[Congressional Record Volume 147, Number 178 (Thursday, December 20, 2001)]
[Senate]
[Pages S13925-S13929]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INVESTOR AND CAPITAL MARKETS FEE RELIEF ACT
Mr. SARBANES. Mr. President, I rise to address an issue which I
believe may merit the attention of the Securities and Exchange
Commission following enactment of H.R. 1088, the Investor and Capital
Markets Fee Relief Act.
That bill has two main impacts. It authorizes the commission to raise
the salaries of its staff to levels that are on a par with the
compensation paid by other Federal financial regulators. Our securities
markets are the envy of the world. It is important that the regulator
of those markets be in a favorable position to attract and retain
qualified employees. Enacting pay parity contributes towards this goal
and will result in enhanced supervision of the securities markets.
In addition, the bill reduces certain fees charged to investors and
issuers. Section 11 of the bill provides an effective date for
reduction of transaction fees on the later of, one, the first day of
fiscal year 2002; or two, 30 days after the date on which a regular
appropriation to the Commission for such fiscal year is enacted.
Because the regular appropriation to the Commission (H.R. 2500) was
signed into law on November 28, 2001, Public Law 107-77, the effect of
Section 11 is to provide an effective date for transaction fee
reduction of December 28, 2001, regardless of when the bill is enacted.
The legislation was passed by the Senate on December 20, 2001, and
still must be signed by the President. Thus, the industry will have at
most only a few days to comply with the law. I have been informed by
some market participants that this may not allow them adequate time to
re-program and test their computers to make certain that the transition
to the new fee structure goes smoothly and without flaws.
I believe it would be appropriate, and consistent with the intent of
this legislation, for the commission to review this situation and
determine whether it is necessary or appropriate in the public
interest, and consistent with the protection of investors, to use the
commission's general exemptive authority to extend the effective date
for the reduction of transaction fees for a brief period as may be
reasonably necessary in order for market participants to comply with
the new law fully and without disruption.
Mr. GRAMM. I believe that the commission can and should alleviate
this problem. When the Senate passed its version of fee reduction
legislation in March, the bill, S. 143, provided for a delay of 30 days
in the effective date for transaction fee reduction in order to provide
securities firms and markets the necessary time to adjust their
computer systems to accommodate the rate change. This language was
changed when the bill was passed by the House in June, in order to
comply with budget-scoring requirements. At that time, it was
envisioned that congressional action on the bill would be completed
well before the start of the new fiscal year in October, and that the
effective date provision would not cause administrative problems for
the securities industry.
It is not our intention to impose an administrative requirement that
would be impossible for industry to meet. In order to comply with
congressional intent and to make this provision workable, I hope that
the commission will consider using its general exemptive authority
under Section 36 of the Securities Exchange Act of 1934 to extend the
effective date for reduction of transaction fees.
Mr. KERRY. Mr. President, I speak today on S. 1499, the American
Small Business Emergency Relief and Recovery Act of 2001. This
legislation provides help to small businesses hurt by the events of
September 11th and to small businesses suffering in the weakened
economy. Senator Bond and I have spent months trying to uncover who is
behind the serial holds that have been placed on this emergency
legislation and work out disagreements.
This bill hasn't been ``hustled through,'' as some contend. It was
drafted with the input of small business organizations, trade
associations and SBA's lending and counseling partners through more
than 30 meetings and conference calls--conference calls because we
couldn't ask folks to fly in the immediate weeks after the attacks. It
is cosponsored by 18 of the Small Business Committee's 19 members. And
overall 62, senators, including 20 Republicans, have joined me in
cosponsoring S. 1499.
On the House side, the Committee on Small Business passed the
companion to S. 1499. We attempted to move this bill quickly because it
is emergency legislation. It is a good bill because it can do a lot for
a lot of people. It is being held because of shameful politics.
[[Page S13926]]
I say let's bring this bill up for a vote. Small businesses have a
right to know exactly who is working against them and who is working
for them.
