[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
STRENGTHENING SBA'S 7(A) LOAN PROGRAM
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JANUARY 17, 2018
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 115-051
Available via the GPO Website: www.fdsys.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
28-251 WASHINGTON : 2018
HOUSE COMMITTEE ON SMALL BUSINESS
STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
TRENT KELLY, Mississippi
ROD BLUM, Iowa
JAMES COMER, Kentucky
JENNIFFER GONZALEZ-COLON, Puerto Rico
BRIAN FITZPATRICK, Pennsylvania
ROGER MARSHALL, Kansas
RALPH NORMAN, South Carolina
JOHN CURTIS, Utah
NYDIA VELAZQUEZ, New York, Ranking Member
DWIGHT EVANS, Pennsylvania
STEPHANIE MURPHY, Florida
AL LAWSON, JR., Florida
YVETTE CLARK, New York
JUDY CHU, California
ALMA ADAMS, North Carolina
ADRIANO ESPAILLAT, New York
BRAD SCHNEIDER, Illinois
VACANT
Kevin Fitzpatrick, Majority Staff Director
Jan Oliver, Majority Deputy Staff Director and Chief Counsel
Adam Minehardt, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Steve Chabot................................................ 1
Hon. Nydia Velazquez............................................. 2
WITNESSES
Ms. Cindy Blankenship, Vice Chairman, Bank of the West,
Grapevine, TX, testifying on behalf of the Independent
Community Bankers of America................................... 5
Ms. Patricia Husic, President & CEO, Centric Financial
Corporation, Harrisburg, PA, testifying on behalf of the
American Bankers Association................................... 6
Ms. Sonya McDonald, Executive Vice President and Chief Lending
Officer, Randolph-Brooks Federal Credit Union, Universal City,
TX, testifying on behalf of the National Association of
Federally-Insured Credit Unions................................ 8
Mr. Tony Wilkinson, President & CEO, National Association of
Government Guaranteed Lenders, Washington, DC.................. 9
APPENDIX
Prepared Statements:
Ms. Cindy Blankenship, Vice Chairman, Bank of the West,
Grapevine, TX, testifying on behalf of the Independent
Community Bankers of America............................... 29
Ms. Patricia Husic, President & CEO, Centric Financial
Corporation, Harrisburg, PA, testifying on behalf of the
American Bankers Association............................... 34
Ms. Sonya McDonald, Executive Vice President and Chief
Lending Officer, Randolph-Brooks Federal Credit Union,
Universal City, TX, testifying on behalf of the National
Association of Federally-Insured Credit Unions............. 41
Mr. Tony Wilkinson, President & CEO, National Association of
Government Guaranteed Lenders, Washington, DC.............. 58
Questions and Answers for the Record:
Questions from Hon. Nydiazquez and Responses from Patricia
Husic...................................................... 70
Questions from Hon. Nydia Velazquez and Responses from Tony
Wilkinson.................................................. 71
Additional Material for the Record:
CBA - Consumer Bankers Association........................... 76
H.R. 4743.................................................... 78
Huntington Bancshares Incorporated........................... 96
ICBA - Independent Community Bankers of America.............. 98
Mission Lenders Working Group................................ 100
NAFCU - National Association of Federally-Insured Credit
Unions..................................................... 104
NAGGL - National Association of Government Guaranted Lenders. 106
STRENGTHENING SBA'S 7(A) LOAN PROGRAM
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WEDNESDAY, JANUARY 17, 2018
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:00 a.m., in Room
2360, Rayburn House Office Building. Hon. Steve Chabot
[chairman of the Committee] presiding.
Present: Representatives Chabot, Brat, Radewagen, Kelly,
Blum, Comer, Gonzalez-Colon, Fitzpatrick, Marshall, Curtis,
Velazquez, Evans, Murphy, Lawson, Clarke, and Chu.
Chairman CHABOT. We appreciate everybody being here.
The economy is improving. Economic data is promising.
Treasury numbers are moving in the right direction. The tax
reform law is being implemented. Overall, the economy, as I
say, is moving in the right direction. However, we continue to
see that lending and borrowing remain flat for small
businesses. This becomes more acute as you get down to the
smaller firms across the nation. We continue to hear that
financing projects for growth and expansion, which leads to job
creation, are challenging.
One of the top priorities for this Committee is to study
how we can create an environment for small businesses to
flourish. I cannot say it enough, when small businesses grow,
so does our economy. To address the gap that small businesses
face when financing their projects, the SBA offers the 7(a)
loan program for small businesses that have a plan in place for
growth, but lack the qualifications for conventional lending
such as collateral.
Recent growth in the program has led to a closer look at
the SBA's oversight tools. As a result of multiple hearings,
meetings, and briefings, I, along with the Ranking Member and
our Senate counterparts, introduced H.R. 4743, the Small
Business 7(a) Lending Oversight Reform Act of 2018. This
bicameral and bipartisan legislation aims to ensure the
integrity of the program while bringing stability to small
businesses that truly require the services of the SBA.
Specifically, H.R. 4743 strengthens the Office of Credit Risk
Management, which oversees lenders at the SBA. It does so by
reinforcing the office's oversight authority, increasing
enforcement options, enhancing the lender review process, and
cementing the SBA's use of the Lender Oversight Committee,
which plays a major role in significant enforcement actions.
Beyond strengthening the oversight activities of the SBA,
this bill will also require a more transparent budget process
to ensure the SBA is allocating oversight dollars properly.
This Committee often discusses the importance of Credit
Elsewhere Tests. This is not an understatement; this test acts
as a gateway into a Federal Government guarantee.
Simply put, the 7(a) loan program cannot be used by small
businesses that can receive traditional bank lending. This
legislation bolsters the test by updating and clarifying the
factors often used in that test.
It is important to note because of the fees associated with
the program that are paid by participants, the 7(a) loan
program runs on a zero cost to American taxpayers. To ensure
that this remains the case and to ensure the program remains an
option for creditworthy small businesses that justly need it,
strong oversight is mandatory.
I believe we are heading in the right direction. We have
already begun to hear from 7(a) loan participants, and I want
to share a quote from a letter of support. I would ask
unanimous consent to enter the letter into the record, and this
is the letter here from Huntington. And without objection, so
ordered.
It is, as I mentioned, from Huntington Bank, a storied
institution from my home State of Ohio. And to quote a couple
of small parts, ``This legislation is focused on the long-term
success and sustainability of the SBA programs that serve to
grow and protect small businesses.'' On the provisions to
improve the Credit Elsewhere Test, Huntington says that the
changes will ``protect the program's integrity.''
Do we have more work to do on this topic? Absolutely. I see
this as a starting point, not the end point. For the nation's
mom-and-pop shops, to those operating a franchise, to those
creating the next great American product or service, we are
just beginning. This hearing will provide Committee members the
opportunity to hear from participants in the 7(a) loan program
about how the proposed changes will ensure real growth while
providing certainty to small businesses.
We appreciate the witnesses for being here this morning. We
look forward to your testimony.
And I would now like to yield to the Ranking Member for her
opening remarks.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
All of us are acutely aware of the vital role access to
capital has in the success of our nation's 29 million small
businesses. Without it they cannot stock their shelves, pay
their employees, or upgrade equipment. Capital is the key to
unlocking opportunities to grow and create new jobs in the
local economy. A vital pathway to accessing that capital is
through the 7(a) loan program, SBA's flagship lending product.
At the beginning of this Congress, our committee held a
series of hearings to take the temperature of the 7(a) program
by looking at how it is being used and administered. The good
news is it is as successful as ever. In 2017, the program made
62,400 loans totaling $25.4 billion, an all-time high. At the
same time, defaults are at historic lows.
Conventional lending to small businesses has yet to return
to its prerecession peak, however, making the 7(a) program all
the more important to driving economic growth.
The 7(a) program is not without shortcomings. Both lenders
and the agency have said oversight could be improved, the
oversight toolbox made more robust, and transparency increased
with legislative action. This committee heard you and set out
to address your concerns.
The Small Business 7(a) Lender Oversight Reform Act of 2018
addresses a number of issues and makes long-overdue reforms to
the program. The act glorifies the Office of Credit Risk
Management and Lender Oversight Committee and outlines the key
employees and duties of each. It also requires the office to
internally submit a budget to ensure there is justification of
the fees, salaries, and expenses used to carry out oversight
functions. These reforms ensure the oversight process will have
transparency and uniformity for both lenders and the SBA.
We also heard that a Credit Elsewhere Test, a bedrock of
the program, was not clear enough and lacked an SBA
verification component. This bill better articulates the
characteristic of the Credit Elsewhere Test and bolsters
verification of how it is fulfilled.
Finally, we all remember 2015 when the program ran out of
authority to lend before the end of the year. This created an
artificial run on the lenders to get loans approved, unfairly
harmed small businesses that needed credit, and ultimately
required congressional intervention. Today's bill incorporates
provisions from legislation I introduced earlier this year
empowering the SBA administrator to request additional lending
capacity from Congress to meet unexpected demand late in a
fiscal year. With improvements offered by the Chairman, this
streamlined process strikes a commonsense balance between
congressional oversight and ensuring SBA can keep making loans
to deserving businesses that cannot get credit elsewhere.
I want to thank Chairman Chabot and his staff for working
in such a collaborative manner on this legislation. I also want
to thank Senator Risch and Shaheen and their staff for making
this process both bipartisan and bicameral. Through debate and
compromise, we arrived with a legislative product we can all be
proud of. Administrator McMahon and her team and the trade
organizations testifying today were also vital in crafting this
bill, and we greatly appreciate your input.
