November 19, 2008 CONGRESSIONAL RECORD — SENATE S10661 

government assistance provide detailed, publically available quarterly 

reports to Treasury outlining how taxpayer dollars have been used; establish 

corporate governance standards to ensure that firms receiving federal assistance do not waste money on unnecessary expenditures; and, create penalties of at least $100,000 per violation 

for firms that fail to meet the corporate governance standards established in the bill. 

The need for such legislation has become apparent in the weeks since Congress approved the economic rescue 

plan. 

Since then, news reports have uncovered multiple instances in which rescued firms have been caught making 

unnecessary and outrageous expenditures, which calls their assistance from 

taxpayers into question. 

Last week, Treasury Secretary 

Paulson announced that the $700 billion approved by Congress to stabilize 

financial markets would not be used to 

purchase illiquid assets but rather to 

make direct capital injections into financial institutions. 

Given this new mission, the need for 

additional transparency and disclosure 

is striking. 

We have learned that we cannot necessarily count on these firms and their 

executives to act sensibly and do what 

is right. 

The public needs to know that their 

tax dollars are being put to good use. A 

simple ‘‘trust me’’ from the bank executives is not enough. 

On October 16th, the Wall Street 

Journal reported that American Insurance Group, AIG, which received billions of dollars in Federal rescue funds, 

was continuing to lobby state regulators to delay implementation of 

strengthened licensing standards for 

mortgage brokers and lenders. 

AIG was lobbying against sensible 

standards created by the SAFE Mortgage Licensing Act of 2008. This bill, 

introduced by Senator MARTINEZ and 

myself, established basic minimum 

regulations for the mortgage industry 

to ensure consumers were adequately 

protected. 

Before this bill, in some states virtually anyone—even those with criminal records—could go out and get a 

mortgage broker’s license. 

Left unchecked, and with no regulations to stop them, unscrupulous mortgage brokers and lenders flooded the 

markets with subprime loans that they 

knew would never be paid back, and 

this served as one of the catalysts for 

our current economic predicament. 

Now AIG, having succumbed to bad 

investments and propped up by billions 

in government money, was lobbying 

against the strong enforcement of state 

laws that might have helped prevent 

this catastrophe in the first place. 

Senator MARTINEZ and I wrote a letter to AIG and, to the company’s credit, CEO Edward Liddy immediately suspended the company’s lobbying operations. 

I find it completely unacceptable 

that taxpayer dollars intended to stabilize the economy could find their way 

into the bank accounts of lobbying 

firms. The legislation which I introduce today will make sure that doesn’t 

happen. 

I do not mean to pick on AIG, but 

they have also been the poster child for 

wasteful spending by rescued firms. 

In September, just days after receiving an $85 billion federal lifeline, the 

management of AIG treated itself to a 

$444,000 spa weekend at the St. Regis 

resort in Monarch Beach, California. 

This included $200,000 for rooms, 

$150,000 for fine dining and $23,000 in 

spa charges. 

AIG executives spent the last two 

days of September on a golf outing at 

Mandalay Bay in Las Vegas at a cost of 

up to $500,000. They were planning to 

follow this with a few days at the Ritz 

Carlton in Half Moon Bay, but cancelled after it hit the news and drew 

fire from Congressional leaders. 

As news of these wasteful expenditures was making headlines, AIG received another $37.8 billion in emergency loans from the Federal Government. Shortly thereafter, the Associated Press reported that—even as AIG 

was asking Congress for these loans— 

AIG executives were spending $86,000 

on a pheasant hunting expedition in 

England. During the trip, they stayed 

at a 17th century manor. 

One AIG executive named Sebastian 

Preil was quoted as saying that: ‘‘The 

recession will go on until about 2011, 

but the shooting was great today and 

we are relaxing fine.’’ 

Once these lapses in judgment came 

to light, AIG chief executive Edward 

Liddy informed Congress that he was 

putting an end to all nonessential expenditures. Yet earlier this month, an 

undercover news crew caught AIG executives at the Hilton Squaw Peak Resort in Phoenix, hosting a seminar for 

financial planners complete with cocktails and limousines. 

One would think that a brush with 

collapse and total failure might have a 

sobering effect on some of these firms. 

But this penchant for wasteful junkets in the face of complete failure was 

not unique to AIG. 

The Wachovia Corporation was 

caught shipping its top brokers off to 

the Greek Isles on a cruise ship for an 

all-expenses paid luxury trip—even as 

the company awaited a buyout potentially backed by taxpayers. 

Wachovia cancelled the trip due to 

the storm of criticism attracted by this 

stunning display of what the ancient 

Greeks called hubris. 

While the economic rescue legislation passed in September includes several oversight boards and accountability provisions to ensure that public 

funds are effectively distributed, the 

bill does not include any reporting requirements for firms that receive Federal dollars. 

This is a significant omission, especially given the amount of Federal 

money that some firms are receiving. 