So what happened? On October 15th, when this legislation had cleared
both cloakrooms for passage, the Administration had the Republican
cloakroom put a last-minute hold on the bill so the Administration
could announce its approach the next day. The next morning, the
Administration lifted its hold, but a new hold was immediately placed
by the junior Senator from Arizona, which he stated in the press was on
behalf of the Administration. Last week, the Senator from Arizona
lifted his hold, and I thank him for that, but unfortunately, we then
learned that there was one or more anonymous Republican holds on the
bill. This approach makes it very difficult to try to work out
objections. Two other Republican senators told me that their objections
were solely based on the Administration's problems with the bill.
Therefore, I directed my staff to meet with the Administration, learn
their concerns and try to reach a compromise so that this bill could
pass before the recess.
Last night, Senator Bond and I joined our staffs as they met with
representatives of the Administration for the eighth time. I am very
disappointed to report that the Administration came to the table and
said that, although we had made some progress, it would not negotiate
further. The ultimatum was for us to strike entire sections and
provisions critical to the relief provisions of our bill.
Specifically the Administration's representatives said:
``We cannot work with you on Section 6.'' That is the entire stimulus
portion of S. 1499. As such, we were asked to eliminate the provision
that would make it less expensive for small businesses to get loans and
provide incentives to lenders to make these loans. We were told that,
in their view, there is no credit crunch for small businesses.
``We cannot work with you on Section 10.'' Section 10 establishes a
fund to help small businesses that were shut out of their Federal work
sites or have suffered delays in accessing those sites because of
national security measures. We offered to set it up in any way they
thought it could work and to reduce its $100 million authorization
level, but the Administration refused to work with us on that section.
``We cannot work with you on refinancing non-SBA business debt.''
This was an important part of the disaster relief that S. 1499 targets
to those at ground zero in NY and VA, those located in airports and
those adversely affected by Federal security actions. The
Administration was unwilling to make this help available to these
disaster victims.
The administration can not go further in providing an incentive to
small business lenders by reducing the lenders' loan fee by more than
one-tenth of one percent. Despite numerous articles in reputable
newspapers such as the New York Times, it is the Administration's view
that lenders do not need incentives to make small business loans in
this economic downturn. Senator Bond and I, as well as the 61 other
cosponsors of S. 1499 believe that both lenders and small business
borrowers need a break to encourage these loans to be made. With this
capital, small businesses will stay in business and continue to employ
people. Without it, we can expect greater business failures and
bankruptcies.
Senator Bond and I asked them to meet us halfway, and they said no.
We asked them to give us alternative language, and they didn't give us
any. We spent more than 20 hours negotiating on this bill and it
appears as if the Administration never had any intention of finding
common ground. It appears as if it was an exercise in delay.
Let me describe briefly where I disagree with the administration
about how to help small businesses battling bankruptcy and employee
layoffs triggered by the terrorist attacks and economic downturn. The
administration believes that all assistance should be delivered through
the SBA's disaster loans, which are administered through only four
regional offices. From talking to small businesses and SBA lenders,
Senator Bond and I have concluded that small businesses would be better
served through a combination of disaster loans and government
guaranteed loans. Government guaranteed loans are almost five times
cheaper than what the administration has proposed, have less exposure
for the taxpayer, and can reach more small business owners because they
are delivered through more than 5,000 private sector lenders who know
their communities and have experience making SBA loans. Our proposal
combines public and private sector approaches to ensure small
businesses receive the maximum amount of assistance.
We will never agree on each other's approach, mostly because the
administration has told us in meeting after meeting that it does not
believe there's a credit crunch and that small businesses are not
having difficulty in accessing credit. They don't acknowledge articles,
surveys and testimonials that state it has become harder and more
expensive for small businesses, particularly minority and women-owned
small businesses, to get loans over the past year.
They ignore the surveys by the Federal Reserve that say, ``40 percent
of domestic banks reported tighter standards [when lending to small
businesses] over the past three months, up from 32 percent in August.''
Please keep in mind that this survey was released in October and
doesn't even capture the affects of September 11.
