WASHINGTON — Nearly 18 months after Hurricane Katrina leveled much of the Gulf Coast, community bankers continue to press for a larger role in the Small Business Administration's disaster-relief lending program.
The House Small Business Committee held a hearing Wednesday to review the SBA's response to the 2005 Gulf Coast hurricanes.
Testifying on behalf of the American Bankers Association, Edward G. Francis, the chief commercial officer of Hancock Holding Co. in Gulfport, Miss., said that banks' preexisting relationships with their communities as well as the SBA would save the SBA from having to train new staff after each disaster.
"The ABA believes that a practical solution is for banks to be involved in the SBA disaster loan process," Mr. Francis told the committee.
Last year, the SBA awarded contracts to three private-sector consulting firms — not banks — to help it process and close disaster loans in an effort to get funds into borrowers' hands faster.
A representative of the Government Accountability Office expressed skepticism at the hearing about giving financial institutions a larger role in the disaster-lending process.
"We have many concerns going back, with oversight of lenders, loan monitoring, and the tools that SBA had when it delegated authority to private-sector lenders," said William Shear, the director of GAO's financial markets and community investment unit.
SBA Administrator Steven Preston was not given a chance to respond to a lawmaker's question about letting banks assist with disaster lending, but an SBA spokeswoman said that he is interested in "discussing" giving banks a more prominent role.