With that, let me thank our witnesses for being here today
to continue this discussion. I look forward to hearing today's
testimony.
I yield back. Thank you, Mr. Chairman.
Chairman CHABOT. Thank you very much. The gentlelady yields
back.
And I would like to thank the Ranking Member for her
leadership and her cooperation and the bipartisanship that she
and her staff showed with ours in crafting this as well. We
really do try to work in a bipartisan manner on this Committee,
and we certainly showed that in this case.
If Committee members have opening statements prepared, I
ask that they be submitted for the record.
And I would like to take just a moment to explain our
timing system and the lights and that short of thing. The rules
are pretty simple. You get 5 minutes to testify, and we will
have 5 minutes each to ask questions. There is a lighting
system to assist you. The green light will be on for 4 minutes
and the yellow light will be on for a minute to let you know it
is about time to wrap up. And then the red light will come on
and we would ask you to stay within those parameters if at all
possible.
And I would now like to introduce our distinguished panel
here this morning.
Our first witness is Ms. Cindy Blankenship. Welcome back to
the Committee. Ms. Blankenship has been a frequent visitor and
guest here and speaker and has done really a fine job over the
years. She is the Vice Chairman and Chief Operating Officer of
the Bank of the West in Grapevine, Texas, which opened in 1986,
under her leadership. Ms. Blankenship has spent years as a
leader in community banking in Texas and throughout the
country. She has also been a past chair of the Independent
Community Bankers of America and a member of the FDIC's
Advisory Committee on Community Banking. Ms. Blankenship is
testifying today on behalf of the Independent Community Bankers
of America, and we welcome you back.
Our next witness will be Ms. Patricia Husic. Ms. Husic is
the President and Chief Executive Officer of the Centric Bank
in Harrisburg, Pennsylvania, which she established. Prior to
her time founding Centric, Ms. Husic was an executive at a
number of Pennsylvania financial institutions and is a past
chair of the Pennsylvania Bankers Association. With nearly
three decades of banking experience, Ms. Husic has been
recognized on multiple occasions as one of the 25 Women to
Watch in Banking. Ms. Husic is testifying today on behalf of
the American Bankers Association, and again, we welcome you
today.
And I would now like to yield to the Ranking Member for the
introduction of our other two witnesses this morning.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
With more than 20 years of experience and increasing
responsibility in marketing, strategic planning, management,
and lending, Sonya McDonald has spent the majority of her
career in the credit union industry. As the EVP/Chief Lending
Officer at RBFCU, Sonya is currently responsible for a $6
billion portfolio, including $22 million in SBA loans. Ms.
McDonald holds a bachelor's degree in journalism from the
University of Texas at Austin. Welcome, and thank you for being
here.
Tony Wilkinson has served as President and Chief Executive
Officer of the National Association of Government Guaranteed
Lenders for more than 25 years. He is responsible for
overseeing the association's government relations strategy and
often offers expert testimony before Congress. He works closely
with SBA and the Small Business Committee to ensure the
continued stability and availability of the SBA 7(a) business
loan program to the nation's small businesses. Welcome, and
thank you for being here.
Chairman CHABOT. Thank you very much.
And we will now hear from Ms. Blankenship. You are
recognized for 5 minutes. Thank you.
STATEMENTS OF CINDY BLANKENSHIP, VICE CHAIRMAN, BANK OF THE
WEST; PATRICIA HUSIC, PRESIDENT & CEO, CENTRIC FINANCIAL
CORPORATION ; SONYA MCDONALD, EXECUTIVE VICE PRESIDENT AND
CHIEF LENDING OFFICER, RANDOLPH-BROOKS FEDERAL CREDIT UNION;
TONY WILKINSON, PRESIDENT & CEO, NATIONAL ASSOCIATION OF
GOVERNMENT GUARANTEED LENDERS
STATEMENT OF CINDY BLANKENSHIP
Ms. BLANKENSHIP. Chairman Chabot, Ranking Member Velazquez,
and members of the Subcommittee, I am Cynthia Blankenship, Vice
Chairman and Corporate President of the Bank of the West in
Grapevine, Texas. It is a $450 million community bank with 105
employees in the Dallas-Fort Worth suburban area.
I am also a former Chairman of the Independent Community
Bankers of America, and I am pleased to testify today on behalf
of more than 5,700 community banks represented by ICBA.
A robust 7(a) program with broad community bank
participation will help small businesses thrive and create
jobs. We are grateful for this Committee's strong support of
the 7(a) program.
Bank of the West is a 30-year partner with the Small
Business Administration and a leading SBA lender in the Dallas-
Fort Worth district. We currently hold in service nearly $100
million in high-quality SBA loans with a minimal loss ratio.
Historically, Bank of the West 7(a) loans have created
thousands of jobs in the communities we serve and help sustain
and strengthen our local economy.
Bank of the West uses the 7(a) program to supplement our
lending and credit services by reaching a broader range of
borrowers who would not qualify for conventional loans.
To preserve the long-term viability of the 7(a) program,
ICBA supports targeted reforms such as those contained in the
Small Business 7(a) Lending Oversight Reform Act, H.R. 4743, to
ensure its integrity and continued safety and soundness. H.R.
4743 would codify the SBA Office of Credit Risk Management,
which supervises and oversees all SBA lenders, and the Lender
Oversight Committee, which reviews the office's enforcement
recommendations. The bill would provide guidelines for lender
reviews, codify lender appeal rights, and create greater
transparency in the office's budget. These provisions
strengthen the integrity of all SBA lending programs and all
responsible lenders should support them.
The 7(a) program is only available to small businesses who
would not otherwise qualify for a conventional loan. To
safeguard the program from abuse, H.R. 4743 would codify the
SBA's Credit Elsewhere Test, which requires lenders to fully
substantiate and document the reasons a given applicant cannot
be served with conventional credit. Stable funding of the 7(a)
program is critical to the thousands of borrowers who rely on
it.
As is well known to this Committee, program funding came to
an abrupt halt in the summer of 2015 when it reached its
authorization cap well before the end of the fiscal year.
Congress was forced to pass an emergency increase to the
authorization cap to restart the program.
ICBA greatly appreciates the support and responsiveness of
this Committee in passing the emergency increase. Thankfully,
the hiatus was short-lived. A longer program shutdown would
have cut off the thousands of small businesses that rely on
this program for payrolls, investment, and expansion.
While the 7(a) program is fully funded by user fees and no
taxpayer dollars are appropriated, a program authorization
level must be approved by Congress each year, and once that
level is reached, no more loans can be approved. H.R. 4743
would give the administrator authority to raise the cap by up
to 15 percent one time each fiscal year with the approval of
the House and Senate authorizing and appropriating committees.
I have focused my remarks today on the 7(a) program.
However, taking a broader perspective, I urge this Committee to
support regulatory relief that would strengthen community banks
and enable more small business lending in SBA programs and in
conventional markets. We are grateful to the Financial Services
Committee for its passage of numerous regulatory relief bills
in this Congress and past Congresses. These bills were the
groundwork for the Senate Banking Committee's passage of S.
2155 in December on a strong bipartisan vote. S. 2155 contains
robust regulatory relief for community banks which will create
more small business credit, economic growth, and jobs. We urge
the House to quickly pass S. 2155 when it is sent over from the
Senate in the coming weeks. We must not miss this long-awaited
opportunity for community bank relief.
Thank you again for convening this hearing. I am happy to
answer any questions you may have.
Chairman CHABOT. Thank you very much.
Ms. Husic, you are recognized for 5 minutes.
STATEMENT OF PATRICIA HUSIC
Ms. HUSIC. Thank you.
Chairman Chabot, Ranking Member Velazquez, and members of
the Committee, I am Patricia Husic, President and CEO of
Centric Bank, a community bank headquartered in Harrisburg, PA.
I appreciate the opportunity to present the views of ABA on
legislation that would improve the availability of SBA 7(a)
loans and oversight of the program. ABA applauds your
leadership, Mr. Chairman and Ranking Member Velazquez, in
introducing H.R. 4743 and working with your Senate
counterparts.
The SBA 7(a) loan program is very important to small
businesses as it helps fill a critical gap, particularly for
early-stage businesses that need access to longer-term loans.
This long overdue bill will strengthen the SBA's Oversight
Office and provide flexibility to the administrator to increase
the program's maximum lending authority in the event it would
be reached.
At Centric Bank, the 7(a) program has helped hundreds of
entrepreneurs during the past 10 years start their own
business, purchase an existing one, or expand a current
business. At Centric Bank, we view SBA lending as a way to get
a customer to yes in a safe and sound manner. Without this
program, many entrepreneurs would never realize their dream.
For example, over 5 years ago, a young customer had a dream
of owning his own restaurant in Harrisburg. When he finally
found a business to purchase, he was unable to obtain a
traditional bank loan. Through the 7(a) program, we were able
to help this owner acquire the building and business with a 10
percent down payment and appropriate repayment terms. His
business is profitable, and just 9 months ago we financed a
second restaurant for him using the 7(a) program. The program
enabled this entrepreneur to realize his dreams and now he is
the owner of two profitable and successful restaurants,
employing more than 60 people.