The Treasury Department has already approved the purchase of $160 billion of preferred stock in 30 financial 

institutions. We know that of these 

funds $125 billion was allocated to nine 

large national banks. 

It was also reported last week that 

AIG will receive an additional $40 billion, meaning that at least $165 billion 

of the economic rescue funding will be 

allocated to only 10 firms. 

When you add up all of the taxpayer 

dollars put on the line—from $30 billion 

provided to Bear Stearns in March, $200 

billion available to Fannie Mae and 

Freddie Mac, $150 billion to AIG, $700 

billion in economic rescue funds, plus 

the direct lending programs at the Federal Reserve—we are talking about 

well over 1 trillion Federal dollars. 

I certainly don’t think it is unreasonable for the public to know how their 

money is being spent. 

As the end of the year nears, we are 

approaching bonus time on Wall 

Street. Certainly Americans deserve 

assurances that struggling firms will 

not use public funds to pay higher bonuses. 

The same can be said for these funds 

going towards dividend payments, or 

mergers and acquisitions. 

Shining light on how firms use public 

dollars not only makes good sense, but 

it will also act as a deterrent to irresponsible behavior. 

My vote on the economic stabilization bill was one of the toughest I have 

taken during my time in the Senate. 

My office received more than 160,000 

calls, letters, and e-mails from Californians concerned about this course of 

action. 

But, I decided to support the bill to 

ensure that action would be quickly 

taken to ease the flow of credit to consumers and businesses. 

Our economy continues to struggle 

today. The money approved by Congress must be used sensibly to ensure 

its maximum impact. 

Americans are struggling, and the 

pain in my State of California, where 

unemployment is 7.7 percent, and foreclosure filings exceed 680,000 this year, 

is especially acute. 

This bill puts in place commonsense 

solutions to fix some of the deficiencies 

in the economic stabilization bill. 

This bill is significant and sorely 

needed. We must act soon to help restore confidence in this effort and shed 

light on how public funds are used. We 

promised the American people transparency and oversight, and this legislation will make good on that promise. 

I hope my colleagues will join me to 

ensure that taxpayer dollars are spent 

efficiently and responsibly. 

By Ms. SNOWE: 

S. 3699. A bill to direct the Administrator of the Small Business Administration to reform and improve the 

HUBZone program for small business 

concerns, and for other purposes; to the 

Committee on Small Business and Entrepreneurship. 


rfrederick on PROD1PC67 with SENATE
S10662 CONGRESSIONAL RECORD — SENATE November 19, 2008 

Ms. SNOWE. Mr. President, I rise 

today in support of the passage of the 

HUBZone Improvement Act of 2008. 

This vital legislation would address the 

Government Accountability Office’s recent recommendations to improve the 

Small Business Administration’s administration and oversight of the Historically Underutilized Business Zone, 

HUBZone, program and ensure that 

only eligible firms participate in this 

crucial program. 

As former chair and now ranking 

member of the Senate Committee on 

Small Business and Entrepreneurship, I 

have been a longstanding champion for 

small business programs such as the 

HUBZone program. The HUBZone program provides Federal contracting assistance to small firms located in economically distressed areas, with the intent of stimulating economic development. According to the GAO, as of February 2008, 12,986 certified businesses 

have participated in the HUBZone program since its inception. And in fiscal 

year 2007, over 4,200 HUBZone firms obtained approximately $8.1 billion in 

Federal contracts. In these troubling 

economic times, the HUBZone program 

is something our country needs now 

more than ever. 

The mechanisms that the SBA uses 

to certify and monitor HUBZone firms 

provide limited assurance that only eligible firms participate in the program. 

Unfortunately, according to a recent 

GAO report and analysis of 125 applications submitted in September of 2007, 

the SBA only requested supporting 

documentation, which helps to clarify 

the status of the business, for 36 percent of the applications and only conducted a single site visit for all 125 applicants. While the SBA’s policies and 

procedures require program examinations, the agency only conducts them 

on 5 percent of certified HUBZone 

firms each year. This is a glaring lack 

of oversight that must be rectified. 

The legislation I introduce today, the 

HUBZone Improvement Act of 2008, 

would take immediate steps to correct 

the lack of effective administrative 

oversight by requiring more routine 

and consistent supporting documentation during the program’s application 

process. In its report, the GAO found 

that the SBA relies on Federal law to 

identify qualified HUBZone areas, but 

the map it uses to publicize HUBZone 

areas is inaccurate, and the economic 

characteristics of designated areas 

vary widely. My bill would require that 

the SBA take immediate steps to correct and update the map that the SBA 

uses to identify HUBZone areas and 

implement procedures to ensure that 

the map is updated with the most recently available data on a more frequent basis. 

The GAO also found that the mechanisms that SBA uses to certify and 

monitor firms provide limited assurance that only eligible firms participate in the program. The GAO found 

that more than 4,600 firms that had 

been in the program for at least 3 years 

went unmonitored. My legislation 

would require the SBA to develop and 

implement guidance to more routinely 

and consistently obtain supporting 

documentation upon application and 

conduct more frequent site visits, as 

appropriate, to ensure that firms applying for certification are eligible. 