They ignore articles from economic authorities such as the Wall
Street Journal. I read this last week on the floor but think it is
absolutely worth repeating. Wall Street Journal, Tuesday, November 6th,
2001. Here are the words of Mr. John Rutledge, Chairman of Rutledge
Capital in New Canaan, CT, and a former economic advisor to the Reagan
administration:
Interest rate reductions alone are not enough to jump-start
this economy. We need to make sure cheaper credit reaches the
companies that need it. . . . The Fed is cutting interest
rates--but the money isn't reaching capital-starved small
businesses because Treasury regulators are cracking down on
bank loans. Credit rationing, not interest rates, is the real
problem with the economy. . . . This problem didn't start on
September 11th. For more than a year U.S. banks have been
closed for business lending. Unless the current Bush
administration takes steps to restore bank lending to small
businesses and heal the asset markets now, the economy will
stay weak.
They ignore surveys published in the American Banker. On October 31,
a survey of 80 lenders of all sizes by Phoenix Management Services
found that 42 percent ``would be less likely to lend to small
businesses, which they view as more risky because they foresee no
improvement in the economy until late 2002 at the earliest.'' The
article from November validated what before was characterized as ``less
likely to lend to small businesses,'' by reporting lenders had actually
``tightened their standards'' to small firms by more than 40 percent.
Still, the administration maintains there's no credit crunch and that
provisions in S. 1499 to provide improved access to credit are too
expensive and unnecessary.
The administration has also raised concerns about the cost of the
legislation, which has been unofficially scored by Congressional Budget
Office at $860 million. Let me be clear, that's million, not billion.
$860 million to help all of our Nation's small businesses. Yet the
administration objects to this, when they have sent up requests for
billions in tax cuts for a select few large corporations, and when the
administration's approach costs almost five times as much to help fewer
small businesses. The bill's $860 million cost is too much to invest in
the nation's small businesses, according to the administration's
position.
I regret very much for small businesses and their employees that
their needs are being trivialized. I admire Senator Bond and the
Chairman of the House Committee on Small Business for showing
leadership in their party to help small businesses. I am very glad that
we can work in such a strong bipartisan fashion to fight for small
businesses. I thank the 62 members of this body who have come together
in a bipartisan fashion to support this legislation and our nation's
small businesses.
Let me note here that the White House said in our meetings that 62
cosponsors ``means nothing--that it happens all the time up here.'' I
find that cavalier considering that, according to the Congressional
Research Service,
[[Page S13927]]
only 13 out of 1,839 bills introduced in the 107th Congress have more
than 60 cosponsors.
The support for this bill is strong and bipartisan. I am very sorry
that those Senators supporting S. 1499 have not had the chance to cast
a vote in favor of this emergency legislation before they go home for
the holidays and visit with the small businesses in their states. Small
businesses deserve some good news. As for right now, we can only tell
them what I told the administration in our meetings last night: When we
come back in January, we intend to file cloture on this bill and take a
vote.
In closing, let me thank the many groups who have fought so hard on
behalf of their members to get this legislation enacted. They have
demonstrated all that is great about grassroots action and active
involvement in the political and legislative process.
In addition to including for the record the list of these groups, I
also ask unanimous consent to have printed articles and letters from
small business groups regarding the current credit crunch, the need for
equitable adjustment provisions for our small business contractors and
other provisions of S. 1499 be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 1499 Supporters
Airport Ground Transportation Association, American Bus
Association, American Subcontractors Association, Associated
General Contractors of America, Association of Women's
Business Centers, CDC Small Business Finance, Chicago
Association of Neighborhood Development Organizations,
Citizens Financial Group, RI, Clovis Community Bank, CA,
Coastal Enterprises, ME.
County of San Diego, Delaware Community Reinvestment Act
Council, Fairness in Rural Lending, Florida Atlantic
University Small Business Development Center, Helicopter
Association, HUBZone Contractors National Council, National
Association of Government Guaranteed Lenders, National
Community Reinvestment Coalition, National League of Cities,
National Limousine Association.
National Restaurant Association, National Small Business
United, National Tour Association, New Jersey Citizen Action,
Rural Housing Institute, Rural Opportunities, Self Help
Credit Union, Small Business Legislative Council.
