By FRANK BASS
The Associated Press
Tuesday, April 25, 2006; 7:07 PM
WASHINGTON -- Small Business Administration chief Hector Barreto resigned Tuesday after a tenure marked by criticism of the agency's response to the Sept. 11 terror attacks and the Gulf Coast hurricanes.
President Bush immediately announced a new agency chief, Steven C. Preston, an executive vice president for The ServiceMaster Co. The appointment requires Senate confirmation.
Barreto, a California businessman, was appointed head of the agency in 2001. After the Sept. 11 terror attacks that year, his agency provided nearly $5 billion in economic disaster recovery loans to small businesses across the country.
The Associated Press reported last year, however, that many of the businesses that received loans said they neither wanted nor knew they were receiving money earmarked for terror victims. Companies receiving aid ranged from an Oregon winery to a Virgin Islands perfume bar, drawing outrage on Capitol Hill.
An SBA internal agency investigation confirmed the AP's findings in an investigation of one of the main programs, the Supplementary Terrorist Attack Relief (STAR) effort.
Barreto also was criticized for his agency's response to the 2005 Gulf hurricanes. A month after Hurricane Katrina laid waste to much of the Louisiana, Mississippi and Alabama coasts, no loans had been handed out, and the backlog of applications was in the tens of thousands. Although the SBA eventually was able to boast that it approved more than $8 billion in disaster relief loans, lawmakers on Capitol Hill were angered by the delays and high rates of loan rejections.
Rep. Nydia Velazquez, the top Democrat on the House panel that oversees the SBA, called for Barreto's resignation in December. In a statement, Velazquez, who represents part of New York City, said that "unfortunately he was simply not up to the challenges of running this agency."
"In the last five years, we have seen the complete and utter abandonment of our small businesses courtesy of the Bush administration," said Sen. John Kerry, D-Mass., the top Democrat on the Senate panel overseeing the SBA. "It's time for a change."
Sen. Olympia Snowe, the Maine Republican who leads the Senate SBA panel, wished Barreto well and said she looked forward "to working with Hector's successor, who I hope will be someone who has a deep commitment to the success of small businesses and understands the vital role the SBA plays in that success."
Rep. Donald Manzullo, an Illinois Republican who chairs the House SBA panel, praised the SBA for having "learned to do more with less while facing unparalleled challenges."
In his resignation letter, Barreto defended his tenure. He told Bush that "it has been a unique honor ... to help execute your vision to bring unprecedented opportunities to all entrepreneurs in every community as they seek to realize their dreams. I am proud that the agency has delivered strong results and achieved historical milestones on behalf of a vital component of our great economy, America's small businesses."
A spokesman said he had not been forced out. Barreto has agreed to remain in his post as SBA administrator during a transition period.
His successor, Preston, is a former investment banker who has been at ServiceMaster since 1996. The company provides home services through more than 5,400 company-owned and franchised services, including TruGreen ChemLawn, ServiceMaster Clean and Merry Maids. Preston is a graduate of Northwestern University and earned his master's in business administration from the University of Chicago Graduate School of Business. He and his wife have five children.
The administration announced last week that White House political mastermind Karl Rove was surrendering a key policy role and press secretary Scott McClellan was resigning, part of an administration shake-up that has been driven by Republican anxieties about how they will fare in the November congressional elections.
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