access to money much quicker.
    Now, I know I am probably treading on some other territory 
here, but let us just throw that out from our Committee and see 
if we can get some answers, because I hear this complaint from 
small business owners. It is so risky for us to take this 
contract because it is big. We can do it; but if we do not get 
paid quickly, it could bankrupt our company. I hear that a lot 
when I am traveling.
    Ms. Hasegawa.
    Ms. Hasegawa. I have not addressed the data issue. So, I 
appreciate my colleagues including Asian-Americans. I think 
that that is great. However, you look at the numbers and you 
cannot ignore the fact that Asian-Americans in the aggregate 
are doing much better.
    However, just in terms of trends, Asian-Americans did lose 
$70,000 in average of their networks. So, it went to being 
higher to whites, then $20,000 less than the whites and it is 
still substantially higher than other communities of color.
    However, like I said, we focus on low income Asian-
Americans and Pacific Islanders solely. And so, you know, in 
terms of that population, Asian-American and Pacific Islanders 
who are in poverty, that poverty population group grew by 40 
percent in the wake of the recession.
    And so yes, the rate of poverty for the population as a 
whole went down. But if you look at just those who are poor or 
who are economically vulnerable, right on the edge of falling 
under the poverty line, that poverty population has grown by 
close to 50 percent.
    So, if you are the community-based organization focusing on 
low income Asian-Americans and Pacific Islanders, the number of 
people that are eligible for your services that you need to 
serve as double the basically.
    And so, I plead with you who, I am a resident of Maryland, 
and, you know, with the Federal Government, a lot of the 
Federal Government or just any government reports look at 
Asian-American data in the aggregate. And so, I just say there 
are different ways to look at need in the Asian-American 
community.
    Otherwise, it looks like why are we doing anything for the 
Asians because they are doing better than everyone else. And 
so, I think with regards to government programs, it is very 
important to look at the subpopulation. Bangladeshis have one 
of the highest poverty rates. Tongans and Somoans have one of 
the highest rates of incarceration.
    So, I think that, you know, strategies to self-employ 
people who are formally incarcerated, who are limited English 
proficient, small business is really the alternative to being 
unemployed, and micro businesses. So, I think that we have to 
think about it in those broader frames.
    So, I appreciate everybody saying Asian American but I just 
wanted to say the finer points at least for our organization, 
race is important. Discrimination still exists but at least for 
Asian-Americans and Pacific Islanders and native Hawaiians in 
particular, you need to look at subpopulations and you need to 
look at those who are low income and under served and limited 
English proficient.
    Mr. Richmond [presiding]. Good point.
    Dr. McKernan.
    Ms. McKernan. Yes. I just wanted to say that we have talked 
about the broader role that home ownership and retirement 
wealth play for small business growth too. I think home 
ownership and retirement savings are powerful wealth-building 
vehicles because they make savings automatic and this is part 
of why we see that African-American and Hispanic families are 
not on the same wealth-building path. They are less likely to 
own homes, and they are less likely to have retirement savings 
accounts. And, these are two of the primary vehicles where 
Americans build their wealth.
    What I mean by automatic is that the power of home 
ownership comes not from price appreciation but from that 
automatic monthly mortgage payment that comes due. It is a form 
of forced savings. You pre-commit and then you save.
    The power of retirement savings comes in much the same way. 
The employer sets up an automatic process for sending money 
directly to our retirement accounts. After that initial 
decision, you do not have to do anything. But we know that 
nearly half of Americans, half of American workers do not have 
access to an employer-sponsored savings plan.
    So, we can promote retirement savings through an automatic 
IRA, an automatic individual retirement savings account. Auto 
IRAs allow particularly low-wage workers--who do not have 
access to employer-sponsored retirement accounts--to make that 
initial decision and have that savings happen automatically 
each month.
    Representative Richmond. Thank you.
    Mr. Allis.
    Mr. Allis. Congressman, thank you.
    With respect to business development, the action items that 
I think we all ought to consider, the leaders that are in this 
room and amongst this table is, as Darryl will, you know, 
testify too, the 8(a) programs has been extremely successful 
for all minority communities that participate in the program, 
and it needs to stay there.
    The federal court cases, Rothe I, DynaLantic, Rothe II 
