Washington Report: Updates From the Capitol

CEO: Banks Need to Lend ‘Outside the Box’

As Carolyn Walker, president and CEO of the Maryland-based TDP L.L.C., listened to banking regulators opine Wednesday morning at a Senate small business roundtable discussion on identifying obstacles and exploring solutions in small business lending, an unsettling notion came to mind: They simply don’t get it.

TDP provides training, development, and program management primarily to government clients, including the U.S. Census Bureau, for which it is managing a multi-million dollar contract to train employees at Census data capture centers in Baltimore and Phoenix. The bureau liked TDP’s work so much, it soon increased the contract from $2.1 million to more than $3 million. But to begin the contract, Walker needed to hire additional staff, and despite her strong credit history, loan requests were denied. She was forced to put together what she described as “hybrid financing” from various sources.

Most lenders, Walker laments, are wary of extending credit to firms that don’t have hard assets that can be used as collateral, and those that specialize in receivables financing take advantage of small businesses.

“Moving forward this country’s success is going to be in the space of technology and service providers. That’s where the innovation is, where the growth is, and where the opportunities are–not only in the U.S. but globally,” Walker said. Bankers and regulators don’t seem to understand how service-based companies operate or how to properly assess their viability or profitability.

Sen. Mary Landrieu (D-Louisiana), who chairs the small business panel, agrees with Walker and says banks should figure it out quickly. A paradigm shift is taking place in the business world and if banks can’t figure out how to lend on firms like TDP that are based on brainpower and technology, “We’ll never get out of this box,” she said.

Tim Scott Giving Thurmond Strong Fight for S.C. Congressional Seat

Tim Scott, the top vote-getter in a South Carolina primary race to fill the 1st Congressional District seat, may actually have a fighting chance to beat political legacy Paul Thurmond, son of the late Sen. Strom Thurmond, during their June 22 runoff. In this week’s primary, the first-term state representative won 30.6% of the vote to Thurmond’s 16.4%. And if he wins the November contest against African American Democrat Ben Frasier, Scott would be the first black Republican to serve in the House since Rep. J.C. Watts (R-Oklahoma) retired in 2003.

What are the chances? Republican House aide Darrell Jordan is optimistic. “Scott’s very sincere; he’s conservative, which matches that district; and he has ideas and solutions. He’s not just a politician who will spout off a bunch of Republican talking points,” Jordan said. More important, he’s worked his way through the system, Jordan added. “People have already seen him in action.”

David Bositis, senior political analyst at the Joint Center for Political and Economic Studies, says that Scott’s success will depend in part on whether race is introduced into the campaign. After all, he says, the South is famous for having begun the practice of runoffs in the first place to prevent black candidates from winning office.

Scott probably has a decent shot, but it would not be surprising if someone aligned with Thurmond used race to wean off some of the black Republican’s support. “That’s the way it works,” Bositis notes.Financial Services Reform Conference Committee Now in Session

Black lawmakers are prominently represented on the conference committee comprised that will reconcile the House and Senate versions of a financial regulatory reform bill. They include Maxine Waters (D-California), Mel Watt (D-North Carolina), and Gregory Meeks (D-New York), who are chair Financial Services subcommittees, as well as Judiciary Committee Chairman John Conyers (D-Michigan) and Oversight and Government Reform Chairman Edolphus Towns (D-New York).

Watt said that while he and the other black lawmakers will fight for protections such as minority representation at each regulatory office “to serve as a watchdog and reminder that people need to do better” and a Consumer Financial Protection Agency, African Americans need to pay attention to as many aspects of the bill as possible.

“We’re an integral part of the economy and this meltdown has substantially and adversely and disproportionately impacted us, so there’s not a section of this bill that we’re not involved in,” he said. “Most of my constituents don’t feel like they know a lot about derivatives and CDOs and those sorts of things, but these things impact them if they as taxpayers end up having to pick up the bill for them.”

Click here to view coverage of the conference hearings.

In the meantime, the Senate is still trying to muster up enough support to pass the American Jobs and Closing Tax Loopholes Act. In addition to some Democrats, moderate Maine Republican senators Olympia Snowe and Susan Collins are balking at increasing deficit spending and want to see more offsets to pay for the measure.

So far, says Rep. Emanuel Cleaver, the provisions that the Congressional Black Caucus fought for, such funding for youth summer jobs and compensation for black farmers, are safe.

Clyburn Calls for Investigation of S.C. Candidates

When it comes to politics, South Carolina is the sort of place where almost anything can happen, and this week, a few things did.

Something is terribly amiss, House Majority Whip James Clyburn (D-South Carolina) said Thursday afternoon, and he’s calling on both state and federal authorities to investigate suspicious congressional campaigns run by black candidates.

Political observers have been most abuzz over unemployed veteran Alvin Greene, the state’s improbable Democratic candidate for the U.S. Senate. Greene, who has no website, staff, signs, or semblance of a real campaign, stunned the party when he won 100,000 votes in Tuesday’s primary and again when the news emerged that he’s facing a criminal felony obscenity charge. Aside from the $10,400 filing fee he paid in March, Greene’s so-called campaign hasn’t made any other expenditure or filed, Federal Election Commission reports. Greene says he has no intention of stepping aside from the November face-off against Republican U.S. Sen. Jim DeMint.

“How can anybody who’s unemployed just plop down $10,000 and all of a sudden spend no money and get nominated?” Clyburn wondered. He suspects that Greene is someone’s plant. “When I heard that he was in fact accused of a felony, I just felt that this was 1990 all over again.”

Clyburn was referring to the year Benjamin Hunt Jr., an unemployed black fisherman, ran for Congress in a primary against incumbent GOP Rep. Arthur Ravenel, Jr. It turned out that political consultant Rod Shealy, who wanted to increase turnout for his sister’s bid for lieutenant governor, had paid Hunt’s filing fee.