[Congressional Record Volume 169, Number 203 (Monday, December 11, 2023)]
[Extensions of Remarks]
[Pages E1200-E1202]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




OPPOSITION TO S.J. RES. 32, PROVIDING FOR CONGRESSIONAL DISAPPROVAL OF 
   THE RULE SUBMITTED BY THE BUREAU OF CONSUMER FINANCIAL PROTECTION 
RELATING TO ``SMALL BUSINESS LENDING UNDER THE EQUAL CREDIT OPPORTUNITY 
                                 ACT''

                                 ______
                                 

                         HON. SYLVIA R. GARCIA

                                of texas

                    in the house of representatives

                       Monday, December 11, 2023

  Ms. GARCIA of Texas. Mr. Speaker, I rise to express my opposition to 
S.J. Res. 32. [the Provision on Congressional Disapproval of The Rule 
Submitted By The Bureau Of Consumer Financial Protection Relating To 
``Small Business Lending Under The Equal Credit Opportunity Act.
  Mr. Speaker, the beginning of so many great American stories is built 
around starting a small business in your family name, becoming a 
foundation in your local community--making it in America.
  Small businesses are major drivers of wealth creation in our overall 
economy. They account for two-thirds of net new jobs and nearly half of 
our U.S. economic activity.
  For many of them, that dream stalls with going to a bank and getting 
a small business loan. For many Americans, the sound of their name, the 
color of their skin, the language that they speak or who they love can 
doom that dream if a bank says that they are at risk.
  This isn't hypothetical. I, too, was born and raised in south Texas, 
I can tell you that when I go home and I see some businesses that have 
closed, I ask my family whether it was due to the pandemic, or no 
demand for the

[[Page E1201]]

cost of services that they had. I am told that they just had trouble 
with finances, and they couldn't get a loan.
  In some small rural areas, like where I grew up, there aren't credit 
unions everywhere like there are in the city of Houston where I live 
now.
  Even in the city of Houston, many small businesses during the 
pandemic couldn't secure a PPP loan in round one. We [as Congress] had 
to go in and do a carve-out to literally force the banks to provide 
loans to small businesses.
  I am glad that one of my colleagues was openhearted and gave people a 
lot of loans. I just hope that that included loans to minority small 
businesses.
  Mr. Speaker, this is real. It is not hypothetical. We know that 
minority-owned small businesses were less likely to receive a loan 
during the pandemic compared to White firms. Regrettably, Mr. Speaker, 
racism and discrimination flourish in the darkness. We need to shine a 
light and allow the Consumer Financial Protection Bureau to make 
lending more transparent.
  Mr. Speaker, a transparent market will be a competitive market.
  With transparency in lending, banks are driven to compete and offer 
better terms.
  With this resolution, extreme MAGA Republicans are protecting the 
secret discriminatory practices of big banks and lenders. Repealing 
this rule would harm all those who stand to benefit from much-needed 
transparency.
  Make no mistake, extreme MAGA Republicans continue to put the 
interests of the big bank CEOs and corporate lobbyists ahead of their 
constituents. It is they who, time and time again, put profits over 
people. House Democrats will continue protecting everyday consumers and 
small business owners, while holding corporations accountable.
  We will always put people over corporate profits. We will always put 
light over darkness.
  For additional information on an April 19, 2022 Report from the 
Consumer Financial Protection Bureau titled ``Data Spotlight: 
Challenges in Rural Banking Access.'' Please see (https://
files.consumerfinance.gov/f/documents/cfpb data-spotlight challenges-
in-rural-banking 2022-04.pdf).
  I include in the Record an April 4, 2021 New York Times article by 
Stacy Cowley titled ``Minority Entrepreneurs Struggled to Get Small-
Business Relief Loans.'' (https://www.nytimes.com/2021/04/04/business/
ppp-loans-minority-businesses.html).
  Mr. Speaker, I urge my colleagues to vote against this resolution.

                [From the New York Times, April 4, 2021]

  Minority Entrepreneurs Struggled To Get Small-Business Relief Loans

                           (By Stacy Cowley)