U.S. Conference of Mayors, United Motorcoach Association,
United States Air Tour Association, United States Chamber of
Commerce, United States Tour Operator Association, Women's
Business Development Center.
____
[From the Wall Street Journal, Tues., Nov. 6, 2001]
A Credit Crunch Imperils the Economy
(By John Rutledge)
When the Federal Open Market Committee meets today it won't
be arguing over whether we are in recession. The economy is
weaker today than at any time since 1982. It will almost
certainly end the meeting by voting to reduce interest rates
again. This will bear the same results as all the previous
rate cuts this year: none.
Interest rate reductions alone are not enough to jump-start
this economy. We need to make sure cheaper credit reaches the
companies that need it. Credit rationing, not interest rates,
is the real problem with the economy.
The Fed's monetary stimulus has been hijacked by the bank
regulators. these credit highwaymen aren't bad guys, they are
just doing their jobs. The Treasury Department's Office of
the Comptroller of the Currency (OCC), which is charged with
regulating federally chartered banks, has a different agenda
from the Fed. Its job is to protect bank capital, period. It
does so with an army of bank examiners, who wield the blunt
instrument of credit rationing inside banks. For more than a
year, these regulators have been diverting bank reserves into
Treasury securities instead of business loans, in hopes of
restoring bank capital that was damaged by technology
lending. Companies that rely on banks for working capital
have been sucking air.
To restore growth we need a functioning banking system.
This will require a level of coordination the Treasury and
the Fed have seldom achieved. But the current consensus for
growth could give President Bush the political Roto-Rooter he
needs to clear out the conduit.
This problem didn't start on Sept. 11. For more than a year
U.S. Banks have been closed for business lending. The story
reads a lot like the real-estate blowout of the early 1990s
that ended with Resolution Trust Corp. auctions, except this
time it was undisciplined technology investments that did us
in. In the three years leading up to 2000, commercial banks
loaned enormous sums of money to telecom, cable and
technology companies to finance, capital-spending programs.
These loans weren't backed by assets, but were based on
projections that all three sectors would have sales growth
rates several times that of the economy for many years to
come.
Last summer it became clear that sales growth would not
meet those heady projections. Instead of the 14% growth
projected by analysts for telecoms this year, for example,
actual sales will shrink. Companies without revenues don't
make interest payments. And so by the fall of 2000, OCC teams
were forcing regional banks to downgrade loans and reduce
business lending.
The Fed is cutting interest rates--but the money isn't
reaching capital-starved small businesses because Treasury
regulators are cracking down on bank loans.
Here's the catch. The loans to technology companies were
generally unrecoverable. The tech firms had spent the funds
on current operating expenses or to purchase assets with lots
of goodwill but little resale value. So the banks turned to
the one place they could get money back: reducing the
revolving credit facilities of their small business
customers.
I got a personal glimpse of all this last October, when a
team of bankers visited our office to inform us their bank
had decided to reduce the credit rating of, as well as cash-
flow loans to, one of the private companies we own, in
preparation for a bank examiner audit the following week. Our
loan went from a ``five'' to a ``six'' on their 10-point
internal risk management system, which meant the company
could no longer use its acquisition credit line. This caused
the company to halt discussions with an acquisition target
and to book the costs incurred up to that point as current
expenses.
Other companies had it worse, with reduced revolving credit
facilities and increased fees. Some companies, under pressure
from their banks to raise equity capital, have been forced to
sell control in an illiquid equity market. Others have been
forced into filing for bankruptcy protection or liquidation.
Deprived of working capital, U.S. companies have been
trying to shrink their way to solvency, by reducing
inventory, stretching vendors and laying off workers. This
has created the sharpest drop in industrial output in 20
years.
Ironically, when the Fed became alarmed at the shrinking
economy and began to cut interest rate sin January, the bank
examiners, who report to a different master, tightened
further. The business loan market is far tighter today than
it was then. Two years ago banks were willing to lend a good
company four to five times Ebitda, or earnings before
interest, taxes, depreciation and amortization. Today banks
quote a market of just over two times Ebitda but money is
not, in fact available even at that level.
