In light of new reports about the Department of Agriculture buying back $34 million in bad business loans made by Business Loan Center, LLC (BLX), Senator John Kerry (D-Mass.) raised concerns and promised aggressive oversight of the country’s largest small business lender. Last month, Kerry held a hearing to examine the Bush Administration’s lax oversight of small business lenders in the wake of a $76 million fraud scheme with loans originated by BLX. The former head of BLX and current Chairman of the Board Robert Tannenhauser testified. Following is a statement from Kerry:
“I’m gravely concerned that there is a pattern of bad loans from BLX. When BLX testified last month, they said they were victims and the bad loans were isolated. BLX and the Administration claimed they have got the lending problems under control. I don’t think they do. Here they are again costing the taxpayers millions,” said Kerry, Chairman of the Committee on Small Business and Entrepreneurship. “The Administration needs to do better oversight and act fast to recover this money and prevent more losses easy payday loan. I will continue to push BLX and the Administration to get to the bottom of this and ensure that small business and rural economic development financing is available to eligible and deserving firms that drive our economy and keep America competitive.”
Senators Olympia Snowe (R-Maine) and Kerry recently introduced legislation to measure the economic outcomes and improve the oversight of the Small Business Administration’s 7(a) (working capital) and 504 (fixed assets) lending programs. The Small Business Lending Oversight and Program Performance Improvements Act (S. 2288) will ensure that the SBA fully assesses the quality and performance of lender portfolios so that these loan programs remain strong and benefit small businesses to the greatest extent possible. The National Association of Government Guaranteed Lenders and the National Association of Development Companies — trade associations for the 7(a) and 504 programs respectively — both support the bill.