       A year after the Paycheck Protection Program started, 
     studies show how its design hurt Black- and other minority-
     owned businesses.
       Southern Bancorp is a lender serving the Arkansas and 
     Mississippi Delta, where poverty rates are among the highest 
     in America and decades of redlining shaped neighborhoods with 
     little generational wealth.
       When the Paycheck Protection Program for small businesses 
     started last April, so many of Southern Bancorp's customers 
     didn't qualify for the relief money that the Arkansas bank's 
     chief executive, Darrin Williams, turned to donors to raise 
     money for $1,000 grants so it wouldn't have to turn 
     applicants away empty-handed.
       The bank made 128 such grants, giving more than 100 of them 
     to businesses run by women or minority owners. One let a nail 
     salon owner buy plexiglass so she could reopen. Another 
     allowed a small cafe to buy safety gear for its staff. A day 
     care used the money for the new sanitizing equipment it 
     needed.
       ``So many companies will never come back, and 
     disproportionately more of those that will be lost are Black 
     and brown businesses,'' Mr. Williams said.
       Congress created the Paycheck Protection Program in March 
     2020 as an emergency stopgap for what lawmakers expected to 
     be a few months of sharp economic disruption. But as the 
     pandemic raged on, the program--which made its first loans 
     one year ago this past week--has turned into the largest 
     small-business support program in American history, sending 
     $734 billion in forgivable loans to struggling companies.
       The program helped nearly seven million businesses retain 
     workers. But it has also been plagued by complex, changing 
     rules at every stage of its existence. And one year in, it 
     has become clear that the program's hasty rollout and design 
     hurt some of the most vulnerable businesses.
       A New York Times analysis of data from several sources--
     including the Small Business Administration, which is 
     managing the loan program--and interviews with dozens of 
     small businesses and bankers show that Black- and other 
     minority-owned businesses were disproportionately underserved 
     by the relief effort, often because they lacked the 
     connections to get access to the aid or were rejected because 
     of the program's rules.


                           Rollout was speedy

       After Congress created the program in last year's CARES 
     Act, President Donald J. Trump's administration--especially 
     his Treasury secretary, Steven Mnuchin--put a priority on 
     getting money to needy businesses fast. Just seven days after 
     the law was signed, the earliest applicants received their 
     checks.
       But the haste meant the rules were mostly written on the 
     fly. Reaching harder-to-serve businesses was an afterthought. 
     Lenders and advocacy groups warned that the relief effort had 
     structural challenges that were likely to inadvertently but 
     disproportionately harm women and minority business owners. 
     Reaching the most vulnerable businesses required 
     determination, they said, and the program gave lenders no 
     incentives to put in that effort.
       The government relied on banks to make the loans, creating 
     an obstacle for borrowers who didn't have established banking 
     relationships. Some banks favored their larger and wealthier 
     clients, which pushed ordinary customers to the back of the 
     queue. ``Mystery shopper'' studies found that Black 
     applicants were consistently treated worse than white 
     counterparts.
       The program also largely locked out sole proprietors and 
     independent contractors--two of the most popular structures 
     for minority-owned businesses. Those companies weren't 
     eligible to apply for the program's first week. When they got 
     access, a rule barring loans to unprofitable solo 
     businesses--a restriction that didn't apply to larger 
     companies--prevented many from getting help. Most nonbank 
     lenders, including those that specialize in underserved 
     communities, were shut out for weeks while they waited for 
     the Small Business Administration to approve them.
       ``The focus at the outset was on speed, and it came at the 
     expense of equity,'' said Ashley Harrington, the federal 
     advocacy director at the Center for Responsible Lending.
       In the program's final weeks--it is scheduled to stop 
     taking applications on May 31--President Biden's 
     administration has tried to alter its trajectory with rule 
     changes intended to funnel more money toward women- and 
     minority-led businesses, especially those with only a handful 
     of employees.
       Mr. Biden took a swipe at his predecessor's track record 
     last week as he signed a bill extending the program's 
     deadline. ``Many small businesses, as you know, particularly 
     Hispanic as well as African-American small businesses, are 
     just out of business because they got bypassed the first time 
     around,'' the president said.
       But Mr. Biden's revisions--which, most prominently, 
     expanded lending to independent contractors and others who 
     work for themselves--have run into their own obstacles, 
     including the speed with which they were rushed through. 
     Lenders, caught off guard, struggled to carry them out, with 
     little time left before the deadline.
       ``The rules are complicated and constantly changing, and 
     that alone creates an access barrier,'' Randell Leach, the 
     chief executive of Beneficial State Bank in Oakland, Calif.