We also assisted a U.S. Army veteran who wanted to open a
gun range with education and training for the public. They also
had the foresight to open their facility to police
municipalities to provide access for the officers while they
were off duty. The customer was unable to obtain financing
through a traditional bank loan. With a longer-term loan
provided through the 7(a) program, the business owners obtained
the financing they needed and they were able to open their
facility. They have hired 20 people, the majority of whom are
veterans.
Another customer of Centric Bank was looking to expand his
existing minority-owned construction company from Philadelphia
into the New Jersey markets. Centric Bank closed a $675,000
7(a) loan to buy the commercial building, provide working
capital for expansion, and hire new employees. Without the SBA
guarantee, we would not have been able to provide the funding
due to an overall collateral shortfall. This loan has provided
our customer with a foundation for sustained growth.
It is essential that small businesses that qualify for the
7(a) loan program are able to utilize the program to obtain
access to the necessary capital to build and grow their
businesses. In past years, this has been a challenge as the
program has hit its funding limits. H.R. 4743 would grant the
authority to the administrator to increase the amount for
general business loans up to 115 percent of the fiscal year's
limit. This important measure helps ensure that small
businesses will not be affected by temporary shutdowns in the
program leaving them unable to meet payroll, purchase
inventory, or secure equipment and supplies. Importantly, this
bill also takes steps to improve the oversight of the program
to prevent fraud and increase efficiency. Clear
responsibilities for the Office of Credit Risk Management,
including risk analysis, providing timely findings to lenders
and establishing a Lender Oversight Committee should ensure the
appropriate level of accountability while maintaining checks
and balances. H.R. 4743 also helps to ensure capital goes to
small businesses that face financing obstacles by clarifying
the factors considered in the Credit Elsewhere Test.
The 7(a) program is an example of how bank lending
facilitates economic growth. This program should be vigorously
supported in the future, and H.R. 4743 is an important measure
to ensure the continued success of this program. In my written
statement, I outline several suggestions that would improve the
servicing aspects of the 7(a) program and would hope the
committees will consider these in your deliberations.
Thank you. I would be happy to answer any questions.
Chairman CHABOT. Thank you very much.
Ms. McDonald, you are recognized for 5 minutes.
STATEMENT OF SONYA MCDONALD
Ms. MCDONALD. Chairman Chabot, Ranking Member Velazquez,
and members of the Committee, thank you for the invitation to
appear before you this morning. My name is Sonya McDonald, and
I am testifying today on behalf of NAFCU.
I am the Executive Vice President and Chief Lending Officer
at Randolph-Brooks Federal Credit Union. In this role, I am
responsible for a $6.6 billion portfolio that encompasses
consumer, mortgage, and commercial lending. I appreciate the
opportunity to share with you our thoughts on strengthening the
Small Business Administration's 7(a) loan program.
RBFCU became an SBA-preferred and express lender in
September 2005. We are delegated with SBA authority and are
able to offer all of their products. In both 2016 and 2017, we
were the number one SBA lending credit union in our 55 county
districts.
SBA products allow us to leverage our lending dollars,
mitigate the risk associated with the loans, and extend more
credit to our community's small businesses. Our current
portfolio has 210 active SBA loans with a balance of
approximately 23 million.
There are many stories of small business owners looking for
that loan that will allow them to either start or grow their
business. While other institutions may have scaled back their
small-dollar business lending, credit unions have been willing
to fill that void. At RBFCU, we are pleased that we have been
able to step up to help meet the demand. SBA's 7(a) loans make
it easier for credit unions because the government-guaranteed
portion of these loans does not count towards the arbitrary
credit union member business lending cap.
In San Antonio, we have a great bagel shop, the Bagel
Factory, owned by an Air Force veteran and his wife. They went
to 20 different places and were denied before coming to
Randolph-Brooks for an SBA loan. That business is now thriving
as it enters its eighth year. This is an example of the kind of
business that SBA 7(a) loans are here to help.
Last year, NAFCU renewed a memorandum of understanding with
SBA to help address the challenge of getting more credit unions
involved with the SBA. The MOU formalized a joint partnership
that aims to increase the availability of small-dollar loans by
providing more outlets for entrepreneurs to access SBA products
in their neighborhoods and it makes the small-dollar loans more
accessible to underserved communities, including women and
minorities.
We appreciate the work SBA has done to improve their
processes. We also support your legislative efforts in H.R.
4743, the Small Business 7(a) Lending Oversight Reform Act of
2018. This legislation will help credit unions by bringing more
clarity to SBA's 7(a) loan program by outlining more specifics
in statute. We are particularly pleased to see the Credit
Elsewhere Test better defined in the bill as compared to what
is included in the standard operating procedures. This will
help clear up ambiguity for lenders.
One of the most important parts of the bill is the
administrator's authority to increase the budget amount to 115
percent of the limit. This would be beneficial to both
borrowers and lenders versus the hard cap that currently exists
and helps ensure that lenders and small businesses will not
face a situation where the ability to use the 7(a) program
comes into doubt due to the popularity of the program.
One area where we think the legislation could be improved
would be to have better definitions for penalties. Adding
clarity that requires the director to distinguish between minor
compliance errors and willful or negligent violations would be
helpful.
Overall, we believe this is a solid legislative package and
would urge the Committee to support and advance this
legislation in a timely fashion.
In conclusion, small businesses are the driving force of
our economy and the key to its success. The ability for them to
have access to capital is vital for job creation. While SBA's
7(a) program provides opportunities to establish struggling
businesses, there continue to be ways the program can improve.
The SBA has taken some steps in the last year to improve the
program. Enacting the Small Business 7(a) Lending Oversight
Reform Act is another step that will help. We urge you to
support this legislation.
We thank you for your time and the opportunity to testify
before you today on this important issue. I would welcome any
questions you may have.
Chairman CHABOT. Thank you very much.
Mr. Wilkinson, you are recognized for 5 minutes.
STATEMENT OF TONY WILKINSON
Mr. WILKINSON. Thank you, Mr. Chairman, Ranking Member
Velazquez, and members of the Committee. My name is Tony
Wilkinson, and I am here on behalf of the National Association
of Government Guaranteed Lenders, NAGGL. NAGGL is a national
trade association representing banks, credit unions,
nondepository lenders, and other entities that participate in
the Small Business Administration's 7(a) Loan Guaranty Program.
NAGGL's members are responsible for approximately 80 percent of
all the SBA 7(a) loans made annually.
This Committee and its colleagues on the Senate Committee
on Small Business and Entrepreneurship have been looking into
the performance of the SBA 7(a) loan program and SBA's role in
oversight of the program for about the last 3 years. There has
been great care taken by this Committee to approach this issue
with diligence, and as the CEO of the SBA's 7(a) industry's
trade association for the last 30 years, I can tell you
honestly that your careful approach to this matter is a rarity
in the history of this program and it is incredibly
appreciated. Your staff, particularly Rob Yavor for the
majority and Justin Pelletier for the minority--and since they
are in the audience I will give a shout out to Renee Bender on
the majority and Kevin Wheeler on the minority over in the
Senate--they have worked diligently to understand the very
technical issues of the 7(a) program. We also very much
appreciate the Committee's announced intention to continue to
work with industry and the agency to perfect H.R. 4743 going
into the markup process. The lending industry that NAGGL
represents is grateful for this Committee and its staff's
longstanding commitment and dedication to engaging the many
stakeholders throughout the process, and we look forward to
working with you and with SBA to ensure that the final
legislation provides appropriate direction for SBA's lender
oversight efforts.
I am pleased to testify today to discuss NAGGL's support
for H.R. 4743, the Small Business 7(a) Oversight Reform Act of
2018, which will strengthen SBA's Office of Credit Risk
Management and how it performs its role to oversee the 7(a)
program.
One of the most important provisions to the lending
community included in H.R. 4743 includes granting flexibility
authority to the SBA administrator to increase the 7(a)
program's authorization cap by 15 percent if the pace of
lending is set to exceed that fiscal year's given cap. NAGGL
first presented this flexibility language to the Office of
Management and Budget and to Congress in the wake of the fiscal
year 2015 7(a) lending shutdown, drawing on the same language
and precedent set by the House and Senate Appropriations
Committees in their treatment of various USDA loan programs.
Since then, NAGGL has enjoyed the partnership of Senator Risch,
Coons, and Shaheen, to name a few last Congress, who introduced
a bill in the Senate to establish cap flexibility, and this
Congress, Ranking Member Velazquez championed a bill in the
House to move this proposal forward. And as you know, OMB
included this language in the last three presidential budget
proposals, so SBA has been a champion for this proposal as
well.
In both fiscal year 2014 and in 2015, the SBA 7(a) program
saw demand from small business borrowers reach the program's
authorization cap before the end of the fiscal year, and in
fiscal year 2015, the program shut down for several days. Some
of you on this Committee helped see unusual measures of
emergency supplemental language pass Congress and receive the
President's signature to ensure the 7(a) program remained
available to the country's small businesses, and industry owes
you a great deal of gratitude. But those were rare instances of
congressional intervention and, unfortunately, these threats of
shutdown destabilized the program and altered lender behavior.
The issue largely stems from the great difficulty in
anticipating the exact number of borrowers who will be applying
for SBA 7(a) loans 18 months in advance as we go through the
budget process.
While this flexibility language should never supplant the
role of Congress in setting authorization caps and still
requires approval from this Committee and its colleagues in the
Senate and in the Appropriations Committee, it serves as a
commonsense safeguard against last-minute panic. Thank you to
this Committee for embracing and now championing this concept.
