- The Washington Times - Friday, December 16, 2005

Small Business Administrator Hector Barreto has been battling numerous obstacles to get loan funding to the survivors of Hurricanes Katrina and Rita since October, and now he appears to be fighting for his job after key Democrats called for his removal.

Mr. Barreto was bolstered yesterday by the support of Rep. Donald Manzullo, Illinois Republican and chairman of the House Small Business Committee, who said the criticisms of the administrator are not taking into account the reality of his job and the situation in the Gulf Coast, particularly in New Orleans.

“This is really complicated; we are talking about not just rebuilding but redesigning the city — new streets, buildings, levees, people not sure if they’re going back — how can you secure a loan under these conditions?” Mr. Manzullo said.

Rep. Nydia M. Velazquez, New York Democrat and her party’s ranking member on the committee, said that despite the obstacles facing the agency, there are “far too many problems” Mr. Barreto has failed to address.

“The numbers don’t lie; this administrator and the SBA has failed small business in the Gulf Coast with an 80 percent decline rate for disaster loans,” Mrs. Velazquez said.

She added that reports of the Small Business Administration (SBA) having the lowest morale rating in a recent survey of 30 federal agencies and the decision to upgrade the computer systems at the height of the hurricane season despite prior objections, which she said led to further delays in response, show a “clear lack of leadership.”

But Mr. Manzullo said the SBA is not a grant agency and must have a “reasonable expectation” that loans will be repaid. In most cases in New Orleans and other areas of the region, businesses seeking loans cannot guarantee a new clientele base sufficient enough to repay them, he said.

The SBA is usually on site within two to three days of a disaster and was on the scene in New Orleans after Katrina hit Aug. 29. But loan agents were forced to move out as Rita stormed the coast Sept. 24, after which first responders prevented the agents from returning for a week.

“It took almost until Oct. 1 for them to get on the ground in New Orleans,” Mr. Manzullo said.

The embattled federal loan director has taken hits from all sides, including from Sen. Olympia J. Snowe, Maine Republican and chairman of the Senate Committee on Small Business and Entrepreneurship, and Sen. John Kerry of Massachusetts, the committee’s top Democrat.

“Hector Barreto is not doing a heck of a job,” Mr. Kerry said. “He needs to either lead or get out of the way.”

But Mr. Barreto said the agency is working “around the clock” to serve the victims — and has hired and trained 4,000 new employees, doubled the size of the loan processing center, reviewed 110,000 applications, conducted 107,000 inspections and approved $1.4 billion in loans, doing “a normal year’s worth of work in three months.”

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