The Small Business Administration is expected to face criticism from a Senate panel today for its handling of a nonbank lender accused of making more than $70 million of fraudulent loans.

In a report issued in July, the SBA's inspector general found flaws in the SBA's oversight of Business Loan Center LLP, where 19 people are facing federal fraud charges for allegedly making loans to unqualified borrowers. The New York lender operates nationwide and is overseen by the SBA.

The report said that even though the SBA had been aware of problems since 2001 at the firm, also known as BLX, the agency "continued to renew BLX's delegated lender status and SBA took no actions to restrict BLX's ability to originate loans or to mitigate financial risks."

The report, while critical of the SBA, was heavily redacted at the urging of the agency, which said exemptions from the Freedom of Information Act justified keeping certain material from the audit out of the public domain.

The redactions triggered criticism from Senate Small Business Committee Chairman John Kerry, D-Mass., who called the hearing.

"We can't get to the heart of the problem if the [Bush] administration keeps hiding the facts from public view," Sen. Kerry said in an Oct. 24 press release.

Witnesses scheduled to testify at the hearing include SBA Administrator Steven C. Preston; Eric M. Thorson, the agency's inspector general; and Robert F. Tannenhauser, the chairman of Business Loan Center.

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