Trump Picks His SBA Administrator

In his 21 Hats column, Ami Kassar says Kelly Loeffler, if confirmed, will face some tough choices at the SBA.

Good Morning!

Here are today’s highlights:

• A federal judge has struck down the Corporate Transparency Act.

• John Warrillow has mixed feelings about PE firms rolling up small businesses.

• A legal battle over whether a donut shop’s mural is art or signage has done nothing to hurt sales.

• Neckties are making a comeback—but not around the necks you might expect.

THE SBA

Trump chooses Kelly Loeffler, a former senator, to lead the Small Business Administration: “Ms. Loeffler was previously the chief executive of Bakkt, a cryptocurrency trading platform that the president-elect’s Trump Media & Technology Group is reportedly in talks to purchase. She comes from a prosperous farming family in central Illinois, and in her early 20s was given large tracts of some of the richest agricultural land in America. As senator, Ms. Loeffler briefly served on an agricultural subcommittee that oversees the Commodity Futures Trading Commission, which regulates the derivatives market, but stepped down to dispel questions over potential conflicts of interest.”

• “She is married to Jeffrey C. Sprecher, the chief executive of Intercontinental Exchange, which owns the New York Stock Exchange. She appeared to have received stock and other awards worth more than $9 million from Intercontinental Exchange, when she left her position there to serve in the Senate.” READ MORE

Ami Kassar says Loeffler will have to make some tough decisions: “The Covid-19 Economic Injury Disaster Loan portfolio is an ongoing headache for the SBA and is putting a cloud over the agency. Last week, Debanked, a media company that calls itself a guide to nonbank finance, reported that cumulative EIDL charge-offs of this portfolio now exceed $70 billion. And with an outstanding principal balance of more than $277 billion, there is still plenty of blood likely to be spilled. The incoming SBA head will have plenty of tough policy calls to make with this portfolio, calls that will have to balance the government’s responsibility to protect taxpayers with its responsibility to support the long-term success of borrowers.”

• “EIDL was created to handle the aftermath of a hurricane or a tornado in a specific regional area. It was not designed to handle crises that hit the entire country. About 4 million EIDL loans were issued during the height of Covid-19. The SBA simply did not have the infrastructure or the systems in place to handle all of the loans, especially given the need to get money out on the street as quickly as possible.”

• “Let me be clear. There are plenty of lessons to learn from the Covid-19 debacle, especially concerning how average loan sizes increased 10 times during efforts to get the money out the door before the budget ran out. These mistakes should be learned from – but not at the expense of the program’s future.”

• “A common thread in these issues is a lesson that I hope will not be forgotten: It’s not supposed to be easy to get a loan.” READ MORE