                  Black and minority businesses suffer

       Because lenders are not required to collect demographic 
     details on their borrowers, data on the Paycheck Protection 
     Program's racial breakdown has been scarce, but economists 
     have consistently found signs of gaps.
       An analysis by the Federal Reserve Bank of New York noted 
     that some counties with large numbers of Black-owned 
     businesses--most notably the Bronx, Queens and Wayne County, 
     Mich., which includes Detroit--had strikingly low 
     concentrations of the relief loans. Majority-white ZIP codes 
     in several metropolitan areas had higher loan coverage than 
     ZIP codes with heavily minority populations, according to a 
     San Francisco Fed analysis released last month.
       And data from the Small Business Administration shows the 
     relief effort's tilt. The vast majority of lenders did not 
     report demographic data on the 3.6 million loans they made 
     this year, but of the 996,000 that included information on 
     the borrower's race, 71 percent of the dollars went to white-
     owned businesses.
       Pilar Guzman Zavala founded Half Moon Empanadas, a small 
     chain of restaurants, in Florida 12 years ago. She employed 
     100 people before the pandemic and had established bank 
     accounts and years of detailed business records. But Ms. 
     Zavala's application stalled at the first two lenders she 
     tried, forcing her to spend a month hunting before she 
     finally found a local bank that would process her loan.
       She's grateful for the aid, which helped her hold on to 50 
     workers, but found the process infuriating.
       ``The financial system doesn't get to truly small business, 
     Hispanic businesses, women-owned businesses. It just 
     doesn't,'' she said.
       Of the 1,300 Paycheck Protection Program loans that 
     Southern Bancorp made last year, many went to customers who 
     had been turned away by larger banks, Mr. Williams said.
       In a recent Federal Reserve survey, nearly 80 percent of 
     small-business owners who are Black or of Asian descent said 
     their companies were in weak financial shape, compared with 
     54 percent of white business owners. And Black owners face 
     unique challenges. While owners from all other demographics 
     told the Fed that their main problem at the moment was low 
     customer demand, Black respondents cited a different top 
     challenge: access to credit.
       When Jenell Ross, who runs an auto dealership in Ohio, 
     sought a Paycheck Protection Program loan, her longtime bank 
     told

[[Page E1202]]

     her to look elsewhere--a message that large banks like Bank 
     of America, Citi, JPMorgan Chase and Wells Fargo delivered to 
     many of their customers in the program's frenzied early days.
       Days later, she obtained a loan from Huntington Bank, a 
     regional lender, but the experience stung.
       ``Historically, access to capital has been the leading 
     concern of women- and minority-owned businesses to survive, 
     and during this pandemic it has been no different,'' Ms. 
     Ross, who is Black, told a House committee last year.


                        Community groups step in

       Community lenders and aid organizations took a shoe-leather 
     approach to filling the gaps.
       Last year, the American Business Immigration Coalition, an 
     advocacy group, worked with local nonprofits to create a 
     ``community navigator'' program that sent outreach workers to 
     Black, minority and rural businesses in Florida, Illinois, 
     South Carolina and Texas. They plowed through roadblocks, 
     Whac-a-Mole-style.
       Language barriers were common. Many business owners had 
     never sought a bank loan before. Several didn't have an email 
     address and needed help creating one. Some hadn't filed 
     taxes; the coalition hired two accountants to help people 
     sort out their financials.
       ``Our folks literally went door to door and walked people 
     through the process,'' said Rebecca Shi, the group's 
     executive director. ``It's time-consuming.''
       The group's work netted $8 million in Paycheck Protection 
     Program loans for 219 businesses. For those companies, the 
     help made a profound difference.
       TruFund Financial, a New York lender that focuses on 
     historically disadvantaged communities, spent two hours of 
     staff time, on average, on each of the 490 loans it made last 
     year--far more than larger lenders put in. Dozens of its 
     applications took 10 hours or more to complete, said James H. 
     Bason, TruFund's chief executive.
       Many of TruFund's customers walked in the door after being 
     turned away by large banks, where ``not being able to speak 
     to anybody at the bank, sitting around waiting to hear, and 
     then not hearing anything for weeks--all of that created a 
     lot of anxiety for our small-business borrowers,'' Mr. Bason 
     said.
       Shaundell Newsome, a Las Vegas business owner and a co-
     chair of Small Business for America's Future, an advocacy 
     group, said improving outcomes for Black business owners 
     would require deliberate, sustained changes throughout the 
     banking industry.
       ``The solution is intentionality,'' he said. ``What I mean 
     by that is making sure bankers, regulators and policymakers 
     stay intentional on building Black businesses and helping us 
     get access to capital.''
       That's a message Mr. Newsome passed on to Treasury 
     Secretary Janet L. Yellen in a recent meeting. Ms. Yellen has 
     pledged to increase support for minority-focused lenders and 
     make other changes to alter a financial system that, in her 
     words, still produces outcomes unacceptably similar to those 
     of the days when Jim Crow laws were in effect.
       Economic crises like the one now gripping the country ``hit 
     people of color harder and longer'' and intensify economic 
     inequality, Ms. Yellen said at that meeting. ``I am worried 
     the current crisis will do this again. In fact, I know it 
     will, unless we act.''

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