question the constitutionality of the program and cause a lot 
of concerns to a lot of people. As we have interacted with the 
different agencies and the people involved in some of these 
cases, they have reached out to us asking for statistics, data, 
information that would show the discrimination and bias in 
contracting and in business development opportunities.
    I have heard from all a lot of good information from some 
of the people here talking about statistics that they have on 
this industry, that industry. I would proffer that we all get 
together and the groups get together and supply that 
information to our leaders in Congress, to the various 
important people in The Administration, and Federal agencies. 
So, it is on the record. It is there.
    So, we will be ahead of the curve of the court rulings that 
seem to be heading in the wrong direction, and make sure that 
this program stays around for generations to come in the long 
future.
    Representative Richmond. I will comment on that and I think 
that what you are saying is very important, specially in 
looking at the opinion that the Supreme Court issued in the 
Voting Rights Act case which clearly said that we will not 
expressed much of an opinion except that the data is outdated. 
You cannot use data from 1962 to justify a current day program.
    So, as you bring it up, we need to make sure that the data 
we used in justifying programs even through the statute and 
legislation continues to be updated so that there is a clear 
articulation and data to support the need for the program.
    And, I think the people in this room are probably the best 
to help facilitate that. But you will need to, and we need to 
push that more in Congress because part of what the court said, 
and there were volumes and volumes and truckloads of evidence 
produced in the voting rights case but they look to the 
evidence and data that Congress used to justify the program.
    So, that is something that is also very critical; and since 
you had the mic, I will pose a question to you and Ms. Powell 
and Ms. Hasegawa, remember my parents were electricians. We 
just worked it out.
    Part of my question is just the support that the U.S. 
Chamber, are they there on any of the issues? Are they 
supportive and the collective effort of all of the minority 
chambers in addressing disparities, access to contract, access 
to capital, because I think if they made a point to make it a 
priority and also talk about prompt pay, then the message might 
actually get out there.
    Mr. Allis. Congressman, good question. I cannot speak to 
some of the other groups but the U.S. Chamber of Commerce in 
the last year has formed a group that specifically focuses on 
Native issues and it could be a wide variety of different 
issues. My understanding recently, there has been a kind of 
change in the leadership of that particular division so I do 
not know exactly where it is going.
    But more importantly, you know, the 8(a) issue in 
DynaLantic kind of left us all scratching our heads on how do 
we figure out if, in fact, the 8(a) program is a good program 
in this particular industry group or that.
    And so, whether it is the U.S. Chamber, you know, or it is 
all of us, we have got to figure out a way to have a 
clearinghouse where we can provide these stats, this 
information; and then we need you folks on the Hill to 
recognize that, and to make sure that the 8(a) program is safe.
    Something has to be done now to, you know, turn the tide on 
the way these cases are going in the federal courts, to make 
sure we are not behind the eight ball, or chasing and 
defending, as opposed to being more proactive and letting them 
know that, you know, this program is right, it is 
constitutional, and here are the stats that support that.
    And, there is a lot of good wealth of information in this 
room and there is a lot outside too. So, we have to figure out 
a way to get that to come in here.
    Chair Landrieu. I am going to ask the SBA now to comment on 
the micro businesses because Ms. Evans, you have made several 
statements that deserve attention and response.
    And, I have said from this chair many, many times when 
small businesses in America are defined by federal law as 500 
employees or less, and we keep crafting our programs for 500 
employees or less, we are just shooting wildly.
    I hate to use the word ``shooting'' but it is too wide. We 
have to focus and target. So, I am trying to get our staffs, 
both minority and majority, to understand that we have certain 
strategies for businesses between 200 and 500. They have an 
interesting set of problems and dilemmas trying to really grow 
really big.
    But then what do you do with the majority of businesses in 
America that are micro, zero to five. And many, many 
businesses, almost 99 percent I think are zero to 15 or zero to 
20.
    You know, those are the businesses we want to focus on and 
really help to emerge, and let me just make this point because 
I am on a little soap box about this.
