[Congressional Record (Bound Edition), Volume 152 (2006), Part 2]
[Senate]
[Pages 2092-2094]
[From the U.S. Government Publishing Office, www.gpo.gov]




       MAKING SUPPLEMENTAL APPROPRIATIONS FOR THE SMALL BUSINESS 
                             ADMINISTRATION

  Mr. FRIST. I ask unanimous consent that the Senate proceed to the 
immediate consideration of H.R. 4745, which was received from the 
House.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The assistant legislative clerk read as follows:

       A bill (H.R. 4745) making supplemental appropriations for 
     fiscal year 2006 for the Small Business Administration's 
     disaster loans program, and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.
  Ms. LANDRIEU. Mr. President, after the close of business on February 
9, 2006, the Small Business Administration, SBA, notified my office 
that the SBA Disaster Loan Program was going to run out of money 4 days 
later on February 13, 2006. I was outraged that my office was only made 
aware of the situation because USA Today was about to do a story on it. 
The Disaster Loan Program is one of the most important lifelines that 
the people of my State are relying on to pull themselves out of the 
destruction wrought by Hurricanes Katrina and Rita. When SBA first knew 
about the funding shortfall in this program, the Senators from 
Louisiana, Mississippi, Florida, Texas, and Alabama should have been 
the first people told. No doubt some of my colleagues may only have 
learned about this in the media. That is not how a Federal agency 
should notify Congress of important developments.
  The administration has requested, and the Appropriations Committee 
has approved, a reprogramming of $100 million from SBA's salaries and 
expenses account to the Disaster Loan Program to keep it funded for 
another 2 weeks. The program will still need additional funding beyond 
this. H.R. 4745, that is before the Senate today, will allow for a 
reallocation of $712 million in funds from the Federal Emergency 
Management Agency to SBA in order to keep the Disaster Loan Program 
running until the end of April. They hope that by then Congress will 
have acted on an additional Katrina supplemental appropriations bill to 
keep the Disaster Loan Program funded through the end of the fiscal 
year. I certainly support this legislation and I am pleased that SBA 
acted to keep the Disaster Loan Program funded.
  But even with these temporary extensions, this latest incident is 
just another example of the poor performance of SBA under the its 
Administrator Hector Barreto. SBA told us that it has known about this 
problem since December when they realized that their average disaster 
loan size for damage as a result of Katrina was double what they had 
previously experienced in the program. So all of their estimates were 
off. They knew that the amount of money they had budgeted for disaster 
loans to businesses and homeowners for the program would not last. But 
they never said anything to us about it--until they thought that the 
press would tell us first.
  The Small Business Committee held hearings focusing on SBA's disaster 
response to Katrina and Rita, so the agency knew that this was a major 
concern to the chair and ranking member of the committee, Senator Snowe 
and Senator Kerry, as well as myself and my colleague from Louisiana, 
Senator Vitter. The committee staff is in almost daily contact with 
SBA, giving SBA ample opportunity to discuss upcoming issues that would 
warrant congressional attention. No one at SBA raised this issue, 
everything was fine.
  When the administration released the Federal budget for 2007, SBA 
made no mention that the Disaster Loan Program was going to need 
additional funding. The SBA's Chief Financial Officer took part in 
budget briefings for staff along with other SBA officials. Again no 
mention that the Disaster Loan Program was running out of money.
  Mr. President, if this was an isolated incident or oversight, I would 
not be nearly as disappointed. But this is far from an isolated event. 
My constituents have been complaining about SBA and the Disaster Loan 
Program since the earliest days after the disaster. Katrina and Rita 
catastrophically destroyed or damaged over 18,000 businesses and over 
200,000 homes in Louisiana alone. Early on after the storm, disaster 
victims had to wait months for their loans to be approved. The agency 
did not have enough staff on the ground to do damage assessments. The 
situation has improved since those early days, and the SBA has finally 
heeded our calls to contract out the loss verification process to speed 
things up. I commend them for coming to their senses on that, but I 
still believe that the SBA's slow start has led to business failures 
and has left many homeowners without any hope of returning home.

