Just Above Sunset
September 11, 2005 - Not Hurricane Related













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As if the administration didn't have enough to worry about, Friday, September 9, the Associated Press is reporting this: Companies Got Unneeded 9/11 Loans - byline Frank Bass and Dirk Lammers.  (Someone is really named Dirk?)

What is this about? It seems to be about the press doing its job. The government had set aside five billion after 9/11 as "recovery aid" to small businesses, these would be low interest loans, and because they don't believe in government - that is, they don't believe government should intrude in our lives - they promised banks a "hands-off approach" in overseeing where the money was going. It's a free market thing. The "invisible hand" will take care of things, or the tooth fairy or whatever. The folks at AP were skeptical - which is, perhaps, their job - so they filed one of those Freedom of Information Act things, requesting the records. Oddly enough, they got the records. The records show "numerous loans to companies that didn't need terror relief - or even know they were getting it." This help for "economic victims" of the terror attacks was going to some mighty odd places - Dunkin' Donuts shops and florists and motorcycle dealers and chiropractors, and a South Dakota country radio station, and a Virgin Islands perfume shop and a Utah dog boutique - many now saying they had no idea their small business loans were coming from the low-interest, government-guaranteed September 11 loan program.

In Manhattan?

 

The pattern of lending left many at New York's Ground Zero seething, especially those who had trouble getting government assistance.

"You have to take it back and give it to us. Even now, I could use it," fumed Mike Yagudayev, who said the government offered him only $20,000 of the $70,000 loan he requested to rebuild the hair salon flattened by the collapse of the World Trade Center's twin towers.

 

Oops. The Small Business Administration said it first learned of the problems through this AP review - and they are "weighing whether an investigation was needed." And AP reports that SBA officials declined comment on documents showing one of their top officials promised banks back in 2002 that there would be a no-questions-asked approach the these "below market" (really low interest) relief loans. This Supplementary Terrorism Activity Relief effort left banks to determine who should get loans. Why would the government care? Congress originally required that the loans go only to companies that could demonstrate they suffered direct or indirect harm from the terror attacks, but the congress was slapped down. Wachovia and Wells Fargo "declined to say" how many loans they shifted into the terror relief program, saying only that they followed the law. Some law. Heck, they profited from the interest - the government guaranteed up to eighty-five percent of each loan total, leaving them with little or no risk.

What are we talking about here? More than 100 Dunkin' Donuts, Subway and Quiznos franchises all over America getting loans, along with fourteen Dairy Queens. And we have some puzzled small businesses:

 

Gordie Barnes, who received a $1.49 million loan to buy the Williams Garden Center in New Bern, N.C., said the previous owners had mentioned that business was dropping off, but not necessarily because of the attacks.

"It would be a very big stretch of the imagination to figure out how this store would be impacted by those wackos who flew their planes into the Twin Towers," he said.

Leslie Bair used a $396,000 loan approved in January 2002 to purchase a recreational vehicle campground in Inglis, Fla. "I would hate to think that my money took money away from somebody else who needed it," she said.

Of the 19,000 loans approved by the two programs, fewer than 11 percent went to companies in New York City and Washington.

 

Oh well, business picked up.

 

And some folks said the loans made sense:

 

• Karl Grimmelmann, general manager of KBFS-AM "Hit Kickin' Country" in Belle Fourche, S.D., borrowed $135,000 from SBA's disaster program after learning about it from a news release. He said his station was forced to pay more money to cover national news and also lost advertisers.

• Margie Olson, co-owner of the Torii Mor Winery in McMinnville, Ore., said her business needed a $125,000 loan because it couldn't sell high-end pinot noir to restaurants that closed in New York City.

• Melva Kravitz, co-owner of the Little Dogs Resort & Salon in Salt Lake City that offers boarding and grooming services for small dogs, said people stopped taking vacations and boarding their pets after Sept. 11, requiring her $50,000 loan.

• Christine Hilty, co-owner of Violettes Boutique on St. Croix in the U.S. Virgin Islands, said the perfume shop lost 60 percent of its business overnight as tourism stopped, and she got a $169,500 loan from the SBA.

 

Ah, Saint Croix is a wonderful place and maybe Christine has a point. But there is this little problem AP reports - taxpayers have been forced to cover about six hundred "defaulted disaster loans - some approaching one million dollars each - from companies that went bankrupt or closed." And more defaults are expected.

Luckily we have the hurricane damage to fix, and a war that goes on and on, so this story will not have legs.

And how is the war going?