H.R. 4743 also updates the Credit Elsewhere provision
currently in statute, a clarification lenders have long asked
for and which is critically important to the program. The
cornerstone principle of the 7(a) program is that it
complements but does not compete with conventional small
business lending. The noncompetitive status of the program is
assured by the fact that before any 7(a)-loan guaranty can be
approved, the participating lender must certify that the loan
could not be made without the SBA guaranty. NAGGL believes the
proposed legislation will strengthen compliance with the Credit
Elsewhere requirement by clarifying the types of situations
which cause the SBA guaranty to be required and provide further
assistance that 7(a) loans continue to fill the existing small
business credit gap.
Finally, I would like to applaud the Chairman and Ranking
Member for the provision of the bill which improves the
oversight review process for lenders. NAGGL has long called for
full-time employees of SBA to lead each team of reviewers that
conducts the oversight reviews of the program's participating
lenders. When there is a full-time employee present and
supervising each review, it ensures that there is a deep
foundation and understanding of the incredibly complicated
policies that are specific to SBA.
There is a whole host of other provisions in this bill that
I would be happy to discuss. And with that, I will conclude my
remarks.
Chairman CHABOT. Thank you very much.
And I will recognize myself for 5 minutes to begin the
questions. And I will open with a general question. I am just
going to kind of go down the line here.
On the small business lending environment in our country,
we hear that small businesses and their optimism is on the
rise. Is this increase in optimism being matched by a demand
for small business loans that you are seeing at your particular
institution? And if you could just give us the general climate.
And I have got some other questions, so if you could maybe take
15 to 30 seconds or so to answer. And I will begin with you,
Ms. Blankenship.
Ms. BLANKENSHIP. Well, I am in the Dallas-Fort Worth
metroplex, and the North Texas economy is thriving. So it has
been very encouraging to see small businesses start to be
encouraged by the economy and believe that they can now take
the chance to gamble and leverage. We saw many businesses just
sit on liquidity for years after the crisis, so we are seeing
an uptick.
Chairman CHABOT. Good. Thank you very much.
Ms. Husic?
Ms. HUSIC. We are seeing a lot of increase of SBA lending
and small business lending. As a point of reference, Centric
Bank, we are headquartered in the Harrisburg, PA, area. We also
loan in Lancaster County where we have an office as well as an
office, and we loan through the suburban Philadelphia market,
as well as in the western part of New Jersey. For some
statistics or a number to support that, for example, last year
our organization had about a 30 percent growth in our
commercial lending, of which we are 85 percent focused on small
business. Last year, we originated over $200 million in
commercial lending, of which $38 million was SBA 7(a) loans to
about 46 clients. Looking at 2017, we originated about $210
million in commercial loans. That SBA 7(a) number was in excess
of $41 million, but to more borrowers, to approximately 77
borrowers.
Chairman CHABOT. Thank you very much.
Ms. McDonald?
Ms. MCDONALD. Just like Ms. Blankenship, I am in Texas, and
Texas has had a very strong economy. What we are seeing is more
confidence----
Chairman CHABOT. Could you pull that mic a little bit
closer there? Thank you.
Ms. MCDONALD. What we are seeing is more confidence in the
economy. We are seeing more applications from our small
business members.
Chairman CHABOT. Great. Thank you.
Mr. Wilkinson?
Mr. WILKINSON. While I am not a direct lender, our members
are reporting robust growth. Our loan volume through the first
couple of weeks of January, year-to-date this fiscal year we
are up 18 percent nationwide in 7(a) lending. So, good economy.
Chairman CHABOT. Good. Glad to hear that on all counts
here.
Mr. Wilkinson, I will go to the next question with you.
This Committee has emphasized the importance of the Credit
Elsewhere Test in the past. Can you provide a little detail on
how this test works in practice? And do the changes in the bill
that we are considering here today, will they further clarify
and bolster this test to ensure that the correct small
businesses are entering the program?
Mr. WILKINSON. I would be happy to. As has been mentioned
here, the cornerstone tenet of the 7(a) program is that it does
not compete with the commercial lending marketplace; that it
complements it. The issue becomes how to provide better
guidance to lenders to assure that the Credit Elsewhere Test
continues to be appropriately met for each and every loan. And
part of the issue has been for our lenders is that the current
definition has not been updated for decades.
And I thought I would read to you what it currently says.
It says, ``For purposes of this act, the term 'credit
elsewhere' means the availability of credit from non-Federal
sources on reasonable terms and conditions, taking into
consideration the prevailing rates and terms in the community
in or near where the concern transacts business.''
Well, in today's lending environment, geography really does
not matter, and so there is a lot of language there that
becomes confusing to our members in how to comply with that
statute. So we believe the language that is in H.R. 4743 clears
that up, defines what are acceptable items that need to be
reviewed and would be required for the lender to document in
their file.
Chairman CHABOT. Thank you very much.
Ms. Husic, I have only got about a minute left. So, as you
know, this bill would require SBA to perform a portfolio risk
analysis. And I want to make sure you do not think we are going
too far there. I see Congress receiving this information is
very important. However, from your perspective, we are not
asking too much there, are we?
Ms. HUSIC. Absolutely not. When we take a look at--I think,
you know, I look at our own organization. When we take a look
and evaluate the loans we booked to our portfolio with each of
those certain industry concentrations, we have a certain
percentage of our capital that is allocated to that. You know,
from there, on an annual basis, and even more so on a quarterly
basis, we do evaluate that, and I think that is a good business
practice. Furthermore, it is a good risk management practice to
do that.
Chairman CHABOT. Thank you very much. And my time is
expired.
The Ranking Member is recognized for 5 minutes.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Mr. Wilkinson, all of you mentioned that this bill includes
flexibility language for the administrator to request an
increase in the authorization cap of the program to meet
unexpected demand. There seems to be some confusion about how
this will work in practice. So my question to you is, can you
elaborate on this authority, how can it be used?
Mr. WILKINSON. I would be happy to. First, this authority
is actually mirrored by the same authority appropriators have
given to the Department of Agriculture's USDA loan guaranty
programs in recognition that demand on any given day, week, or
month can often exceed expectations and that lending is
cyclical. The intention, as set out in this language, is that
the authority can be used only once per year. So presumably,
the agency would want to use its authority at the end or
towards the end of a fiscal year to prevent programmatic
shutdown if the authorization cap was going to be insufficient
as that was the case in 2015.
Ms. VELAZQUEZ. So not at the end of a short-term CR,
correct?
Mr. WILKINSON. Correct. So at a CR, it really becomes a
function of do we have what is called anomaly language in the
CR that allows SBA to spend at whatever the pace of demand
might be.
Ms. VELAZQUEZ. And can you please explain how the anomaly
process can work?
Mr. WILKINSON. I would be happy to. So what happens under a
CR is the Office of Management and Budget takes the number of
days that are provided for in the CR and divides that into the
authorization cap for the year. So we get X amount of money to
lend during that period of time. With an anomaly, that
calculation is not necessary. We are allowed to spend up to the
authorization cap at whatever pace. And just so folks
understand, we hit that apportionment cap at the last CR. We
actually had a program shut down for a few hours. A lot of
folks do not know that we did, but we had a program shut down
for a number of hours as the last CR ended and the current one
started. There was a gap there for about 6 or 7 hours.
Ms. VELAZQUEZ. Thank you.
Ms. McDonald, SBA's capital access mission is to aid and
assist America's small businesses, including underserved and
vulnerable small businesses to obtain the capital that they
need. So does SBA encourage lenders to make loans to
underserved markets, such as to firms majority-owned by those
who are socially and economically disadvantaged and to new
businesses?
Ms. MCDONALD. Well, at Randolph-Brooks Federal Credit
Union, we have about 240 SBA loans to minorities, approximately
230 to women, and 167 to veterans. So this is a huge part of
our SBA lending. That is what credit unions are here for. We
are here to provide those small-dollar business loans to folks
who could not get it. The average SBA loan at Randolph-Brooks
is less than $90,000, and I would say more than half of our SBA
loans are for less than $75,000.
Ms. VELAZQUEZ. In your meetings with SBA officials, is
there any discussion as to what is it that you are doing to
increase small business lending for underserved communities or
underserved small businesses?
Ms. MCDONALD. Well, at Randolph-Brooks we serve a lot of
underserved areas. We call them community charter areas and we
look for opportunities to help folks. I am thinking right now
of a Mexican restaurant on the south side of San Antonio. So we
have lots of opportunities to do that and the SBA has gotten
much better at working with us to make things easier.
Ms. VELAZQUEZ. Thank you.
Ms. Husic, you testified that increasing the time that a
seller can remain on as an employee with the business will be
beneficial. This is something I am also exploring as a way for
the 7(a) program to help ESOP and Co-Op ownership transitions.
Can you please elaborate on why extending this period is
necessary and whether there are any additional safeguards that
could be implemented to address concerns about a seller double-
dipping after the sale of the business?
Ms. HUSIC. Absolutely. We have had certain situations where
perhaps it is a first-time business owner, they are acquiring
the business, and which would be helpful and we are not looking
for a long-term period of time, but maybe in certain situations
a 2-year period of time might be valuable. When any type of
loan we are making, conventional or SBA, we are always looking
to set the borrower up for success. So maybe navigating some
challenging times in a business and they have not been through
that before, maybe some also intricacies in with particular
clients could be beneficial, I think in the end that new
business owner has to have the ultimate ability to terminate
that employment and to give control so there is no double-
dipping going on there.
