Luetkemeyer: When entrepreneurship is strong, the next economy is on the way
WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a hybrid hearing titled, "Empowering Employee Owned Businesses and Cooperatives Through Access to Capital."
Ranking Member Luetkemeyer's opening statement as prepared for delivery:
Thank you, Madam Chair. I would like to begin by addressing what is happening a few floors below us at the House Financial Services Committee. This morning, the Financial Services Committee will be hearing from Treasury Secretary Janet Yellen. Though I am glad Secretary Yellen has finally found her way to one of our House Committees, I must address yet again that it has now been over 150 days since the Secretary has defied her legal duty to testify before the Small Business Committee on COVID-19 relief for small businesses. Simply put, Secretary Yellen continues to break the law, and my colleagues on the other side refuse to hold her accountable.
The Paycheck Protection Program was created with two agencies spearheading efforts, the Department of Treasury and the Small Business Administration. With nearly $800 billion in assistance flowing through the program, it was the most important small business relief program to assist and save the nation’s smallest companies, and their most important asset, their employees. It is clear that while Secretary Yellen flouts her statutory responsibility to the program, she is also ignoring American small businesses.
This blatant disregard for Main Street U.S.A. appears to be pattern within the Biden administration. Take for example the Biden tax hikes that are currently making their way through Congress without Republican input. Increases to the corporate rate, increases to the individual rates, and increases to the capital gains rate will all crush our country’s small businesses.
While small businesses continue to recover from COVID-19, they are being impacted by supply chain issues, skyrocketing inflation, and a major labor shortage. And this Administration’s response to all of these issues is to increase their taxes, all while the Treasury Secretary continues to turn her back on our nation’s smallest firms.
Madam Chair, last week, I sent you letter requesting that we subpoena her to testify. I look forward to working with you on next steps in order to conduct a hearing with the Treasury Secretary and the SBA Administrator as soon as possible.
Today’s hearing and topic are important. Employee-owned businesses are a viable option for many small businesses, especially with owners aging and planning next steps. However, I think it is necessary to also discuss some of the recent policy proposals put forth by my colleagues and how these proposals will impact small business access to capital.
Earlier in the month, this Committee met to examine the small business provisions within the Democrats’ partisan, reckless, socialist spending spree. Not surprisingly, we saw numerous provisions that disregard responsible lending standards.
Chief among these changes was language to create a direct lending option at the SBA. This path that the Democrats are taking toward a one-lender model is extremely concerning.
A few weeks prior to the creation of this direct lending tool, the Biden administration’s SBA threatened lenders with audits if they didn’t join their newly created Direct Forgiveness Portal. These are dangerous trends for many reasons.
The existing public-private lending guarantee partnership harnesses the efficiencies of competition to deliver assistance to small businesses. As we all know, the federal government doesn’t face competition. Importantly, private sector lenders also bring their own fraud protection oversight to the table.
In fact, we have a case study that examines the SBA’s direct lending model. The Economic Injury Disaster Loan program, which was activated at the onset of the pandemic, has underperformed compared to the private lender-driven PPP. EIDL continues to be slow and cumbersome, and the SBA’s lack of response and communication on loan questions has been frustrating and unacceptable. When it comes to fraud, report after report from the SBA’s Inspector General and others have highlighted that the program is layered with massive amounts of potential fraudulent loan activity. Unfortunately, the fraud numbers continue to rise.
It is important to note that we know all of these problems are associated with direct lending, yet my colleagues are continuing down this path. We also know the pitfalls of waiving the personal guarantee on loans moving forward. The SBA in its own words said of the personal guarantee: “this requirement is to ensure that SBA adequately mitigates the risk to the loan program and, ultimately, to the taxpayer.”
My Republican colleagues and I will not sit quietly and allow more taxpayer dollars to be exposed to waste, fraud, and abuse through SBA’s programs. Underwriting standards should not and cannot be reduced.
These are vital topics that this Committee should examine thoroughly. I look forward to exploring many of these topics today with our witnesses. In a discussion yesterday, somebody made the comment, "when entrepreneurship is strong, the next economy is on the way." Ladies and gentlemen, if we want to grow this economy, we have to protect the small businesses and the entrepreneurs of this country to be able to grow our next economy.
