FOR IMMEDIATE RELEASE
January 5, 2008
Petaluma, Calif. - Congress will begin work this week on President-elect Barack Obama's new economic stimulus plan. The American Small Business League (ASBL) is predicting President-elect Obama's stimulus plan may contain provisions that will allow wealthy venture capitalists to receive billions of dollars in federal contracts earmarked for small businesses.
Under the guise of "increasing access to capital for small businesses," the Obama stimulus plan may change the long-standing federal definition of a small business as being "independently owned," to include firms that are controlled by some of the nation's wealthiest investors.
Most economists agree the best way to create jobs and stimulate the nation's failing economy is to direct federal infrastructure funds to the 26 million small businesses that create over 85 percent of new jobs and employ over 55 percent of all Americans.
The new Obama loophole in federal contracting law would do just the opposite by forcing legitimate small businesses to compete head-to-head with firms controlled by wealthy investors and even some of the largest venture capital firms in the United States.
Thousands of legitimate small businesses would be negatively impacted. Billions of dollars in federal small business contracts would be diverted from middle class firms and into the hands of a very small number of firms controlled by wealthy venture capitalists.
The Obama plan may even include a provision that would exempt the venture capital owned firms from capital gains tax.
Similar proposals in the past were pushed by the National Venture Capital Association (NVCA) and opposed by the Small Business Administration, the ASBL, the U.S Chamber of Commerce, the Bush White House and virtually every major small business group in the country.
The NVCA and its members donated heavily to the Obama campaign and have donated millions more to dozens of key democratic members in Congress such as House Speaker Nancy Pelosi, Senator John Kerry, Senator Joseph Lieberman and Congresswoman Nydia Velázquez. The majority of the members of the House Small Business Committee and nearly all of the members of the Senate Committee on Small Business and Entrepreneurship received significant contributions from the NVCA and its members.
In the past, the NVCA has used the term "increasing access to capital for small businesses," to disguise legislation and policy changes that would allow wealthy investors to receive billions of dollars in federal contracts earmarked for legitimate small businesses.
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As Congress addresses the Economic Stimulus there is a compelling survey that must be recognized.
RE: Small Business, the 2nd Wave of Foreclosures, and Job Loss:
On December 14, 2008, CBS’s "60 Minutes" had a segment on the 2nd Wave of Foreclosures. They indicated that experts were expecting another wave of mortgage defaults on ALT-A and Option ARMs mortgages which will dwarf the Subprime Mortgage Crisis. CBS MISSED A VERY IMPORTANT FACT!
Many fail to realize that there are millions of Self-Employed Smaller Businesses, who employ from 1-10 employees, that are holding the mortgages that are going to reset in 2009 through 2012. These borrowers are Prime and Near-Prime borrowers who hold ALT-A, Option ARMs, Interest-Only mortgages. There are $1 Trillion ALT-As, and $500-600 Billion Option ARMs.
So, here we have a major problem… Not only will these small business owners lose their homes, but there will be the resulting JOB LOSSES on their business failure.
Although President-Elect Obama is stressing the need to create 3 million new jobs, we must understand that “JOB RETENTION IS AS IMPORTANT AS JOB CREATION”.
I authored the survey which was conducted by the National Association for the Self-Employed (NASE) to its national membership. The NASE Survey disclosed disturbing facts. The NASE survey is at http://www.nase.org . See the NASE News for the Survey on Toxic Mortgages. Please read my Commentary.
According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.
The solution lies in the hands of Congress as they meet in January to structure an economic stimulus package. Congress should take note of this survey and be “proactive” in addressing the situation, rather than “reactive” as the case has been in the Subprime Mortgage Crisis.
We can’t afford another shock to our economic system at this time. This 2nd Wave of Foreclosures which will be caused by the ALT-A and Option ARMs will not only result in Foreclosures, but also Job Loss.
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