WASHINGTON – In an unexpected move, Hector Barreto announcedApril 25 that he will resign as administrator of the Small BusinessAdministration after nearly five years at the helm. Barreto said heis leaving the agency to become the national chairman of The LatinoCoalition, a nonprofit organization formed to address policy issuesthat affect Hispanics. In his letter of resignation to PresidentBush, Barreto said “It has been a unique honor to serve asAdministrator of the U.S. Small Business Administration and to helpexecute your vision to bring unprecedented opportunities to allentrepreneurs in every community as they seek to realize theirdreams. I am proud that the agency has delivered strong results andachieved historic milestones on behalf of a vital component of ourgreat economy, America's small businesses.” Barreto has agreed toremain in his post during a transition period, the agency said. Hehas led SBA since July 2001. During his tenure, the agency said thenumber of loans made through the main SBA business loan programshave doubled. Through SBA's disaster assistance program, more than$8.4 billion in low-interest disaster loans have been made tobusinesses and homeowners in the disaster area, more than doublethe next largest disaster response in the SBA's history. On Feb.14, 2003, SBA expanded its 7(a) loan guarantee program to allcredit unions to allow greater access to capital for smallbusinesses. At the time, the agency estimated that as many as 1,500of the country's credit unions were likely to join SBA's network oflenders. Today, more than 250 credit unions have become lenders.Responses from all across credit union land have been pouring in onBarreto's resignation. CUNA, which lobbied for more than a year toallow credit unions to join SBA's lending network, said Barretoprovided “consistent support” during his tenure. “He has recognizedthat credit unions can and do provide an affordable source ofcapital for the nation's small business entrepreneurs,” CUNA said.“Under Mr. Barreto's leadership, the SBA broadened eligibility forits flagship 7(a) loan guarantee program to include credit unionsof all charter types, a move that has been beneficial not only forAmerica's credit unions and their 87 million members, but for thenation's economy as a whole.” CUNA urged the Bush administration to“appoint a new SBA Administrator who shares Mr. Barreto'sunderstanding of credit unions.” At press time and shortly afterBarreto's resignation announcement, Bush had already nominatedSteven Preston, executive vice president of strategic services atDowners Grove, Ill.-based The ServiceMaster Co. to take over thehelm. The firm provides lawn care and landscape maintenance,termite and pest control, plumbing, heating and air conditioningmaintenance and repair, appliance maintenance and repair to homesand businesses. NCUA Chairman JoAnn Johnson highlighted how itspartnership with SBA has benefited credit unions under Barreto.“Under Administrator Barreto's leadership, America's credit unionsgained access to the 7(a) loan guarantee program and helped assistvictims of Hurricanes Katrina, Rita, and Wilma through the `Give aLending Hand' initiative,” Johnson said. “These programs empoweredcredit unions to harness America's entrepreneurial spirit whilehelping many small businesses achieve their American Dream.”Johnson also pointed out SBA's role in one of NCUA's priorities ofregulatory flexibility for member business lending. “I wish all thebest in the future for Administrator Barreto and look forward tocontinuing a positive working relationship with his successor,”Johnson said. NAFCU President/CEO Fred Becker recalled Barreto'snumerous appearances at credit union meetings including at itsannual conference last year. “Mr. Barreto was a tireless advocatefor America's small businesses and in seeking ways that creditunions could reach out to help more minorities and women to starttheir own businesses,” Becker said. In a 2005 story with CreditUnion Times, Barreto said credit unions are the facilitators of the“oxygen” or capital for small businesses to start and expand. Hecontinued to back the 7(a) zero subsidy saying it would prevent ashutdown of the program, which occurred for a few days in January2004, after it ran out of funding to guarantee loans. According toseveral published reports, including the Los Angeles Times, thereare rumblings that Barreto stepped down as the agency facedcriticism on how it handled loan processing after last year'shurricanes. Barreto told the Los Angeles Times his resignation wasunrelated to that and he was not asked to leave. “This is somethingthat I have been thinking about for some time now,” Barreto toldthe publication. “This was just the perfect time, now that we'realmost done with the disaster response.” SBA also made what somecritics say was a controversial move when the agency's 7(a) programmoved to a zero subsidy, which means it operates on fees collectedfrom borrowers and lenders rather than relying on any congressionalfunding. CUNA, NAFCU and other industry trade groups hadcontinually urged Bush to return funding back to Congress concernedthat further fee increases would force credit unions and otherlenders to leave the program. As recently as March, Grace Mayo,CUNA Business/SEG Services Task Force chairperson and president/CEOof Telesis Community Credit Union, testified on behalf of CUNA thatcredit unions were growing concerned about SBA's latest feeincrease. On Barreto's resignation, she said the news is sad butshe wishes him well. “He's been very supportive,” He's got an awfullot of talent and clearly the (Latino Coalition) recognized that,”Mayo said. Should Preston, the SBA administrator nominee, take thehelm, Mayo said it will be important for the industry to not onlyget to know him but educate him on the credit union model. HouseSmall Business Committee Chairman Don Manzullo (R-Ill.), a staunchSBA supporter, has also opposed any further fee increases. Manzullocredits Barreto for “doing more with less” during his tenure.“Under Hector's leadership, the SBA streamlined many functions andlearned to do more with less while facing unparalleled challengesto the SBA's disaster loan program from the 9/11 terrorist attacksand Hurricanes Katrina, Rita and Wilma,” Manzullo said. Manzulloalso supported the 7(a) program's zero subsidy saying it savedtaxpayers nearly $100 million annually. Rep. Nydia Velazquez(D-N.Y.), the top Democrat on the House panel that oversees theSBA, criticized the zero subsidy and last December, called forBarreto's resignation, accusing him of mismanaging the agency.Several publications reported her saying “unfortunately he wassimply not up to the challenges of running this agency. Sen.Olympia Snowe (R-ME), who is also chairperson of the SenateCommittee on Small Business and Entrepreneurship, said she looksforward “to working with Hector's successor, who I hope will besomeone who has a deep commitment to the success of smallbusinesses and understands the vital role the SBA plays in thatsuccess.” Meanwhile, Barreto said he is proud of the changes thathave taken place at SBA during his tenure. “Accountability, greaterefficiencies and results-oriented management are now part of theSBA culture,” Barreto said. “I am confident that the foundation hasbeen established for even better results in the future to thebenefit of our small business clients as well as the U.S.taxpayer.” -

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