By Lloyd Chapman
President, American Small Business League
CIT has acknowledged that negotiations with the Obama Administration have broken off. It seems clear the Obama Administration has decided CIT is not too big to fail.
What about the roughly one million small and medium businesses that depend on CIT for financing, should they also be allowed to fail? CIT has been the nation's number one SBA lender for nine years and the top lender to women, minorities and veteran entrepreneurs for six consecutive years. If the officials of the Obama Administration have decided not to save the nation's top small business lender, doesn't President Obama have an obligation to CIT's customers? Shouldn't he take immediate steps to ensure those firms are not forced into bankruptcy as a result of his administration's decision not to rescue CIT?
CIT's customers have worked many years to build their businesses and create jobs for millions of people. They have done nothing wrong and they do not deserve to have their businesses damaged or destroyed as a result of an arbitrary decision on the part of Washington bureaucrats.
If President Obama does not want to save CIT he should immediately offer a viable financial alternative to CIT's nearly one million customers. He should take appropriate steps to ensure that CIT's customers have workable government backed financial alternatives. To simply leave those firms to fend for themselves and say that other lenders will fill the void is unacceptable.
If the Obama Administration insists on letting CIT fail and they refuse to provide CIT's customers with reasonable and workable financial alternatives, an avalanche of bankruptcies will likely follow. There will almost certainly be a reverberation through the middle class economy that will make the recession worse and extend its duration.
President Obama should also consider the nearly one million CIT customers along with all of the employees of those firms and all the families of those employees. Conservatively the average CIT customer has approximately 15 employees. According to the U.S. Census Bureau the average American family is about 3.19 people. That comes out to 47.8 million people that could be adversely affected if President Obama lets CIT fail and refuses to offer some help to their customers.
So far President Obama's economic stimulus plan is not working for the vast majority of Americans. The 27 million small businesses that employ over 55 percent of the private sector work force, create over 97 percent of all net new jobs and are responsible for over 50 percent of the Gross Domestic Product (GDP) have received less than 1 percent of the overall 2.5 trillion in economic stimulus funds. Unemployment continues to rise as Goldman Sachs, one of President Obama's top campaign contributors, is reporting record profits. Dissatisfaction with President Obama's economic policies is growing daily across the country and on both sides of the isle in Congress.
President Obama should take a closer look at his administration's policies involving CIT and the over 40 million voters that could be impacted by those decisions.
2012 will be here before you know it. Maybe John Kerry and Al Gore could offer some advice on the difference a few million voters can make on Election Day.
Friday, July 17, 2009
Wednesday, July 15, 2009
New Bill Could be Powerful Economic Stimulus for Middle Class Firms
More than two years ago, notable small business advocate Lloyd Chapman sat in a hotel in Durango, Colorado and drafted a bill to stop billions of dollars in fraud and abuse in federal small business contracting programs. On Thursday, May 21, Congressman Hank Johnson (D - GA) introduced H.R. 2568, the Fairness and Transparency in Contracting Act of 2009.
With a mind for change, Chapman drafted H.R. 2568 with Congressman Johnson and Senator Barbara Boxer, while relying heavily on the guidance of the nation's preeminent expert on contracting law, Professor Charles Tiefer. The bill was designed to preclude the federal government from counting publicly traded firms towards the government's 23 percent small business procurement goal. The Small Business Act requires that a small business be independently owned and operated; publicly traded firms do not qualify as independently owned.
Since 2003, more than 15 federal investigations have uncovered the diversion of billions of dollars in federal small business contracts to Fortune 500 corporations and thousands of other clearly large firms. The American Small Business League (ASBL) has estimated that every year more than $100 billion in federal contracts intended for small businesses are awarded to firms like British Aerospace (BAE), Rolls-Royce, Xerox, John Deere, Wal-Mart, Home Depot, Sherwin-Williams, Dell Computer and Dutch giant Buhrmann NV.
The ASBL maintains that H.R. 2568 is a free and easy solution to a problem that is costing America's middle-class $100 billion a year.
With the assistance of the ASBL, Chapman has garnered a wide swath of support for H.R. 2568 from members of the House of Representatives, chambers of commerce and major business organizations across the country. With a wave of support that includes key decision makers in the minority and veteran business communities, support for H.R. 2568 appears to be turning into a major movement for change in the government's contracting community.
Despite its potential major positive impact, H.R. 2568 has run into roadblocks from faux small business advocates, the U.S. Chamber of Commerce, and the U.S. Hispanic Chamber of Commerce. That said, the ASBL maintains that the U.S. Chamber of Commerce and the U.S. Hispanic Chamber of Commerce are wolves in sheep's clothing; lobbying for the interests of Fortune 500 corporations who are currently receiving billions of dollars in small business contracts, while at the same time masquerading as small business advocates. (http://www.asbl.com/showmedia.php?id=1432, http://www.asbl.com/showmedia.php?id=1425)
"The small business community needs to open its eyes to the deception of the U.S. Chamber of Commerce and the U.S. Hispanic Chamber of Commerce and get behind our movement towards change in federal small business contracting programs, "ASBL President Lloyd Chapman said. "H.R. 2568 is the first and only solution to the diversion of billions of dollars in small business contracts to corporate giants. It is not reasonable to allow this problem to continue while our nation's small businesses go belly-up and our economy continues to flounder."