    I believe, like Cedric, my family had some small businesses 
too. My father was a self-employed lawyer who made $350 a month 
with nine children. That was very hard. I do not know how much 
your parents made. I think a little bit more than mine but 
anyway we came from hard working parents.
    But you know, what I am trying to focus on are businesses 
in America that I would define, and if Pew has a better word 
great, but lifestyle businesses. People that want to run one 
restaurant. They do not want to run a chain of restaurants. 
They want to run one profitably. Pay for their home, send their 
kids to college, have an impact on their neighborhood. Can 
anybody tell me if there is something wrong with that?
    Why do we not ever focus on these lifestyle businesses? All 
we can talk about up here is Microsoft, Google. I am all for 
that. I am all for Microsoft, Google, Dell Computer, et cetera, 
et cetera.
    But if we do not in Washington get our eyes on the people 
that are hiring in our neighborhoods, in the suburbs, in the 
rural areas, in the urban areas, those shoe shine, you know, 
the shoe repair, the cleaners, restaurants, those businesses.
    Now, they might have small margins of profit; but if run 
correctly, they can create a lot of wealth over time and be 
transferred to the next generation. I don't want to 
underestimate how important these start up businesses are, 
where the earnings are spectacular in the finance sector, in 
the tech sector and moving, you know, the base of our community 
into those is very important as well.
    But I think it needs to be balanced. And if someone has a 
different view, we can submit it to the record because I do not 
want to be completely dictatorial about this but until somebody 
gives me some evidence, I am going to continue to say, despite 
the fact that I am a lone voice, these lifestyle businesses are 
important in getting entrepreneurs who do not want to have a 
hundred employees. They would like to have 15 for 50 years and 
have great impact in their communities. We need to be helping 
them to make sure that they are not at risk.
    Now, I am going to step out because I have unfortunately 
another commitment. I am going to have my small business staff 
director, bring us to close in the last 10 minutes. If you can 
stay, Congressmen, please you can provide some leadership here 
as well.
    But I want to just say this record will stay open for the 
next two weeks. I want to acknowledge and get your final 
comments verbally but this record will stay open for two weeks 
and all of your organizations can submit even after that 
documents, reports, et cetera, that you think will be helpful 
to this discussion.
    And, we plan to share this with other Committees, the 
Commerce Committee, maybe even the Justice Committee, the 
Finance, the Housing Committee, and the Education Committee so 
when we get ideas that you all have come that they need to be 
more open to, we will do that.
    So, I am going to step out. I am going to have Jane 
Campbell, my very able staff director step in, and then thank 
you, Congressman, and if you can wrap it up for us as well. 
Thank you very much I really appreciate it.
    Ms. Campbell. Friends and neighbors, I am not Senator 
Landrieu and so I can only provide you with the logistics. We 
are, in fact, keeping the record open for a month on this 
particular one because of the complexity of the issues and 
because of the number of participants and the amount of 
interest that there was.
    So, if you have any additional thoughts, questions, 
comments, please let us have those within that time period. If 
you know of others who you work with who have thoughts and 
comments on this, what Senator Landrieu would like to do is to 
use this next year to try to put together a similar report, the 
report that we issued today, that it is focused on best 
practices for raising the socially disadvantaged population and 
increasing wealth amongst that population.
    So, she is particularly interested in stories of success. 
What has been done that has been successful, whether that is a 
private program, a public program, a public-private partnership 
with a special idea about recommendations for the Federal 
Government.
    So, as we no longer have a member of our Committee here, we 
should close the formal portion of this. We certainly invite 
you to talk to one another and we look forward to your ongoing 
participation.
    Thank you so much for coming, for participating, and for 
your interest in trying to really solve this problem. We look 
forward to working with you.
    This meeting is officially adjourned.
    [Whereupon, at 11:48 a.m., the roundtable adjourned.]

                      APPENDIX MATERIAL SUBMITTED

[GRAPHIC] [TIFF OMITTED] 
              Additional Material Submitted for the Record

    The following organizations submitted material for this 
hearing. That material will be maintained in the committee's 
permanent record.

[GRAPHIC] [TIFF OMITTED] 




                                  
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