A further irony is that although banks have refused to lend
to businesses, they have been throwing money at the consumer
through mortgage and equity credit lines. This has produced a
two-speed economy that has left many companies unable to
produce products or to ship orders for lack of working
capital. Stimulating consumer spending won't solve this
problem; we need a functioning bank market.
The last period of nonprice credit rationing was the 1990-
92 credit crunch. It caused tremendous damage to the economy
and cost the first President Bush his re-election bid. It
ended only after the RTC had finished its auctions and the
property and banking markets had stabilized.
The lesson of that experience--that the economy is only as
healthy as its balance sheets--is as true today as it was a
decade ago. Unless the current Bush administration takes
steps to restore bank lending to small businesses and heal
the asset markets now, the economy will stay weak.
The White House can do three things to put the economy back
on sound footing.
First, it should bring the Fed and the Comptroller of the
Currency together to coordinate efforts to restore bank
lending. This can be done very quickly and would not require
new legislation.
Second, it should introduce legislation to transfer the
regulation of federally chartered banks from the Treasury to
the Fed, which would make monetary policy function more
smoothly and prevent future credit-crunch situations.
Third, the White House should make it, clear to
Congressional Democrats that the price for support of their
huge spending projects is fast action on a lower capital-
gains tax rate and further action to lower marginal income
tax rates, both of which would increase asset market values
and improve bank capital.
Forceful action to Roto-Rooter the business loan pipeline
is one thing we can do to make the economy grow again.
____
[From The American Banker, Wed., Nov. 14, 2001]
(By Rob Garver)
The slowdown in lending activity, evident through much of
the year, sharpened in recent months through diminished
demand and tighter lending standards even as banks addressed
a new round of credit quality problems in their loan
portfolios.
According to the Federal Reserve Board's latest survey of
senior loan officers, which was released Tuesday, nearly half
the banks had lowered internal ratings on at least 5% of
their commercial lending portfolios.
Internal loan ratings reflect a bank's assessment of the
risk that the borrower will default. The most likely
borrowers to be downgraded in the three-month period through
October were commercial airlines and nondefense aerospace
firms, followed
[[Page S13928]]
closely by travel and leisure-related businesses such as
hotels and restaurants. The survey of the chief credit
officers of 57 domestic banks and 22 U.S. branches of foreign
institutions also found that most U.S. banks tightened their
underwriting standards for commercial loans, and that
commercial borrowers, for their part, were less willing to go
into debt. Terms and conditions for consumer loans tightened
slightly, the survey found, and demand for consumer loans
fell.
The survey, taken four to six times a year, typically
contains a number of ``special questions'' in addition to
standard queries about loan terms, conditions, and demand.
The special questions, which usually address typical issues,
focused on the recent downgrading of commercial credits and
the changes in the loan market as a result of the Sept. 11
terrorist attacks on New York and Washington.
After noting that debt rating agencies ``have revised their
ratings for a substantial number of firms'' recently, the
survey asked banks what portion of their commercial loan
portfolios, by dollar volume, had been downgraded in the past
three months.
Among domestic institutions, 10.5% said they had downgraded
less than 1% of their portfolios, while 40.4% reported
downgrading between 1% and 5%. Banks that downgraded between
6% and 20% of commercial loans made up 42.1% of the total,
and an additional 7% of respondents reported downgrading
between 21% and 30%.
The standard elements of the survey, which deal with
underwriting standards and loan demand, found that 50.9% of
banks had tightened their standards for large and midsize
firms. For loans to small firms, 40.4% reported higher
standards.
The tightening of standards most frequently took the form
of premiums charged for making risky loans, and higher
interest rates. Loans to large firms were also likely to have
tighter loan covenants, while loans to small firms were
likely to carry higher collateralization requirements.
The main reasons for the tougher underwriting standards
were a ``less favorable or more uncertain economic outlook''
and a ``worsening of industry-specific problems.''
While banks were tightening their standards, commercial
borrowers were reducing their demand for loans, the survey
found. Loan demand from large and middle-market firms was
down at 72% of banks in the survey, while demand form small
businesses was down 55.4%. The most common reason reported
for the decreased demand was a reduced investment by
customers in their plants and equipment.