Small businesses are the backbone of our nation's economy. Small businesses are responsible for more than 50 percent of our gross domestic product and over 90 percent of innovations. According to the U.S. Census Bureau, 90 percent of all U.S. firms have less than 20 employees and those firms are responsible for 97 percent of net new jobs. It is time for our small business leaders to embrace a real solution, H.R. 2568, to the diversion of federal small business contracts to large corporations. our jobs, families, homes, and businesses rely on it.
With a mind for change, Chapman drafted H.R. 2568 with Congressman Johnson and Senator Barbara Boxer, while relying heavily on the guidance of the nation's preeminent expert on contracting law, Professor Charles Tiefer. The bill was designed to preclude the federal government from counting publicly traded firms towards the government's 23 percent small business procurement goal. The Small Business Act requires that a small business be independently owned and operated; publicly traded firms do not qualify as independently owned.
Since 2003, more than 15 federal investigations have uncovered the diversion of billions of dollars in federal small business contracts to Fortune 500 corporations and thousands of other clearly large firms. The American Small Business League (ASBL) has estimated that every year more than $100 billion in federal contracts intended for small businesses are awarded to firms like British Aerospace (BAE), Rolls-Royce, Xerox, John Deere, Wal-Mart, Home Depot, Sherwin-Williams, Dell Computer and Dutch giant Buhrmann NV.
The ASBL maintains that H.R. 2568 is a free and easy solution to a problem that is costing America's middle-class $100 billion a year.
With the assistance of the ASBL, Chapman has garnered a wide swath of support for H.R. 2568 from members of the House of Representatives, chambers of commerce and major business organizations across the country. With a wave of support that includes key decision makers in the minority and veteran business communities, support for H.R. 2568 appears to be turning into a major movement for change in the government's contracting community.
Despite its potential major positive impact, H.R. 2568 has run into roadblocks from faux small business advocates, the U.S. Chamber of Commerce, and the U.S. Hispanic Chamber of Commerce. That said, the ASBL maintains that the U.S. Chamber of Commerce and the U.S. Hispanic Chamber of Commerce are wolves in sheep's clothing; lobbying for the interests of Fortune 500 corporations who are currently receiving billions of dollars in small business contracts, while at the same time masquerading as small business advocates. (http://www.asbl.com/showmedia.php?id=1432, http://www.asbl.com/showmedia.php?id=1425)
"The small business community needs to open its eyes to the deception of the U.S. Chamber of Commerce and the U.S. Hispanic Chamber of Commerce and get behind our movement towards change in federal small business contracting programs, "ASBL President Lloyd Chapman said. "H.R. 2568 is the first and only solution to the diversion of billions of dollars in small business contracts to corporate giants. It is not reasonable to allow this problem to continue while our nation's small businesses go belly-up and our economy continues to flounder."
Small businesses are the backbone of our nation's economy. Small businesses are responsible for more than 50 percent of our gross domestic product and over 90 percent of innovations. According to the U.S. Census Bureau, 90 percent of all U.S. firms have less than 20 employees and those firms are responsible for 97 percent of net new jobs. It is time for our small business leaders to embrace a real solution, H.R. 2568, to the diversion of federal small business contracts to large corporations. our jobs, families, homes, and businesses rely on it.
Tuesday, July 14, 2009
Obama Should Save CIT
By Lloyd Chapman
CIT Group Inc. has been the number one Small Business Administration (SBA) 7(a) lender for nine consecutive years. They have also been the top lender to women, minority and veteran owned small businesses for six consecutive years. CIT has been a lender to roughly one million small and mid-size businesses. Without help from the federal government CIT could face a very serious challenge to their future that may include bankruptcy.
President Obama should not let that happen for several good reasons.
America's small businesses are responsible for approximately 50 percent of the gross domestic product (GDP). According to the latest U.S. Census Bureau data, small businesses with less than 100 employees are responsible for over 97 percent of all net new jobs in America. These firms employ over 56 percent of the private sector workforce and are responsible for the majority of technical innovations. Small businesses are unquestionably the foundation our of national economy.
These are the firms CIT has been serving since 1908. CIT makes successful loans available to thousands of hardworking small business owners that had been turned down repeatedly by other lenders. CIT's unique ability to work with new entrepreneurs and small business owners trying to expand their businesses will be impossible to duplicate.
CIT received $2.3 billion in TARP funds. As far as I know, they didn't use the money to give their top executives millions in bonuses, buy a new corporate jet or spend a million dollars remodeling the president's bathroom like many firms in their industry.
I admit, I am not an economist and the detailed and complex inner workings of the financial industry are not my area of expertise. I am a hardcore small business advocate and a taxpayer. If my tax dollars are going to be used to rescue banks and other financial institutions, CIT is the kind of firm I want to see saved.
