Magazine article American Banker

SBA Told, We Can Do More

Magazine article American Banker

SBA Told, We Can Do More

Article excerpt

Bankers in the Gulf Coast region are pleased the Small Business Administration has decided to let them process and close disaster-relief loans, but some said they will keep pushing for a larger role in hopes of a faster recovery for the area.

Overwhelmed by demand for disaster loans in states hard hit by hurricanes Katrina and Rita, the SBA put out a request for proposal last week seeking banks and other lenders that could help it process disaster-relief loan applications. It was an unprecedented request by the agency, which partners with banks in most of its lending programs but works alone in disaster-relief lending.

The agency said it would select a number of financial institutions to process loans and to recommend whether they should be approved or not. But it also said it would retain decision-making authority and that its own officials would review every loan bankers process.

Bankers said the process would be quicker and more effective if they had the final say, adding that they are better at making credit decisions anyway.

"Our ultimate goal is to let banks have delegated decision-making authority," said Guy T. Williams, the chairman and chief executive officer of the $665 million-asset Gulf Coast Bank and Trust in New Orleans. "It makes the most sense. The private sector has always done a better job of lending than the government."

"We echo what ... [Mr. Williams] is saying," said McKinley W. Deaver, the executive director of the Mississippi Bankers Association. "I'm somewhat disappointed that the loans have to go back to SBA."

An SBA spokesman did not return calls, but James Ballentine, the American Bankers Association's director of community development, said the SBA would need congressional approval to delegate its decision-making authority over disaster-relief loans, something that could take weeks or months to obtain. …

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