Chairman CHABOT. The gentlelady's time is expired.
The gentleman from Kansas, Mr. Marshall, Dr. Marshall, is
recognized for 5 minutes.
Mr. MARSHALL. Thank you, Chairman.
My first question is going to be for Ms. Husic, and then I
want to ask you other three the exact same question, so I am
going to give you a chance to prepare. The second question is
going to be, how are the Tax Cuts and Jobs Act going over in
your community? What has it done to unleash this economy? If
you can give me some examples.
My first question for Ms. Husic, I have been part of a bank
board for 15 years, and over and over I saw the great things
that the small business loans did. Specifically, what has this
bill done to improve that process? How is it going to help your
customers?
Ms. HUSIC. Well, first and foremost, the SBA, and
specifically the 7(a) program is a great program, and it is an
opportunity if you cannot do the loan conventionally, how do we
get our client to a yes? And that is what we look to do as
small businesses, 85 percent of our lending. But when you take
a look at some of the processes, we have had some clients that
when a number of years ago the SBA ran out of funds and we were
getting ready to settle and we were waiting for the SBA
approval, we are a nonpreferred lender so that we submit our
applications to the SBA and wait for the approval to come back.
And we were sitting there with that particular client. We could
not get them over the finish line with that unnecessary or that
wait, that you could never give them that specific timeline.
We have also had another client at that same timeframe was
looking for a loan and it was to be able to support additional
inventory connected with an additional contract which, again,
these type of things would help that if that situation were to
present itself----
Mr. MARSHALL. Does this bill make it more efficient, do you
think, the process?
Ms. HUSIC. I think it will make it more efficient, but
also, that if the SBA runs out of funds, they would have the
ability to have that additional 15 percent to be able to extend
that.
Mr. MARSHALL. Got it. Okay.
Ms. Blankenship, how are the Tax Cuts and Jobs Act
impacting Texas?
Ms. BLANKENSHIP. Well, I think very positively. I think it
is a bit early yet, but I think the general----
Chairman CHABOT. I am not sure if that mic is on.
Ms. BLANKENSHIP. To answer your question, the tax cut has
had a positive effect on the Texas economy. On our small
businesses, I see a lot of encouragement, a lot of future
planning. They seem to be willing to leverage those additional
dollars saved by their tax savings, which in turn helps the
community. So we are very excited to see that.
Mr. MARSHALL. And you hope the 7(a) is just one more step
to making those dreams come true, living this American dream?
Ms. BLANKENSHIP. Exactly.
Mr. MARSHALL. Ms. McDonald, where are you from? Remind me.
Ms. MCDONALD. San Antonio.
Mr. MARSHALL. San Antonio, another Texas gal. We are just
loaded with Texas here.
Ms. MCDONALD. Another great Texas town.
Mr. MARSHALL. How is the Tax Cuts bill working down there?
Ms. MCDONALD. It is going very well. We had a record year
in lending last year, particularly towards the end of the year.
Typically, in November-December, lending slows down. We had
record months. In fact, I got an email just right after
Christmas that said we had over 1,800 loan applications in one
day. And so that is pretty incredible, especially on a skeletal
staff at Christmastime. But, and from the small business
perspective, we are seeing an increase in those applications.
And, in fact, we are hiring an additional business loan officer
to keep up with the demand.
Mr. MARSHALL. So maybe this law will work an old dovetail
right into those 1,500--is that what you said?
Ms. MCDONALD. Eighteen hundred loan applications.
Mr. MARSHALL. In a day.
Ms. MCDONALD. Now, these were for consumer loans.
Mr. MARSHALL. That is all right. Okay.
Mr. Wilkinson, how have your customers, your clients been
impacted by this Tax Cuts bill?
Mr. WILKINSON. Well, I represent the lender, so I am not
dealing directly with our small business customers, but as I
mentioned, our loan volume is up 18 percent year-to-date, so
something good is happening.
But I did want to respond to your earlier question, how
does this bill help small businesses? And it is more from a
programmatic perspective. We want this program to be a program
of integrity. It is working great right now. We want it to
continue to work great. We are ahead of this curve. We want to
make sure SBA has the tools and resources to keep the lenders
between the lines, so we are not responding to any kind of
problem right now, but we are going to make sure that this
program is here for the long haul for borrowers for many years
to come.
Mr. MARSHALL. Okay. Ms. Husic, you have not had a question
to respond to my Tax Cuts question. I thought we would get back
to you. I think you have a story to tell as well.
Ms. HUSIC. For the tax cuts, we are exploring several
different ways of where, not only how, do we help more small
businesses. We have not finalized on any specifics of what we
will do as an organization. At this point, our board is still
finalizing that, but we see great opportunities within our
marketplace. There are a lot of small business optimism, and
more interesting, starting businesses and expanding, buying
more capital outlays, those type of things.
Mr. MARSHALL. I think I would just close this, I finished
up my town halls this week going to every county. Over and over
the economy is improving. And people ask me why. And see if you
agree with this. I think number one is we have cut back on
regulations. And I think number two is that consumer confidence
is incredible out there. And then lastly is this tax reform. Is
there any other big picture out there that you think has added
to the sudden--not necessarily sudden, but the great economy we
are experiencing?
Ms. HUSIC. To your point, I believe all those things, and
those reasons encompass the reason why there is small business
optimism, as they are the job creators. As we are looking
forward, as you mentioned, as far as some relief of regulatory
burden, as community bankers, we are looking for some of that
relief as well of the additional amount of regulation and
burdensome that over the past 8 to 10 years community banks
have really been burdened with.
Mr. MARSHALL. Sorry, I went over. I apologize, Chairman.
Chairman CHABOT. That is okay. The gentleman's time is
expired.
The gentleman from Pennsylvania, Mr. Evans, who is the
Ranking Member of the Subcommittee on Economic Growth, Tax, and
Capital Access, is recognized for 5 minutes.
Mr. EVANS. Thank you, Mr. Chairman.
I would like to start out starting from Ms. McDonald and go
down that particular direction about what ways do you think
that can improve this particular program? So I will start with
Ms. McDonald and then to the right.
Ms. MCDONALD. Well, I think that this bill is a great
start. It codifies the expectation. We talked about the Credit
Elsewhere Test. From a credit union perspective, and we have
talked about this before, but increasing the member business
cap for credit unions would help. There are a lot of credit
unions who do not participate in SBA lending because it does
take a lot to get a program started. You would have to hire
somebody, and then if you are wildly successful, then you have
to cut back, which does not do anything for member service.
Ms. HUSIC. Several other ways that the SBA 7(a) program can
be enhanced, currently, the law does not allow for any type of
consolidation or refinancing with a current lender so that if
that business owner would like to do any of those things they
cannot do it. So, for example, if they have been with our
organization for several years, they need to go to another
financial institution, and I think that is very challenging for
that business owner because here is someone they have a
relationship with, they know their business. They are forced to
go elsewhere in order to do any of those items.
An opportunity, too, looking at this particular bill here
is that if there is an opportunity to carve out for the
portfolio lenders and suggesting of banks with assets under a
billion. So, for example, with this particular piece, that if
prior to this, if you were in excess of our legal lending--
legal lending for a bank is 15 percent of our capital is what
we can lend. With the SBA guaranty, you could back that out.
That is no longer the case. So for those of us who are
portfolio lenders and we want to make loans in our communities,
that can be prohibitive to us.
Also, too, we talked briefly about having the seller remain
on for an extended period of time. In situations we have seen
it was up to a 2-year period of time to help maybe navigate
through the waters of being a first-time business owner. But a
new component with this is that a key employee who is not an
owner can be required to guarantee the loan and the SBA can
come back and require that. They are going to have all the
challenges or the downside of guaranteeing a loan without
having the benefits of an ownership. And I do not know many
individuals who are an employee, who are not an owner, who
would be willing to sign to guarantee that. So those are some
of the items I would recommend.
Ms. BLANKENSHIP. I would just echo their comments. But I
would like to expand on the inability to refinance your own
credit. We take the risk on these small businesses when they
come in and we use the SBA 7(a) program because that is what it
was designed for, those small businesses that cannot get
conventional credit. But our bank, our small community banks
are taking that risk. And so when the business gets up and
successful, if you could look at maybe some term, 3 years down
the road you are successful, that is when our customers get
cherry-picked out of our portfolio. And I understand the
complication that the guaranteed portion many banks sell in the
secondary market, so then there is an issue with that. But if
it is a portfolio loan, let us take the entire risk back in-
house and then that would be more dollars back into the SBA
program to leverage into new small business.
Mr. EVANS. Mr. Wilkinson, could you talk about the Credit
Elsewhere provision and how it helps the SBA 7(a) program?
Mr. WILKINSON. Well, again, it is the cornerstone of our
program and we are optimistic that the new language provided in
H.R. 4743 will clarify that for lenders so they know exactly
what is expected and how the file will have to be documented in
terms of how they determine that the borrower could not get
credit elsewhere. So the old definition is quite old. It has
not been updated for many decades and really does not fit the
marketplace in which we lend today. So we are cautiously
optimistic that this language will pass and it will make our
jobs a lot easier.
Mr. EVANS. Thank you, Mr. Chairman. I yield back the
balance of my time.
Chairman CHABOT. Thank you very much. The gentleman yields
back.
The gentleman from Utah, Mr. Curtis, is recognized for 5
minutes.