After noting that, in the aftermath of the attacks, the
Securities and Exchange Commission had relaxed its rules on
stock repurchases by public companies, the survey asked if
demand for loans to finance such repurchases had increased,
and if banks had altered the terms of such loans. In both
cases, more than 90% of respondents reported little or no
change.
The survey also asked if the dislocation of businesses
after Sept. 11 had affected liquidity in the secondary loan
market. Two-thirds of the respondents reported decreased loan
trading volume, and 64.4% reported that since the attacks,
bid-ask had widened.
____
[From the Arizona Daily Star]
Kyl Accused of Blocking Aid Bill
(By Tiffany Kjos and Aaron J. Latham)
Arizona Sen. Jon Kyl and an anonymous lawmaker are being
accused of blocking a bill that would provide low-income
loans to small businesses suffering as a result of the
country's economic downturn.
The bill would provide financial help through existing loan
programs administered by the Small Business Administration:
7(a) working capital loans; and 504 loans for equipment and
building improvements. It would also lower fees for borrowers
and SBA lenders.
Sen. John Kerry, a Democrat from Massachusetts and chairman
of the Senate small-business committee, introduced the bill
more than two months ago in hopes of moving it through
quickly. It has 60 co-sponsors in the Senate and dozens of
backers in small-business associations.
``I'm asking my Republican colleague to stop obstructing
this legislation,'' Kerry said.
The Congressional Budget Office estimates the bill's cost
at $860 million, but it would result in $25 billion in
government-guaranteed loans and venture capital for
businesses, Kerry said. If the bill passes, Congress would
have to figure out where the money would come from.
``As each day passes, more and more small businesses are
left behind, facing financial hardships that are forcing them
to close their doors as a result of inadequate disaster
assistance, stifled availability of loans and limited access
to capital,'' Kerry said.
Kyl, a Republican, has said the bill is too expensive, and
he told the Washington Post he is not blocking the bill but
acting as an agent for the Republican steering committee in
reviewing it.
Kyl's anonymous colleague on the bill can remain
unidentified because Senate rules allow members to oppose
legislation without going public.
The federal government already has in place a disaster loan
program that offers low-interest loans to businesses that
suffered directly or indirectly as a result of the Sept. 11
attacks. The Small Business Emergency Relief and Recovery Act
of 2001 would help those firms, plus any small business that
needs money to survive in the lagging economy.
Like thousands of other small businesses across the
country, Tucsonan Maggie Johnson has seen a dropoff since
Sept. 11. Johnson's Malkia African Arts & Gifts at 272 E.
Congress St. is filled with African masks, fabric and
clothing, Egyptian beaded scarves, and colorful greeting
cards she makes by hand.
``I'm not selling necessities. I'm selling things people
buy with their disposable income. And everyone's sitting on
their disposable income now,'' she said.
The consumer response to the attacks was immediate and
nationwide, she said.
``People are pulling back, retrenching--waiting is a good
word,'' she said. ``They're spending money on things they
have to have, food and basics.''
The U.S. Chamber of Commerce is a strong supporter of the
measure. Giovanani Coratolo, director of small-business
policy for the Washington, D.C.-based group, was careful not
to criticize Kyl but did not say the chamber has been working
hard to get the bill through the Senate.
``We respect his opinion but we are not with him on this,''
Coratolo said. ``We've been actively working to get co-
sponsors and, quite frankly, it could have 80 co-sponsors,
(but) he is still determined to block it.''
Normally the chamber would not endorse legislation that
would expand the government's role in small business, Corato
said--but these are special circumstances.
``Given the times and what we see from small businesses,
there's a lot of hurting going on and they do need help.
They're not looking for handouts. They're looking for access
to capital that will give them the ability to help them hang
in there,'' he said.
Coratolo said the opposition's strategy has been to run out
the clock. The Senate will probably adjourn by the end of
this week and not return until late January, Coratolo said.
``Small businesses need the relief now, and actually they
needed it last month,'' he said. ``The existing programs and
loan programs that were meant to act as a safety net--some
are not there and some don't reach out far enough to help
those that really need the help.''