Thank you all for joining us, and Madam Chair, I yield back.
Ranking Member Luetkemeyer's opening statement as prepared for delivery:
Thank you, Madam Chair. I would like to begin by addressing what is happening a few floors below us at the House Financial Services Committee. This morning, the Financial Services Committee will be hearing from Treasury Secretary Janet Yellen. Though I am glad Secretary Yellen has finally found her way to one of our House Committees, I must address yet again that it has now been over 150 days since the Secretary has defied her legal duty to testify before the Small Business Committee on COVID-19 relief for small businesses. Simply put, Secretary Yellen continues to break the law, and my colleagues on the other side refuse to hold her accountable.
The Paycheck Protection Program was created with two agencies spearheading efforts, the Department of Treasury and the Small Business Administration. With nearly $800 billion in assistance flowing through the program, it was the most important small business relief program to assist and save the nation’s smallest companies, and their most important asset, their employees. It is clear that while Secretary Yellen flouts her statutory responsibility to the program, she is also ignoring American small businesses.
This blatant disregard for Main Street U.S.A. appears to be pattern within the Biden administration. Take for example the Biden tax hikes that are currently making their way through Congress without Republican input. Increases to the corporate rate, increases to the individual rates, and increases to the capital gains rate will all crush our country’s small businesses.
While small businesses continue to recover from COVID-19, they are being impacted by supply chain issues, skyrocketing inflation, and a major labor shortage. And this Administration’s response to all of these issues is to increase their taxes, all while the Treasury Secretary continues to turn her back on our nation’s smallest firms.
Madam Chair, last week, I sent you letter requesting that we subpoena her to testify. I look forward to working with you on next steps in order to conduct a hearing with the Treasury Secretary and the SBA Administrator as soon as possible.
Today’s hearing and topic are important. Employee-owned businesses are a viable option for many small businesses, especially with owners aging and planning next steps. However, I think it is necessary to also discuss some of the recent policy proposals put forth by my colleagues and how these proposals will impact small business access to capital.
Earlier in the month, this Committee met to examine the small business provisions within the Democrats’ partisan, reckless, socialist spending spree. Not surprisingly, we saw numerous provisions that disregard responsible lending standards.
Chief among these changes was language to create a direct lending option at the SBA. This path that the Democrats are taking toward a one-lender model is extremely concerning.
A few weeks prior to the creation of this direct lending tool, the Biden administration’s SBA threatened lenders with audits if they didn’t join their newly created Direct Forgiveness Portal. These are dangerous trends for many reasons.
The existing public-private lending guarantee partnership harnesses the efficiencies of competition to deliver assistance to small businesses. As we all know, the federal government doesn’t face competition. Importantly, private sector lenders also bring their own fraud protection oversight to the table.
In fact, we have a case study that examines the SBA’s direct lending model. The Economic Injury Disaster Loan program, which was activated at the onset of the pandemic, has underperformed compared to the private lender-driven PPP. EIDL continues to be slow and cumbersome, and the SBA’s lack of response and communication on loan questions has been frustrating and unacceptable. When it comes to fraud, report after report from the SBA’s Inspector General and others have highlighted that the program is layered with massive amounts of potential fraudulent loan activity. Unfortunately, the fraud numbers continue to rise.
It is important to note that we know all of these problems are associated with direct lending, yet my colleagues are continuing down this path. We also know the pitfalls of waiving the personal guarantee on loans moving forward. The SBA in its own words said of the personal guarantee: “this requirement is to ensure that SBA adequately mitigates the risk to the loan program and, ultimately, to the taxpayer.”
My Republican colleagues and I will not sit quietly and allow more taxpayer dollars to be exposed to waste, fraud, and abuse through SBA’s programs. Underwriting standards should not and cannot be reduced.
These are vital topics that this Committee should examine thoroughly. I look forward to exploring many of these topics today with our witnesses. In a discussion yesterday, somebody made the comment, "when entrepreneurship is strong, the next economy is on the way." Ladies and gentlemen, if we want to grow this economy, we have to protect the small businesses and the entrepreneurs of this country to be able to grow our next economy.
Thank you all for joining us, and Madam Chair, I yield back.
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