Mr. CURTIS. Thank you, Mr. Chairman and Ranking Member, for
this opportunity for this critical conversation and this very
important bill. I must admit, as I have listened to the
testimony today, my heart has raced and my palms have grown
sweaty because not too many years ago I was an owner of a small
business and the trauma of going through loans and navigating
this, signing your home up as collateral, I think we frequently
underestimate the sacrifice our small businesses make to drive
our economy and to employ people.
And as part of that experience, I know--I would like to
think I know how a lot of these businesses think, and you will
not be surprised that many of them find institutions difficult
to navigate. They may be very good at patents. They may be very
good at manufacturing. They may be very good at sales, but they
are not necessarily very good at navigating.
And Ms. McDonald, if I could start with you because of your
title, and then ask the others as well to answer this question,
and that is, are we doing enough to market and to help
businesses that are not walking through your door who need this
vital program, but do not understand? And if we are not doing
enough, what should we be doing?
Ms. MCDONALD. Well, my credit union career actually started
in marketing, so I love the idea of marketing all the time. And
we do do a good job of marketing. At Randolph-Brooks, the
concern that we have is that if we put up a billboard on 281 in
San Antonio that talks about the business loans that we do, we
would get inundated and we would not be able to serve those
members effectively. So we have to be very strategic in how we
market the program because the worst thing that can happen is
you get 1,800 phone calls and you are not able to service them.
But we work with our local SBDCs. We work with the SBA. We
work with our members. And really, that is where our program
started was not that we were going out and marketing small
business loans; it was our members that came to us and said,
hey, you do a great job with our personal stuff. We want you to
take care of our business needs, also. And so that is how we
grew into business lending was because the members were asking
for it. So word of mouth does a really good job for us.
Mr. CURTIS. I do not know if any of the others want to
weigh in on that. Please, yes, Ms. Husic?
Ms. HUSIC. One of the things we do at Centric Bank is we
work with SCORE. SCORE is the Service Corps of Retired
Executives, who are mentoring for small business. And over the
year we may be doing 6 to 10 events, different seminars they
may have. We are educating those who have an interest to own
their small business, to how to navigate the waters. What do
they need to do to be prepared?
There are other things we do. We reach out to our local
economic developments, our chambers throughout the areas and
the markets that we serve in being able to be a resource if
there are questions, but also to have individuals, they can
come forward being prepared if that is something they are
looking to explore.
Mr. CURTIS. Thank you.
I would like to take this opportunity to point out to all
of us that we have more work to do. The fact that we would
flood your bank if it was advertised, it points out that there
are just a lot of businesses out there who need access to this
who do not understand it and hopefully we can do more for them.
I think the last question that I would like to ask, and
maybe I will start with you, Mr. Wilkinson, is if you are
familiar with the fee enough that is associated with this to
comment on how prohibitive is that for these small businesses?
Clearly, we are taking them above market rate by doing this.
And are you finding that we are eliminating businesses and
turning them to other less traditional sources because of that
fee?
Mr. WILKINSON. Okay, as with everything else in our program
there is not really a very simple answer, so bear with me. But
there is a sliding scale of fees charged to the small
businesses that increases as the loan size increases. And you
know, given our loan volume, it is easy for me to say no, they
are not prohibitive because we are still seeing a strong
increase in demand. On the interest rate side, we are
legislatively capped at for most loans prime plus 2-3/4. So the
interest rate today is--I forget what prime is. What are we, 4?
So we are like 6-3/4 on our interest rate cap. So the pricing
is really not pricing folks out of the market.
Mr. CURTIS. Okay. Please?
Ms. BLANKENSHIP. Well, I agree. And the thing about the
pricing, while a lot of customers, you know, kind of flinch at
the pricing, it does give them an alternative to credit card
financing, which, you know, I think that the SBA does a great
job in providing capital access rather than going through the
credit card.
Mr. CURTIS. Or hard money loans.
Ms. BLANKENSHIP. Or hard money.
Mr. CURTIS. Mr. Chairman, I yield my time.
Chairman CHABOT. Thank you very much. The gentleman's time
is expired.
The gentlelady from California, Ms. Chu, is recognized for
5 minutes.
Ms. CHU. Thank you.
Mr. Wilkinson, as you mentioned in your testimony, the
authorization level for the 7(a) program is typically set 18
months in advance and it is hard to anticipate the level of
demand that far out. Before 2014, had the 7(a) program reached
the cap before the end of the year, and what do you believe has
changed with lending over the past few years to cause this
increase?
Mr. WILKINSON. Yes, we hit the cap a couple of times before
2014. I believe it was 2003 and 2004, if my memory serves me
correctly. But today we have more lenders participating in the
program than we did back then so the program is much more
robust and more dynamic. It is growing and it is tough to
really gauge what our growth rate is going to be 18 months in
advance, and that is why this flexibility language is so
important. We try to do a good job of surveying our members and
get their estimate in their budgets, what is their growth
forecast for the next year. But again, 18 months in advance is
a long way to try to guess where we are going to end up and
what things may be happening in the economy along the way that
might stimulate or cause demand to slow down. So the
flexibility language in our opinion is critical so we do not
bump into those caps and cause program shutdowns going forward.
Ms. CHU. And then there is the issue of oversight. As the
7(a) portfolio has grown nearly 60 percent over the past 5
years, many questions were raised about how the Office of
Credit Risk Management was handling oversight of such a large
portfolio.
So Mr. Wilkinson, the Small Business 7(a) Lending Oversight
Reform Act would require OCRM to prepare a budget justification
for Congress in order to create more transparency. How will
this requirement address some of those concerns?
Mr. WILKINSON. Well, we want to make sure that the Office
of Credit Risk Management has the tools and resources it needs
to conduct appropriate oversight. I think that is the critical
part of this program. As I mentioned before, we want to have a
program of integrity. That means we keep everybody between the
lines so that this program is here for the long haul. We as
lenders would like to know what resources OCRM is getting. Part
of those resources we are paying for so we would like to know
what that might be. And then just to know that they do have the
tools and the resources they need to get the job done. One of
our issues with OCRM has been they will come out and they will
do a review of the lender and sometimes it takes several months
before that review is completed. And hopefully, with the
additional resources they can provide those reports in a more
timely fashion, and it is much more beneficial to the lender if
they are having issues, that they find out about them today
rather than a year and a half from now.
Ms. CHU. In fact, that leads to a question I have for Ms.
Husic. In addition to requiring SBA employees to manage
reviews, the Small Business 7(a) Reform Act also sets timelines
for review reports and correspondence to be transmitted back
and forth between SBA and lenders. Can you tell us why it is
important for SBA to provide lenders with an audit report
within 60 business days instead of 18 months as has happened in
the past?
Ms. HUSIC. It is very important to receive the feedback.
So, for example, if an organization is perhaps in some things,
if there is a common thread, something systemic, and with the
underwriting or something they are not doing, I think it is
important to get that feedback, especially if you are a more
robust lender or any lending at all, an importance to be able
to receive that feedback to make any modifications and
corrections, what you are doing at your particular
organization.
Ms. CHU. Now, it is my understanding that many of the SBA
lenders rely on the services of third-party agents to assist in
the origination, closing, servicing, and liquidation of these
loans. You mentioned, Ms. Husic, the lack of training is a
problem in the loan liquidation process. Could you please
elaborate?
Ms. HUSIC. Yes. So for us at Centric Bank, we do utilize a
third-party to assist us with any, if there is liquidation, et
cetera. During the course of Centric, we have not had that
particular issue with us. We are at a 0 percent delinquency as
well as a 0 percent default rate for any type of SBA lending
that we have done. But we have heard it has been a common
thread within the industry as well as to ensuring the
particular order that you go in to liquidate as to ensuring
that you maintain and preserve the guaranty piece.
Ms. CHU. Thank you. I yield back.
Chairman CHABOT. The gentlelady yields back. Thank you.
The gentleman from Iowa, Mr. Blum, who is the Chairman of
the Subcommittee on Agriculture, Energy, and Trade is
recognized for 5 minutes.
Mr. BLUM. Thank you, Chairman Chabot, and thank you to our
panelists for being here today. I appreciate it very much.
I would like to focus the next couple of minutes if we
could on the default ratios of the SBA's 7(a) loan program
versus your commercial loan portfolio as a whole. Can you
compare and contrast those, the three of you that work at
financial institutions, please? Ms. Blankenship?
Ms. BLANKENSHIP. I would say our SBA default ratios are
very low. It is probably 1 percent or less than our total
default ratios.
Mr. BLUM. What would your total commercial loan portfolio
default ratio be on average?
Ms. BLANKENSHIP. Historically, well, our past dues are
about 2 percent, so our charge-offs are maybe .5. So we do not
have a lot of charge-off and default ratios. And particularly
on our SBA, we have had great historical--we do not have zero
such as Ms. Husic, but traditionally they have been very low. I
think the program and its integrity--and I thank this Committee
for holding this oversight because we want to preserve this
program and make sure that there are not third-party players,
and you can preserve this program so that we can offer--these
are good customers. They just needed extended terms.
Mr. BLUM. I was Chairman of the Director's Credit Committee
on a $1.5 billion bank before this life and we would ask the
question occasionally if our default ratios got too low, are we
taking enough chances? Do you think you are taking enough
chances? Are the collateral requirements different on an SBA
loan than they are on a general commercial loan?
Ms. BLANKENSHIP. Sure.