SBA loans are guaranteed by the government, so lenders are
more apt to give them, Kerry said.
While he opposes the small-business bill, Kyl is backing a
$500 per person tax credit for travel-related expenses.
``Sen. Kyl has a travel incentive bill going through that's
$10 billion, but he says our bill is too expensive.
Understanding how important small businesses are to our
economy, we are not denying that travel is important as well,
but we do need to get these small businesses some
assistance,'' said Dayna Hanson, Kerry's press secretary for
the small-business committee.
Kerren Vollmer, who owned Nava-Hopi Tours in Flagstaff with
her husband, Roger, agrees. The couple closed their bus tour
business Oct. 26 because so many people canceled their travel
plans after Sept. 11. The Vollmers owned 10 tour buses and
operated charter tours as well as regular trips to Phoenix
and the Grand Canyon from Flagstaff.
``You still have to run regular schedules,'' she said.
``You can't quit just because you have only three or four
people.''
Vollmer is a lifelong Republican who voted for Kyl, ran for
county superintendent, and has worked in the voting precinct.
She tried to contact Kyl's office but received no response.
``I've sent e-mail, I've sent him a fax, begging him,
offering to talk with him or any of his staff, this is what's
going on,'' Vollmer said. ``When it's your own senator, it
hurts. Because I don't feel like he even recognizes what's
going on under his own nose.''
Vollmer said the company tried to get a disaster loan but
couldn't even get the application, even with the help of the
Arizona Department of Revenue and the local community
college's small business development center. Whether the
latest measure will make it through the Senate is very much
up in the air, Coratolo said.
``Am I optimistic? It's about a 50-50 chance, and if it
does, it will be by the skin of its teeth,'' he said. ``Sen.
Kyl has been very, very effective at blocking it.''
____
The National Association of Government Guaranteed
Lenders, Inc.,
December 20, 2001.
Hon. John Kerry,
Chairman, Senate Committee on Small Business and
Entrepreneurship, Russell Senate Building, Washington,
DC.
Dear Senator Kerry, On behalf of the members of the
National Association of Government Guaranteed Lenders
(NAGGL), the SBA's 7(a) lending partners, thank you for your
continuing efforts to improve capital access for small
businesses in this time of sharply heighted need. We strongly
support your efforts and the efforts of Senator Bond to enact
S. 1499.
It is clear, especially in light of events of September 11,
that banks' profits continue to plunge. According to a
November 30 article in the Washington Post, ``Earnings for
the nation's banks dropped nearly 10 percent in the third
quarter because of the largest increase in expected loan
losses in more than a decade.'' The report goes on to say
that ``the dip in earnings can be partly attributed to losses
from the Sept. 11 terrorist attacks, with more expected to be
reported in the fourth quarter.''
[[Page S13929]]
This drop in profits has resulted in an every-tightening
credit crunch, as can be inferred from just the headline of a
November 14 Wall Street Journal article that reads, ``Banks
Tighten Credit, Loan Standards In Past Months Amid Uncertain
Outlook.'' This article cities a Federal Reserve study that
``aids fuel to growing concerns that an unwillingness among
bankers to lend is threatening to choke off investment,
hampering chances of a quick economic recovery.''
In this economic climate, it has become exceedingly
difficult for even the most qualified small businesses to
access the capital they need for survival, and to help spur
the American economy to recovery and renewed prosperity.
This is why the passage of S. 1499 is so important. While
the SBA's Disaster Loan Program is a necessary ingredient of
economic recovery, it cannot possibly provide the sweeping
help that the 7(a) program can, and S. 1499 addresses this
problem. S. 1499 creates a more attractive 7(a) program for
cautious lenders, and a more affordable 7(a) program for
hurting borrowers for one year's time--when both of them need
it most. And it utilizes private sector lenders that are
already in place and ready to provide necessary capital
immediately.
We encourage you and your Senate colleagues to
expeditiously pass S. 1499 while it is still possible to help
small businesses and the American economy in their time of
greatest need.
Sincerely,
Anthony R. Wilkinson,
NAGGL President & CEO.
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