- The Washington Times - Tuesday, April 25, 2006

ASSOCIATED PRESS

The head of the Small Business Administration, criticized for his agency’s handling of loans to aid recovery after the September 11 attacks in 2001 and the destructive hurricanes last year, announced yesterday that he was stepping down.

Hector Barreto, picked by President Bush to head the SBA in 2001, said he was leaving the administration to head the Latino Coalition, a Hispanic advocacy group based in the District.

Mr. Bush chose a business executive, Steven C. Preston, to replace Mr. Barreto. Mr. Preston is an executive vice president at the ServiceMaster Co. His nomination must be confirmed by the Senate.

Mr. Barreto is departing during an administration shake-up by new White House Chief of Staff Joshua B. Bolten in the face of record low approval ratings for the president and calls from Republicans in Congress for a staff overhaul.

A spokesman for Mr. Barreto said the White House had not forced him to resign.

“He was not asked to leave,” SBA spokesman Raul Cisneros said. “He has been invited to join this prominent Latino organization, and he has decided to do so.”

The Associated Press reported last year that a substantial amount of nearly $5 billion in SBA terrorism recovery loans awarded after the 2001 terror attacks had gone to companies that had not wanted the loans or known that they would be receiving government money earmarked for September 11 victims.

In December, Rep. Nydia M. Velazquez of New York, the top Democrat on the House Small Business Committee, called for Mr. Barreto’s resignation, saying he “has simply run SBA straight into the ground.”

Sen. John Kerry of Massachusetts, ranking Democrat on the Small Business and Entrepreneurship Committee, said yesterday that Mr. Bush should replace Mr. Barreto with someone who would restore the SBA’s ability to help small businesses.

“Since George Bush took office, the SBA’s budget has been slashed by more than 40 percent, critical lending and counseling programs have been on the chopping block, and we have witnessed the most abysmal response to the needs of Gulf Coast victims devastated by Hurricanes Katrina, Rita and Wilma. It’s time for a change,” Mr. Kerry said.

Mr. Kerry and Mrs. Velazquez had both complained of enormous loan backlogs and high rates of declined loans for hurricane victims.

However, the SBA statement announcing Mr. Barreto’s departure said the agency had responded in an unprecedented manner after the hurricanes last year, providing more than $8.4 billion in low-interest loans to businesses and homeowners in the disaster areas, more than double the next-largest disaster response in the SBA’s history.

In his resignation letter to Mr. Bush, Mr. Barreto said it had been an honor “to help execute your vision to bring unprecedented opportunities to all entrepreneurs in every community as they seek to realize their dreams.”

Mr. Barreto, the second-longest-serving administrator in the SBA’s 53-year history, said he agreed to remain at SBA during the transition period.

The administration announced last week that White House political mastermind Karl Rove was surrendering a key policy role and spokesman Scott McClellan was resigning in an escalation of an administration shake-up that has been driven by Republican anxieties about how they will fare in the November congressional elections.

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