Joni Ernst Asks SBA Nom If He Supports Increased 'Transparency' In Agency's Rule Making Procedures

3 hours ago

During a Senate Small Business Committee hearing prior to the congressional recess, Sen. Joni Ernst (R-IA) spoke about increasing transparency surrounding the cost-benefit analysis of SBA regulations.

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Transcript

00:00Wonderful. Thank you, Dr. Mulligan and Mr. Briggs for your testimony. Before we move

00:06to questions, the committee has received several letters of support for Mr. Briggs and Dr.

00:12Mulligan's nominations, and I ask for unanimous consent to enter into the record letters of

00:17support for Mr. Briggs, letters of support from the National Restaurant Association,

00:23Independent Community Bankers of America, National Small Business Association, National

00:29Association of Government Guaranteed Lenders, International Franchise Association, Texas

00:35Association of Business, Independent Bankers Association of Texas, Texas Venture Alliance,

00:42Economic and Community Development Institute, the Association of Women's Business Centers,

00:48Visiting Angels, Small Business Multicloud Coalition, and U.S. Black Chambers. For Dr.

00:54Mulligan, letters from the National Small Business Association, Small Business and Entrepreneurship

00:59Council, International Franchise Association, a joint letter from Tom Sullivan, SBA's Chief

01:05Counsel for Advocacy from 2002 to 2008, and Winslow Sargent, SBA's Chief Counsel for Advocacy

01:14from 2010 to 2015, and a letter from Daryl DePriest, SBA's Chief Counsel for Advocacy

01:21from 2015 to 2017. Without objection, so ordered. I will now recognize myself for five

01:30minutes of questions. So we'll start with you, Mr. Briggs. During your service in the

01:37previous Trump administration, you had direct insight into the COVID, EIDL, and PPP. As

01:44you know, both programs have suffered from a lack of transparency and experienced over

01:49$200 billion in fraud. These same problems plague many of SBA's loan programs, as I highlighted

01:56during last month's hearing on the 7A loan program. If confirmed, do you commit to providing

02:03the committee with comprehensive and current information on how SBA's loan programs are

02:09performing? Chair, thank you for that question. I'm tremendously

02:14proud of my service, particularly with the Paycheck Protection Program and the EIDL program.

02:20I believe they did an incredible job of helping to preserve American small business jobs at

02:27the worst economic crisis since the Great Depression. However, as you have noted, there

02:32is way too much fraud in these programs, or was too much fraud. And part of that, particularly

02:38with PPP, some of that was statutory mandated guardrails that had to be let down by law.

02:46But when I was Acting Associate Administrator, we implemented upfront checks that reduced

02:50a lot of that fraud. Since that time, I understand that there have been more upfront checks and

02:56identity verification procedures introduced. However, should I be confirmed, I will continue

03:01to focus on cracking down on fraud in the current programs and have a zero-tolerance

03:06approach to fraud going forward. Very good. I appreciate that, because I am

03:09worried that the 7A loan program could require an appropriation if those defaults are too

03:16high without enough fee revenue to offset the losses that we have experienced. Will

03:21you commit to reviewing the loan portfolios and make necessary policy changes to avoid

03:27taxpayers footing the bill wherever that may lead, including tightening up eligibility?

03:35Thank you, Chair Ernst. Yes, the 7A program right now is cash flow for the negative. For

03:38the first time in 12 years, I was noted in the hearing three weeks ago. It is a serious

03:43problem and one that ultimately ends up hurting access to credit for all small businesses.

03:48I will work with Administrator Loeffler, the Associate Administrator of Capital Access,

03:53and all of the relevant SBA staff to make sure that we are doing everything we can to

03:56put that program back to its historical position of having a neutral subsidy, where the taxpayers

04:04aren't taxed to run the program. Very good. Thank you. What, in your experience,

04:09were the pitfalls of SBA's COVID programs? Chair Ernst, I have spent the last four years

04:16thinking about lessons learned from that experience. It was an unprecedented time, as every member

04:22of this committee knows. As Ranking Member Markey did know, we did come together to work

04:27on this at a perilous time in our nation's history. I would say the first thing is not

04:32to shut down the entire economy and then hope that something like SBA could solve

04:36the problem. I think that if that situation ever happened again, hopefully we do have

04:41more forethought. I also think that something, again, like upfront identity checks and verification

04:47and also, too, being much more clear about eligibility guidelines going forward are all

04:51things we really need to do in both our capital access and disaster loan programs. Very good.

04:57I appreciate that. We'll go to Dr. Mulligan next. As I've noted, Dr. Mulligan, under the

05:03prior administration, small businesses across the country were burdened with a $1.8 trillion

05:12regulatory onslaught and over 350 million hours of paperwork. While the Regulatory Flexibility

05:19Act requires agencies to consider how their regulations impact small businesses and look

05:26to evaluate less burdensome alternatives, agencies have not followed the law. So I

05:31did reintroduce the Prove It Act to require that agencies evaluate the true cost of regulations

05:38and to empower advocacy's role to make an agency prove the regulation is necessary and

05:45mitigates against cost and compliance burdens for small businesses. Do you support increasing

05:51transparency and accuracy in the cost-benefit analysis aspect of SBA's rulemaking process?

05:59Absolutely. Easy. Do you agree agencies have failed to

06:03properly consider the indirect costs of their regulations?

06:09Almost all of them that I've looked at have been pretty weak on considering those costs.

06:14If confirmed as the chief counsel for advocacy, will you commit to properly evaluating agency

06:20rulemaking for both its direct and indirect impact on small businesses?

06:25I commit to do that. Thank you. And are you supportive of the

06:28Prove It Act? Yes, I support the Prove It Act.

06:32And right on time. My time has expired. Ranking Member Markey.

Joni Ernst Asks SBA Nom If He Supports Increased 'Transparency' In Agency's Rule Making Procedures

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