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SBA Head Quits to Lead Latino Group

The administrator says his exit is unrelated to criticism of the agency's hurricane response.

April 26, 2006|Michelle Keller | Times Staff Writer

The head of the Small Business Administration resigned Tuesday to become the national chairman of a Washington-based Latino advocacy group.

Hector V. Barreto, who was tapped in 2001 by President Bush to be administrator of the agency and confirmed by the Senate that July, said he was stepping down after serving the second-longest tenure in the 53-year history of the agency.

During his term, the agency was criticized for its slow response to victims of the hurricanes that pounded the Gulf Coast last year and for its handling of economic recovery loans after the Sept. 11 terrorist attacks.

Barreto, former head of the Los Angeles-based Latin Business Assn., is poised to step into controversy once again -- this time in the immigration debate, said Robert de Posada, president and acting chairman of the Latino Coalition.

"This is such a crucial time in our community, but what we've seen is a lack of leadership to really galvanize the community and represent a true vision," De Posada said. "He's well respected by the mainstream ... and he's always had our community's best interests at heart."

After Barreto's resignation, President Bush announced the nomination of Illinois businessman Steven C. Preston to the post. Preston, who received a master's degree in business administration from the University of Chicago, is an executive vice president at ServiceMaster Co., a nationwide network of 5,400 franchised service centers and business units providing such services as lawn care and plumbing. Preston must be confirmed by the Senate.

Barreto said that he was not asked to leave and that his resignation was unrelated to criticism of the agency's handling of Hurricane Katrina victims.

"This is something that I have been thinking about for some time now," Barreto said. "This was just the perfect time, now that we're almost done with the disaster response."

The agency has been criticized for its slow response to the hurricanes that devastated Louisiana, Mississippi and Alabama last year. The Government Accountability Office, which conducts audits of government agencies, recently reported that the agency had been inadequately prepared to deal with a hurricane of Katrina's magnitude.

Sen. John F. Kerry (D-Mass.), who has criticized the Bush administration for cutting the Small Business Administration's budget, said in a statement that "it's time for a change."

"Since George Bush took office, the SBA's budget has been slashed by more than 40%, critical lending and counseling programs have been on the chopping block and we have witnessed the most abysmal response to the needs of Gulf Coast victims devastated by hurricanes Katrina, Rita and Wilma," Kerry said.

But Barreto has defended his agency's response to the hurricanes, pointing to the more than $8.4 billion in low-interest loans given to small businesses and homeowners through its disaster assistance program -- double the amount offered after the last major catastrophe.

During Barreto's tenure, the number of loans made through the agency's main business loan programs also doubled.

One small-business group's leader said he had qualms about both Barreto and his proposed successor.

"There's a sense in the small-business community of frustration with the SBA," said Scott Hauge, president of Small Business California, a statewide nonpartisan advocacy group. "You didn't get the feeling that they were out there fighting for us."

Hauge said he also was wary of Preston, who previously worked at large corporations including First Data Corp. and Lehman Bros.

"On first glance, I don't see small businesses on his resume," said Hauge, "and that raises a red flag."

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