The AP also reports this on September 9 - Pay Dispute Shuts Down Baghdad Airport - byline Sinan Salaheddin.

What's this about?

 

The Baghdad International Airport, Iraq's only reliable link to the outside world, was closed Friday in an embarrassing pay dispute between the government and a British security company.

The Interior Ministry sent a force to reopen the facility, but withdrew the men after they confronted U.S. soldiers at a key checkpoint along the airport road.

"We ordered the forces to pull back after American forces were deployed at the first checkpoint on the road. We did not want to create a confrontation," acting Transportation Minister Esmat Amer told The Associated Press.

Brig. Gen. John Basilica Jr., commander of the 256th Brigade Combat Team of the Louisiana National Guard, said security remained "intact" at the airport. His unit, some of which has already returned to the United States, had been in charge of security along the militant-plagued airport road.

Otherwise, the U.S. military, in an apparent attempt to play down the problem, said it had no information about the pay dispute or Interior Ministry force movements.

 

Is the AP picking on the Bush team by using the word "embarrassing" in their text? They admit there are only about fifteen civilian flights each day there - Iraqi Airways, Royal Jordanian Airlines and three companies operating out of the United Arab Emirates - Jobotier, Ishtar and Tigris airlines. This may not be a big deal.

But acting Transportation Minister Esmat Amer has a problem - he said that Iraqi troops had been sent to reopen the facility because its closure was illegal. "This issue is related to Iraq's sovereignty, and nobody is authorized to close the airport."

Hey, London-based Global Strategies Group provides security and they're not being paid!

The problem?

 

Global said its workers would continue securing the facility but had suspended other operations because the Transportation Ministry, which owns the airport, was six months behind in payments. All flights in and out of Baghdad were suspended, it said.

"We're in continuing dialogue and we're hoping it'll be resolved as soon as possible," company spokesman Giles Morgan said. He declined to talk about specifics of the dispute.

Amer confirmed Global had not been paid since contract talks resumed around Jan. 1.

In June, Global suspended airport operations for 48 hours for the same reason.

 

We don't have the troops to take over for Global, and Global also manages security for the Green Zone in central Baghdad. We're doing this on a shoestring.

Well, it's not just the AP picking on Bush and his team on these matters. The day before these AP stories the Los Angeles Times reports another small problem:

 

The U.S. will halt construction work on some water and power plants in Iraq because it is running out of money for projects, officials said Wednesday.

Security costs have cut into the money available to complete some major infrastructure projects that were started under the $18.4-billion U.S. plan to rebuild Iraq. As a result, the United States is funding only those projects deemed essential by the Iraqi government.

 

One contractor has stopped work on six of eight water treatment plants they were supposed to get running. And even the Republicans are piling on. The Times quotes representative Jim Kolbe, a Republican representing Arizona, saying the Bush administration's vision for using reconstruction funds to stabilize Iraq "was largely a chimera, a castle built of sand. Reconstruction in Iraq has been slower, more painful, more complex, more fragmented and more inefficient than anyone in Washington or Baghdad could have imagined a couple of years ago." And he's chairman of the house appropriations subcommittee on foreign operations.

Oh my. And there are the fifty-eight investigations into corruption the Times mentions, including those of US contractors.

An often-repeated thing said as the Bush-Cheney-Rumsfeld era began - it will be good to have the grownups in charge for a change (referring Cheney and Rumsfeld only, one presumes).

Well, there are grownups, and then there are also responsible, careful, thinking adults - a special subset of the first group.

 

We didn't take that into account.

 

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On the loan business above, late Friday, this:

 

Congress will investigate the "flagrant abuse" of a federal loan program designed to help businesses recover from the Sept. 11 attacks and make sure such problems don't occur with Hurricane Katrina relief, a key Senate Republican announced Friday.

 

Sen. Olympia Snowe, R-Maine, chairwoman of the Senate Small Business and Entrepreneurship Committee, announced the investigation in response to an Associated Press story Thursday that showed the federal program was so loosely managed that it gave low-interest loans to companies that didn't need terrorism relief or even know they were getting it.

 

"The apparent widespread abuse of loans provided through the Supplemental Terrorist Activity Relief Act is nothing short of an outrage," Snowe said. …

 

If you read the whole thing, the Democrats rant, Snowe and a few Republican feel they have to act on it, and the SBA folks say it's all a misunderstanding.

 
































 
 
 
 

Copyright 2003, 2004, 2005, 2006 - Alan M. Pavlik
 
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