It looks like President Obama and the people in his administration get to decide who succeeds and who fails in the financial industry. In making those life and death decisions I believe President Obama would be wise to consider the crucial role small businesses will play in our nation's economic recovery. Over 50 percent of the GDP and over 95 percent of all net new jobs are very compelling statistics in favor of supporting America's 27 million small businesses.
President Obama recently rolled out his ARC loan program that will provide interest free $35,000 loans to small businesses. The program is capped at $255 million. CIT made $770 million in loans under the SBA's backed loan program in 2008.
If you consider the total volume of federal funds that have been allocated to stimulate the nation's failing economy, the figure is over $2.5 trillion. To date, the nation's 27 million small businesses have received less than 1 percent of those funds. To help put that in perspective, more tax dollars have gone to help J.P. Morgan than all American small businesses combined. The Wall Street executives that helped create the worst national economic disaster since the Great Depression have received more money than 27 million small businesses, over $18 billion in bonuses.
If our economy is going to recover any time soon, President Obama needs to come to the realization that small businesses will lead the way out of this recession, not Wall Street and not Fortune 500 firms. Politicians in Washington pushed the Wall Street bailout bill and the American Recovery and Re-Investment Act by saying small businesses need access to capital. The truth is, and has been widely reported, that access to capital for most small businesses has actually decreased.
An effective economic recovery will require lenders like CIT to get money into the hands of qualified small businesses.
If our hard earned tax dollars are going to be used to save financial institutions, we should use those funds to save firms like CIT that have a 100-year track record of helping those small businesses where most Americans work, the businesses that are responsible for over 50 percent of the GDP and create over 97 percent of all net new jobs.
President Obama needs to invest our tax dollars wisely and I can't think of a better use for those funds than to invest in a firm like CIT that has been the nation's top lender to small businesses and firms owned by women, minorities and veterans.
CIT Group Inc. has been the number one Small Business Administration (SBA) 7(a) lender for nine consecutive years. They have also been the top lender to women, minority and veteran owned small businesses for six consecutive years. CIT has been a lender to roughly one million small and mid-size businesses. Without help from the federal government CIT could face a very serious challenge to their future that may include bankruptcy.
President Obama should not let that happen for several good reasons.
America's small businesses are responsible for approximately 50 percent of the gross domestic product (GDP). According to the latest U.S. Census Bureau data, small businesses with less than 100 employees are responsible for over 97 percent of all net new jobs in America. These firms employ over 56 percent of the private sector workforce and are responsible for the majority of technical innovations. Small businesses are unquestionably the foundation our of national economy.
These are the firms CIT has been serving since 1908. CIT makes successful loans available to thousands of hardworking small business owners that had been turned down repeatedly by other lenders. CIT's unique ability to work with new entrepreneurs and small business owners trying to expand their businesses will be impossible to duplicate.
CIT received $2.3 billion in TARP funds. As far as I know, they didn't use the money to give their top executives millions in bonuses, buy a new corporate jet or spend a million dollars remodeling the president's bathroom like many firms in their industry.
I admit, I am not an economist and the detailed and complex inner workings of the financial industry are not my area of expertise. I am a hardcore small business advocate and a taxpayer. If my tax dollars are going to be used to rescue banks and other financial institutions, CIT is the kind of firm I want to see saved.
It looks like President Obama and the people in his administration get to decide who succeeds and who fails in the financial industry. In making those life and death decisions I believe President Obama would be wise to consider the crucial role small businesses will play in our nation's economic recovery. Over 50 percent of the GDP and over 95 percent of all net new jobs are very compelling statistics in favor of supporting America's 27 million small businesses.
President Obama recently rolled out his ARC loan program that will provide interest free $35,000 loans to small businesses. The program is capped at $255 million. CIT made $770 million in loans under the SBA's backed loan program in 2008.
If you consider the total volume of federal funds that have been allocated to stimulate the nation's failing economy, the figure is over $2.5 trillion. To date, the nation's 27 million small businesses have received less than 1 percent of those funds. To help put that in perspective, more tax dollars have gone to help J.P. Morgan than all American small businesses combined. The Wall Street executives that helped create the worst national economic disaster since the Great Depression have received more money than 27 million small businesses, over $18 billion in bonuses.
If our economy is going to recover any time soon, President Obama needs to come to the realization that small businesses will lead the way out of this recession, not Wall Street and not Fortune 500 firms. Politicians in Washington pushed the Wall Street bailout bill and the American Recovery and Re-Investment Act by saying small businesses need access to capital. The truth is, and has been widely reported, that access to capital for most small businesses has actually decreased.
An effective economic recovery will require lenders like CIT to get money into the hands of qualified small businesses.
If our hard earned tax dollars are going to be used to save financial institutions, we should use those funds to save firms like CIT that have a 100-year track record of helping those small businesses where most Americans work, the businesses that are responsible for over 50 percent of the GDP and create over 97 percent of all net new jobs.
President Obama needs to invest our tax dollars wisely and I can't think of a better use for those funds than to invest in a firm like CIT that has been the nation's top lender to small businesses and firms owned by women, minorities and veterans.
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