[[Page 2093]]

  Furthermore, SBA's failure to accurately track the finances of the 
Disaster Loan Program, and more importantly, its neglect in keeping 
Congress updated on this developing problem, is evidence of a culture 
of inefficiency that goes through to the highest levels of the SBA. I 
want to know what these officials knew and when they knew it, because 
certainly no one in Congress was told until February 1. That is 12 
days--I repeat 12 days--before the program was set to run out of money.
  Mr. President, Katrina and Rita threw the gulf coast into a state of 
uncertainty. SBA's handling of the Disaster Loan Program has only made 
this feeling of uncertainty worse. We need more than a string of 
temporary fixes to the financial viability of the program to ensure 
that the dollars will be there for the people in the gulf who are 
trying to rebuild. We need a permanent solution or else the management 
mistakes of the past will continue to plague the SBA's disaster 
response for future disasters.
  Mr. KERRY. Mr. President, the Small Business Administration's 
disaster loan program is facing another shutdown this month unless 
Congress passes a bill to provide the program with more funding. A 
shutdown of this program would further slow the recovery of the gulf, 
where hundreds of thousands of business owners and homeowners have been 
waiting months for the administration to process and disburse loans to 
help them pay their bills and start rebuilding their businesses and 
homes.
  As of this week, according to the SBA's data, out of more than 60,000 
loans approved for businesses and homeowners, only 23,000 have been 
partially or fully disbursed. And out of the almost 375,000 
applications received, 190,000 are still waiting to be processed. The 
families and businesses waiting should not be subjected to yet another 
roadblock to assistance through the disaster loan program.
  The mismanagement of the SBA's disaster loan program has been well-
documented on national news programs like CNN and in major papers like 
the Washington Post and USA Today. The Committee on Small Business and 
Entrepreneurship has held two hearings on the matter. Adding to the 
problems, the SBA was not paying attention to the books and didn't 
realize it was making larger loans and spending more than it had 
estimated. This lack of oversight brought the program to the brink of 
shutting down.
  When the President's budget was released on February 6, the SBA 
discovered it only had enough money to make it to February 13. Instead 
of being forthcoming about the problem when the SBA and its financial 
team came up to brief the oversight Committee on SBA's budget and 
financial standing, they were silent. Luckily, as has been the pattern 
since President Bush has been in office, the Congress stepped in to 
pass emergency legislation to keep one of SBA's small business programs 
up and running.
  Specifically, Congress approved a last-minute request from the 
administration to reprogram $100 million from SBA's disaster 
administrative funds into the account for disaster loans. 
Unfortunately, not only did SBA wait until the last minute to seek 
assistance, but the assistance it sought was not enough to keep the 
program running long--just enough to keep the program running from 
February 14 to maybe the end of the month. To make it through the year, 
the SBA needs an estimated $1.3 billion.
  Demonstrating yet another lapse in judgment, the administration did 
not plan to seek the entire amount to avoid another shutdown but 
instead decided to take a piecemeal approach. Their plan was to ask now 
for enough money to make it through July and then later in the year to 
seek the rest of the needed funding. I disagreed with this approach and 
urged the President and Senator Majority Leader Frist to request the 
entire funding at one time and to move the funding measure as a 
freestanding bill so that it could pass before the Congress breaks for 
the Presidents Day recess. Waiting until Congress comes back on 
February 28 would be too risky given that SBA only has the $100 million 
it requested to keep going.
  Given all that is at stake for the families and businesses in the 
gulf, I am very glad that today, before we recess, the Senate is 
considering H.R. 4745, a bill to provide funding to the SBA's disaster 
loan program. I am glad that Congress has come to the administration's 
rescue to pass another emergency bill, one that is freestanding. I only 
wish the bill provided the full $1.3 billion instead of $712 million. 
This will only keep the program running through April. However, the 
House has already recessed, so we are not in the position to add more 
funding at this time.
  I hope this bill gives some peace of mind to those in the gulf 
waiting for help, and I hope that when we come back we can be just as 
swift in approving a final measure to fully fund the disaster loan 
program.
  In closing, I ask unanimous consent that letters from me and my 
colleagues to President Bush and Majority Leader Frist be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         U.S. Senate, Committee on Small Business & 
           Entrepreneurship,
                                Washington, DC, February 10, 2006.
     Re Averting Shutdown of SBA's Disaster Loan Program.

