"The Next Michael Brown?" SBA Head Stands Firm Amid Washington Storm Several leading small-business organizations rallied around SBA Administrator Hector Barreto as he rejected calls for his resignation over the agency’s performance in helping hurricane victims. In a Dec. 9 editorial, The Washington Post nominated Barreto as “the next Michael Brown” because of what it called SBA’s poor response in providing government-guaranteed loans to businesses and homeowners devastated by Hurricane Katrina. Brown was the head of the Federal Emergency Management Agency who resigned in the face of criticism of FEMA’s performance after Katrina. The senior Democrat on the House Small Business Committee, Rep. Nydia Velazquez (NY), called for Barreto’s immediate resignation. The top Democrat on the Senate Small Business Committee, John Kerry (MA), did not go that far, saying, “Administrator Barreto needs to either lead, or get out of the way.” But the chairman of the House committee, Rep. Donald Manzullo (R-IL), stood with Barreto at a Dec. 15 press conference and said he had “every confidence” in the SBA chief. Asked about calls for his ouster, Barreto said he was committed to doing his job and added, “There’s so much work left to be done.” Among the organizations supporting Barreto were the U.S. Chamber of Commerce, National Federation of Independent Business, National Black Chamber of Commerce, U.S. Hispanic Chamber of Commerce, U.S. Pan-Asian Chamber of Commerce, Women Impacting Public Policy, Minority Business Roundtable and the HUBZone Contractors National Council. The Hispanic Chamber called the attacks on Barreto “politically motivated.” Barreto’s father was a founder of the organization. The White House also expressed support for Barreto, The Associated Press reported. Critics charge SBA has been slow to approve loans for businesses hurt by Katrina. Rep. Velazquez said SBA has rejected 80% of loan applications and has a backlog of more than 200,000 pending applications. In a detailed response to the criticism, Chairman Manzullo pointed out that SBA offers loans, not grants: “That’s why the SBA must do credit checks. That’s why the SBA must make sure the applicants have paid their taxes. That’s why the SBA must verify the loss. And that’s why they must do criminal background checks. The SBA is required by law to undergo this process, and they cannot deviate from it.” In a press release, SBA said, “Loan approvals since the beginning of December have averaged $33 million per day, and loans approved by the SBA have surpassed the billion-dollar mark in roughly the same amount of time [as] following the 1994 Northridge Earthquake, the largest disaster before the current one, and five weeks faster than after last year’s Florida hurricanes.” SBA and its critics put different spins on the statistics, but the agency’s figures agree with Rep. Velazquez that about 200,000 loan applications were pending more than three months after Katrina struck. SBA did not dispute that it has rejected 80% of loan applications. However, Manzullo said many businesses and homeowners have applied for SBA loans not because they want a loan, but because they must show that SBA has turned them down before they can qualify for grants from FEMA. Manzullo said: “Quite frankly, the SBA is in a no-win situation with this disaster. It is understandable that those affected by the disaster want to get their loans as soon as possible. At the same time, taxpayers demand accountability and a reasonable expectation that the loans will be paid back.” In a statement, Sen. Kerry declared, “Small business owners throughout the Gulf Coast are still hurting months after Katrina, but the Small Business Administration’s leadership is offering them only hurricane-force spin.” Velazquez said, “For an agency tasked with the sole purpose of providing assistance to our nation’s entrepreneurs, it is inconceivable to think that Mr. Barreto – a former small business owner himself – has simply run SBA straight into the ground.” As head of SBA since 2001, Barreto holds a cabinet-level presidential appointment. Before joining the Bush administration, he ran a financial services firm in California.