Mr. BLUM. Are they more stringent?
Ms. BLANKENSHIP. I mean, the collateral requirements on an
SBA, you have more flexibility with collateral. And as well as
terms. Terms are a big deal so that you can stretch that
repayment term out and allow that customer to have enough cash
flow until he gets his business up and successful and running.
So that is one of the biggest advantages, the reason that we
cannot make a traditional or conventional credit under current
regulatory guidelines in our banking environment.
Mr. BLUM. Ms. Husic?
Ms. HUSIC. For our portfolio and our non-SBA, so our
delinquencies and our nonaccrual, we are at .42 percent of our
lending portfolio. Very pristine.
Mr. BLUM. Very pristine.
Ms. HUSIC. And you are looking at our asset quality----
Mr. BLUM. Congrats.
Ms. HUSIC.--of our SBA loans, we have a zero percent
default rate and a 0 percent delinquency. We have been doing
that, it will be almost 11 years. And over the past 6 to 7
years we have been a much more robust lender in those regards.
And I have to say, if I look historically through the life of
Centric, especially if you look over the economic downturn, you
would see loans that had gone bad during that period of time. I
think especially over the past, you know, 2 to 3 years, there
has been much improvement in the credit quality through
financial institutions in general.
Mr. BLUM. Zero percent, that is off the charts. You need to
take more risk.
Ms. HUSIC. When you see our lending numbers, we are doing
really a robust amount. As I mentioned, last year we did over
$41 million with 77 loans in the SBA and total lending, over
$210 million that was improved. One of the things so important
to us is setting the client up for success. And there is a lot,
as I mentioned, the numbers that we approved, there is a large
list of the numbers, and I would say equivalent to 25 to 30
percent that we have said no to. One of the things we do like
to do is if we do say no, we give them a way and a path how do
you get to a yes? And so almost some homework maybe to go back
and to say these are some of the things, if you work on and
improve we could perhaps help you and assist you in the future,
but until some of these things have been worked upon or done or
enhanced, we want to set them up for success and make it a win-
win.
Mr. BLUM. Ms. McDonald?
Ms. MCDONALD. Well, just like Ms. Blankenship and Ms.
Husic, we have a very low delinquency ratio, charge-off ratio.
Again, not at 0 percent. We do take a little bit more risk. But
it depends on what the needs of the member are, and for us it
is what can we do to help the member? How can we help them
either grow their business or start a new business?
Mr. BLUM. Is it higher or lower than your commercial loan
portfolio in general?
Ms. MCDONALD. It is generally just a bit higher, but our
commercial loan portfolio is incredibly low as well. I want to
say somewhere between 1 and 1-1/2 percent.
Mr. BLUM. Would your lender banks, what would the
experience be there in credit unions?
Mr. WILKINSON. Expecting that you were going to ask this
question I brought the numbers. So there are two different ways
to look at this, the way you as a banker would look at it, what
were the charge-offs this year, and what was our loan portfolio
balance at the end of the year? So at the end of fiscal year
2017, that charge-off rate was .8 for the entire 7(a) program.
Now, the other way that the Office of Management and Budget
looks at this is rather than as a typical banker would make a
loan to a business and have that loan renew every year, so a
15-year loan would be 15 separate loans for the bank. SBA looks
at this as one long 15-year loan. So they look at it as a
cohort. They call it a cohort of loans, and how does that
cohort of loans perform? And they then come back with all those
numbers from all the cohorts that they have and they put that
in the budget request.
So in the fiscal year 2018 budget request, our defaults net
of recoveries over a portfolio that can span 25 years was 4.49.
So you figure an average life of about 10 years, our annual
charge-off rate would be somewhere just under .5.
Chairman CHABOT. The gentleman's time has expired.
Mr. BLUM. That is amazing, and I yield back. Thank you.
Chairman CHABOT. Thank you.
The gentleman from Florida, Mr. Lawson, who is the Ranking
Member of the Subcommittee on Health and Technology, is
recognized for 5 minutes.
Mr. LAWSON. Thank you, Mr. Chairman. And welcome to the
Committee.
One other thing I read in the proposed legislation, and
maybe you can respond to it is that the lending to smaller
firms over 2008 to 2016 went down by about 13.7 percent, but
the increase to larger firms went up by almost 46 percent. What
happens in that regard?
Mr. WILKINSON. So you are talking about loan volume?
Mr. LAWSON. Right.
Mr. WILKINSON. Okay. I am going to look at loans of
$150,000 or less. Back in 2015, our numbers dropped, but our
dollars moved up, so we were making fewer number, but larger
dollar amounts. And then going up to the next step, 150 to 350,
those numbers actually improved slightly.
Mr. LAWSON. Okay. Did anyone else want to comment?
Ms. MCDONALD. What I can tell you is that is not an issue
at Randolph-Brooks. More than half of our SBA loans are less
than $75,000, so that is kind of our niche.
Mr. WILKINSON. Okay. The other thing I would add is if you
look at the current fiscal year, the loans in the small
categories are all up. So while through fiscal year 2017 they
were flat or modest, they have begun to move up in the current
fiscal year.
Mr. LAWSON. Okay. And Mr. Wilkinson, since you are talking,
can you discuss the effectiveness of the oversight mechanism
that SBA had put into place, including risk profiles to
guarantee that the 7(a) program is effective?
Mr. WILKINSON. Yes. They developed a--they call it PARRiS,
a risk protocol where they review lenders. It is a very robust
system. It is still relatively new, but it looks like a really
good system. We would like for them to have a few more years
managing this to see how it works out, but we think it is a
pretty good oversight tool.
Mr. LAWSON. And one other thing that was very intriguing is
I guess in a credit union they must be doing something very
significant because when you say that you do not have hardly
any defaults, what are you doing during the course of the loans
to put you in that position?
Ms. MCDONALD. Well, we work with our members. It is about
communication. We look at our loans. Depending on the amount of
the loan, we look at either a quarterly or a semiannual basis.
We go and we talk to members. We see how things are going. We
make sure that that line of communication is open. We have a
very good underwriting staff and we do a very good job with our
loans.
Mr. LAWSON. Okay. Thank you. And Ms. McDonald, can you
discuss the growth in the 7(a) lending? I believe that the data
show that growth in lending has increased, so what does it do
for the small-dollar loan? And you can tell me a little bit,
what do you consider a small-dollar loan?
Ms. MCDONALD. Well, for us a small-dollar loan is, well, by
SBA standards, less than $350,000. For us, it is really
anything less than $100,000. And again, that is mostly what our
niche is. And your question was how are we increasing it?
Mr. LAWSON. We have tremendous member loyalty, and so when
you do something for a member at a $75,000 level that maybe
they were not able to get somewhere else or maybe somebody did
not spend the time with them and you are able to help them,
then they tell their family and they fell their friends. And
that is the best kind of advertising that you can have is that
word of mouth. Randolph-Brooks has been very successful in
helping people with their personal finances for a very long
time. And as I mentioned before, the only reason that we got
into member business lending is because those same members were
coming to us saying we want you to help us with our business
needs.
Okay, and real quick, and anyone can respond to it, there
was always some consideration that the commercial banks area
felt that credit unions were doing more than they were supposed
to in getting involved in business lending. Is that generally
the same feeling?
Yeah, Ms. Husic?
Ms. HUSIC. We see quite a bit of that in our market area.
We say, in fact, the credit unions are reaching out to do more
commercial loans on their various electronic signs out in front
of their numerous buildings. They do. They have signs ``We do
commercial loans.'' And there is a big push towards it.
Our goal is, yes, we want to help the small business in our
community, just the piece is we would like to be able to have a
level playing field in order to compete.
Mr. LAWSON. Mr. Chairman, with that, my time ran out. I
yield back. I have a lot more questions I could ask.
Chairman CHABOT. All right. Thank you very much. The
gentleman's time has expired.
The gentleman from Kentucky, Mr. Comer, is recognized for 5
minutes.
Mr. COMER. Thank you, Mr. Chairman. And my questions are
going to be geared towards Ms.--is it Husic? Am I pronouncing
that right? I appreciate the American Bankers Association. Like
Congressman Marshall and Congress Blum, I served as a director
of a bank, 15 years, community bank back in Kentucky. And we
did not do very many SBA loans. I know other banks did, but we,
for whatever reason, did not do that many. But I am curious,
when a small business customer enters your bank, how does the
conversation proceed all the way to a SBA loan? Is there a
reason you send it to the SBA or what is the process to get
that customer towards that SBA loan?
Ms. HUSIC. Sure. So at Centric Bank, we have a total of 15
commercial lenders. We do not have any individuals that are
solely focusing on SBA loans. I would say out of those 15,
about half of them are contributing to the bulk of our SBA
loans. And again, they are doing other loans that are non-SBA
as well. So, in times, and just recently, I sat down with a
client, and many times a prospective client. So part of the
conversation when someone says they are looking to say maybe
start up a new business or acquire a business, we go through
the process to ask them, you know, do you have a business plan?
From there, you know, looking at the specifics with the
financials, the tax returns of them personally, personal
financial statement, a business plan; for the business perhaps
they are acquiring, the financials to support that and their
projections. First and foremost, we are always looking at can
we do this loan conventionally? That is where we start.