     The President,
     The White House,
     Washington, DC.
       Dear Mr. President: We have just received word that the 
     Small Business Administration's (SBA) disaster loan program 
     was on the brink of running out of money next week, on 
     February 13, 2006. Our Committee was not notified until this 
     week that the SBA needed more funding, and according to 
     documents I have just received, not even the appropriators 
     were notified until recently. Instead of waiting until the 
     last minute to try and avoid a shutdown, further exacerbating 
     the disaster loan program's failure to meet the urgent needs 
     of hurricane victims in the Gulf, the Administration should 
     have notified Congress of this problem sooner. This is 
     reminiscent of the way in which the Administration handled 
     the shutdown of its largest small business lending program 
     two years ago and the way it handled the shortage of funds to 
     pay SBA's disaster loan staff during the 2004 Florida 
     hurricanes.
       Mr. President, your FY2007 budget was released on Monday, 
     and you deployed your staff out to the various oversight 
     Committees this week to promote your priorities for the 
     various agencies and departments and to justify the requests. 
     Among other key SBA employees, Committee staff met with the 
     SBA's Chief Financial Officer. No one should be in a better 
     position to know the Agency's fiscal standing in its 
     accounts. Yet, not once did the CFO or anyone from the SBA 
     mention a need for additional disaster loan funding.
       For too long, you have ignored the mismanagement of the 
     SBA. The draconian cuts to the SBA by this Administration 
     have proven deleterious to the delivery of resources 
     important to small businesses across the nation. The near-
     shutdown of the disaster loan program demonstrates the short-
     sightedness of these budget cuts.
       It is time to get the SBA's disaster loan program running 
     smoothly and remove the red tape that is keeping so many 
     homeowners and business owners from getting much-needed 
     disaster assistance. As of yesterday, SBA's data showed that 
     almost six months after Hurricane Katrina hit, 50 percent of 
     the loans requested by homeowners are waiting to be 
     processed, and 35 percent of the business owners are waiting 
     for their loan applications to be processed.
       I understand that the Administration's reprogramming 
     request of $100 million approved yesterday by Congress will 
     only provide enough funding to keep the program running for 
     about 14 more days. To avoid a shutdown during Fiscal Year 
     2006, the SBA disaster loan program needs an estimated $1.3 
     billion. Currently, your Administration is planning to 
     request $1 billion to be reallocated from the billions 
     sitting idle at FEMA. Unfortunately this will only fund the 
     disaster loan program through July, requiring an additional 
     request for the remaining $300 million in supplemental 
     appropriations to make it through the end of the fiscal year 
     in September. Rather than continue this piecemeal approach to 
     budgeting, I urge you to request the full amount to operate 
     the program properly now and make sure the needs of the Gulf 
     and future disaster victims are met.
           Sincerely,
                                                    John F. Kerry.

[[Page 2094]]

     
                                  ____
         U.S. Senate, Committee on Small Business & 
           Entrepreneurship
                                Washington, DC, February 14, 2006.
     Re Passing Legislation To Prevent Shutdown of SBA's Disaster 
         Loan Program.

     Hon. William H. Frist, M.D.,
     U.S. Senate Majority Leader, U.S. Senate,
     Washington, DC.
       Dear Mr. Majority Leader: We are writing to ask your 
     immediate attention in passing critical legislation to 
     prevent the Small Business Administration's (SBA) Disaster 
     Loan program from shutting down.
       As you are aware, the SBA Disaster Loan program would have 
     run out of money yesterday, February 13, 2006, if the 
     Congress had not approved a last-minute request from the 
     Administration to reprogram $100 million. The SBA has told 
     the Committee that the reprogrammed funding will only keep 
     the program running for about 12 more days and estimates it 
     will need an additional $1.3 billion to avoid a shutdown in 
     FY2006.
       Instead of seeking the full amount, SBA has informed the 
     Committee that the Administration intends to request only 
     part of the needed money now, through a reallocation of $1 
     billion from the unspent funds in the Federal Emergency 
     Management Agency's (FEMA) Disaster Relief Fund. 
     Unfortunately this will only fund the disaster loan program 
     through July, requiring an additional request for the 
     remaining $300 million in supplemental appropriations to make 
     it through the end of the fiscal year in September.
       Rather than continue this piecemeal approach to budgeting, 
     we believe the Congress should pass legislation with the 
     entire estimated amount so that there is stability in the 
     delivery of disaster relief to meet the needs of the Gulf 
     victims, as well as any future disaster victims. We also 
     believe that the request should move as a free-standing bill, 
     rather than combining it with other bills that run the risk 
     of delay because of unrelated controversies.
       In summary, we seek your cooperation to immediately pass a 
     free-standing bill in the Senate that would authorize FEMA to 
     reallocate from its Disaster Relief Fund $1.3 billion to the 
     SBA's Disaster Loan program. And we request that any 
     reallocated funds from the Disaster Relief Fund be restored 
     as soon as possible through the next supplemental emergency 
     funding bill that Congress enacts.
           Sincerely,
     John F. Kerry.
     Carl Levin.
     Mark Pryor.
     Mary Landrieu.
     Maria Cantwell.
     Tom Harkin.

  Mr. FRIST. I ask unanimous consent that the bill be read a third time 
and passed, the motion to reconsider be laid upon the table, and any 
statements relating to the bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (H.R. 4745) was read the third time and passed.

                          ____________________