When there are times that we are unable to get them there,
we are looking at perhaps they do not have the required amount
of down payment, 20 or 25 percent in, to purchase to have their
own skin in the game of their own funds and needing a lesser
down payment. Is it a collateral shortfall? As when they are
purchasing a business there might be a more significant dollar
that is associated with good will. We are not going to do an
extended payment terms of, you know, past a 7- or 10-year if we
are doing that conventionally. So first and foremost, we walk
through those questions, can we do it conventionally? When we
cannot accomplish that, we like to look at how do we get the
client to a yes?
So the SBA program would be the next one we are looking at.
And at times, we are looking at the SBA 504. So it is not
necessarily always the 7(a). We are looking at what makes the
most sense for that particular customer in front of us. In the
end, we want to be able to set them up for success through that
process. And at times I look at it, we are a consultative
banker to them and trying to help navigate through the process,
and maybe some things they do not have sufficient information
coming to the table.
Mr. COMER. I am going to switch gears here. Dodd-Frank,
that is something I hope that we can somehow repeal. I know the
House has passed legislation to repeal it. Maybe a compromise
since we cannot seem to get there in the Senate would be just
to focus on community banks, try to ease up the regulatory
burden that community banks face with, in my opinion, the
excessive regulations and the excessive compliance that is
required now because of Dodd-Frank.
My question with respect to this testimony, has Dodd-Frank
had any effect on the 7(a) loan program? Are more customers
having to qualify now for an SBA loan because of Dodd-Frank or
less or has it affected availability and access to credit any
with the SBA program?
Ms. HUSIC. Well, I look at--there is an aspect of Dodd-
Frank that has not even come into place as far as being
effective for banks needing to do, and that is with small
business lending where the data needs to be compiled and will
need to be compiled going forward if something is not done or
impacted, we are to compile that similar to HMDA for the
residential loans. So that is particular. That is outstanding.
You know, in general, Dodd-Frank, the addition of hiring
individuals for the compliance rules to be able to oversee, so
that has cost us as community banks to having that. You know,
you get into qualifying mortgages. You get into a lot of
noncommercial as well, but it has, the regulatory burden has
been significant and onerous on community banks.
Mr. COMER. Okay. Thank you, Mr. Chairman. I yield back.
Chairman CHABOT. Thank you. The gentleman yields back.
The gentlelady from Puerto Rico, Jennifer Gonzalez-Colon,
is recognized for 5 minutes.
Ms. GONZALEZ-COLON. Thank you, Mr. Chairman. And thank you
for all our witnesses today.
My first question will be to Ms. McDonald, and it will be,
as part of your testimony you highlighted the importance of
better definitions for penalties on page 15. What kind of
errors should be defined as minor compliance errors and why?
Ms. MCDONALD. Thank you. The minor compliance errors would
be if somebody put the wrong date on something, if somebody
checked the box wrong. What we would like to see is there be a
difference between willful malicious negligence in trying to do
something on there, and another would be it is a training issue
and we screwed it up and we need to understand what the
penalties are because between 0 and $250,000, that is a big
number.
Ms. GONZALEZ-COLON. And what penalties should we apply to
those areas?
Ms. MCDONALD. Oh, gosh. In most cases I would say if it is
something like where you changed a date or you messed up in
that, it would be better to point it out first and then have
some type of a penalty after that.
Ms. GONZALEZ-COLON. Okay. My second question will be to Mr.
Wilkinson. And it will be, you mentioned the PARRiS system on
page 10 of your testimony, highlighting that it is in the final
stage. Do you think the system can converge with the new
regulations or be adapted?
Mr. WILKINSON. To the proposed legislation?
Ms. GONZALEZ-COLON. Yes.
Mr. WILKINSON. Oh, yes. I think it can. That should not be
an issue at all.
Ms. GONZALEZ-COLON. So without a problem?
Mr. WILKINSON. Not in my opinion.
Ms. GONZALEZ-COLON. Okay.
Mr. WILKINSON. SBA may have a difference of opinion, but it
should work just fine.
Ms. GONZALEZ-COLON. Okay. And my last question will be to
Ms. Blankenship. In your testimony you mentioned the Credit
Elsewhere Test. Please explain how the test operates and the
average time it takes to do that and what other recommendation
is required in addition to the inability to receive the
conventional credit?
Ms. BLANKENSHIP. Well, I think the Credit Elsewhere Tests
were encouraged by, as Mr. Wilkinson said earlier, it was
fairly ambiguous before, and the last thing that we want to do
is be out of compliance with the expectations of the program.
So by defining the Credit Elsewhere Test criteria and making it
as simple as possible, although, remember, every applicant is a
custom deal more or less, and typically a lot of times we would
use--what our regulators would allow as a conventional loan and
if we could not get that done, and you can look at their credit
scores or their lack of collateral. So it is fairly easy to
know that this would not be a slam dunk credit approval
process. Again, I just applaud this Committee for trying to
preserve this SBA program. We have used SBA programs since we
opened our bank in 1986 and it is a cornerstone of our lending.
Thank you. We appreciate that.
Ms. GONZALEZ-COLON. We do support it.
What other persons or people are involved in this process
besides the bank and the client?
Ms. BLANKENSHIP. The other, well, at Bank of the West,
since we have had this program since 1986, we have a very
dedicated and trained--this is a niche program, and it is
complicated. So we actually have about six people on staff that
specialize in SBA. So they work in conjunction with the lender,
and so we have our credit analyst and our loan department and
our underwriters that also assist that loan officer.
Ms. GONZALEZ-COLON. Yeah, but besides the client and the
bank, to the Credit Elsewhere Test, is it anybody else besides
the client and the bank, outside the bank and the client that
is working on that or no?
Ms. BLANKENSHIP. Typically, it would just be the client
coming to the bank for us.
Ms. GONZALEZ-COLON. Okay.
Ms. BLANKENSHIP. And then we would determine if it meets
the criteria of the Credit Elsewhere Test.
Ms. GONZALEZ-COLON. Thank you for being here.
And with that, Ms. Chairwoman, I yield back the balance of
my time.
Ms. RADEWAGEN. Thank you very much. Talofa and good
morning. You know, I am really looking forward to being back
home in sunny and warm American Samoa. And I want to thank the
Chairman and Ranking Member for holding this hearing.
So I have got a question for all of you. From your
perspective, does the length and the cumbersome nature of the
SBA application process hurt a small business' ability to
access capital? Ms. Blankenship?
Ms. BLANKENSHIP. Well, it is a cumbersome and lengthy
process and, you know, I would be lying if I told you that our
customers are often disgruntled with the amount of paperwork,
but I think when we show them that it is such a viable
alternative for them and they could not get this credit
elsewhere, and in our case, since we have been doing this for
over three decades, we have sort of perfected holding their
hand and counseling them and walking them through the process.
We would like to see it streamlined. We would like to see more
specific definitions, but it works for us.
Ms. RADEWAGEN. Ms. Husic?
Ms. HUSIC. To the same points, it is a more complex process
and I have to say of all of our small business clients that
come into Centric, and I would say less than 5 percent walk in
the door and say I want an SBA loan. And in fact, when that
topic ends up getting brought up for a discussion point that
they did not qualify for conventional lending, you have
probably about half of them saying I do not want to do a
government guaranteed loan because they have said I have heard
through other individuals that it is a very complex process, it
is very time-consuming. And for us, we are not a preferred
lender. I would say an average turnaround from application to
the time we close could be 6 to 7 weeks. We have had those that
have been in excess of 3 months.
So I think some of those things could be perceived by that
small business client as, again, cumbersome. Again, to the
point of, you know, that at the end, if that is the way that
they are going to be able to realize their dream of owning
their own business, we can get them to a yes by that and to
show them, you know, we are there working with them as a
partner to accomplish that.
Ms. RADEWAGEN. Ms. McDonald?
Ms. MCDONALD. Just like they said, there is a perception
that SBA loans are very onerous; that they take a lot of time.
We are a preferred lender, but there are a few times that we do
have to send it through general processing and that can take up
to 8 weeks. So that is somewhat frustrating, particularly for
our members. As I think Ms. Blankenship said, the benefits to
the member is what helps us sell the program.
Ms. RADEWAGEN. Mr. Wilkinson?
Mr. WILKINSON. Last year we did over 62,000 loans. We are
on pace to do over 65,000 loans this year, so there are a lot
of small businesses that do not find this too cumbersome, I
think especially when they figure out that they are able to
appropriately finance a long-term asset with a long-term loan
that reduces their monthly payments and puts their business in
a proper spot, the paperwork suddenly gets forgotten.
Ms. RADEWAGEN. Thank you. I reserve my time.
Chairman CHABOT. Thank you very much, Madam Chairman.
And we want to thank everyone for coming. If people are
wondering what happened, we had a markup in Judiciary. Most
members, in fact, all of us are on several committees and the
Judiciary was marking up a bill and they needed my vote for it
to pass, and it did, so. But I think all the members who had
any questions got to ask them.
We want to thank the very distinguished panel for their
excellent testimony this morning and now into this afternoon. I
think you all did a very good job. It helped us to learn more
about this program and how it impacts out there, especially
amongst small businesses, which after all is the focus of this
Committee; and also, the legislation that we are considering as
well, which is both bipartisan and bicameral since the Senate
is considering as well. So we want to thank you very much all
for shedding light on that.
And I would ask unanimous consent that members have 5
legislative days to submit statements and supporting materials
for the record.
Without objection, so ordered. And if there is no further
business to come before the Committee, we are adjourned. Thank
you very much.
[Whereupon, at 12:31 p.m., the Committee was adjourned.]
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