These commonsense achievable steps 

would help to eliminate participant 

fraud and misrepresentation, and ensure that firms applying for HUBZone 

certification are truly lawful and eligible businesses. 

In its report, the GAO illustrates the 

SBA lack of a formal policy on how 

quickly it needs to make a final determination on decertifying firms that 

may no longer be eligible for the 

HUBZone program. According to the 

GAO, of the more than 3,600 firms proposed for decertification in fiscal years 

2006 and 2007, more than 1,400 were not 

processed within 60 days—the SBA’s 

targeted timeline. As a result of these 

weaknesses, there is an increased risk 

that ineligible firms have participated 

in the program and had opportunities 

to receive Federal contracts based on 

their HUBZone certification. My legislation would require the SBA to formalize and adhere to a specific timeframe for processing firms proposed for 

decertification in the future, as well as 

require further developed measures in 

assessing the effectiveness of the 

HUBZone program. 

Moreover, the Federal Government 

must strive to continue to provide additional contracting opportunities to 

those who are legitimate HUBZone 

firms. I am dismayed by the innumerable ways that government agencies 

have time and again egregiously failed 

to meet most of their small business 

contracting goals. I am alarmed that 

only one Federal small business contracting program—the small disadvantage business program—has met its 

statutory goal, and that the three 

other small business goaling programs 

have all fallen drastically short. For 

example, in fiscal year 2007, the 

HUBZone program met only 2.2 percent 

of its three percent government-wide 

goal. The Federal Government can and 

must provide more to our country’s 

hardworking small businesses. 

In my home State of Maine, only 118 

of 41,026 small businesses are qualified 

HUBZone businesses. HUBZones represent a tremendous tool for replacing 

lost jobs for our Nation’s declining 

manufacturing and industrial sectors— 

clearly, this program should be better 

utilized. 

Mr. President, I ask unanimous consent that the text of the bill be printed 

in the RECORD. 

There being no objection, the text of 

the bill was ordered to be printed in 

the RECORD, as follows: 

S. 3699 

Be it enacted by the Senate and House of Representatives of the United States of America in 

Congress assembled, 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘HUBZone 

Improvement Act of 2008’’. 

SEC. 2. DEFINITIONS. 

In this Act— 

(1) the terms ‘‘Administration’’ and ‘‘Administrator’’ mean the Small Business Administration and the Administrator thereof, 

respectively; 

(2) the terms ‘‘HUBZone’’ and ‘‘HUBZone 

small business concern’’ have the meanings 

given such terms in section 3 of the Small 

Business Act (15 U.S.C. 632); and 

(3) the term ‘‘recertification’’ means determining whether a business concern that was 

previously determined to be a qualified 

HUBZone small business concern is a qualified HUBZone small business concern under 

section 3(p)(5) of the Small Business Act (15 

U.S.C. 632(p)(5)). 

SEC. 3. PURPOSE; FINDINGS. 

(a) PURPOSE.—The purpose of this Act is to 

reform and improve the HUBZone program of 

the Administration. 

(b) FINDINGS.—Congress finds the following: 

(1) The HUBZone program was established 

under the HUBZone Act of 1997 (Public Law 

105–135; 111 Stat. 2627) to stimulate economic 

development through increased employment 

and capital investment by providing Federal 

contracting preferences to small business 

concerns in economically distressed communities or HUBZone areas. 

(2) According to the Government Accountability Office— 

(A) as of February 2008, 12,986 certified 

firms have participated in the HUBZone program since its inception; and 

(B) in fiscal year 2007, over 4,200 HUBZone 

small business concerns obtained approximately $8,100,000,000 in Federal contracts. 

(3) The Government Accountability Office 

also identified numerous concerns with the 

HUBZone program, including that— 

(A) the Administration verifies the information received by the Administration from 

HUBZone small business concerns in limited 

instances and has limited assurances that 

only eligible firms participated in the 

HUBZone program; 

(B) by not obtaining documentation and 

conducting site visits on a more routine 

basis during the certification process, the 

Administration cannot be sure that only eligible firms are part of the HUBZone program; and 

(C) although the examination process of 

the Administration involves a more extensive review of documentation, the examination process cannot be relied upon to ensure 

that only eligible firms participate in the 

HUBZone program because the examination 

process involves only 5 percent of firms in 

any given year. 

SEC. 4. HUBZONE IMPROVEMENTS. 

The Administrator shall— 

(1) as soon as is practicable, correct and 

update the map that is used by the Administration to identify HUBZones and implement 

procedures to ensure that the map is updated 

with the most recently available data on a 

more frequent basis; 

(2) develop and implement guidance for determining whether an applicant is a qualified 

HUBZone small business concern under section 3(p)(5) of the Small Business Act (15 

U.S.C. 632(p)(5)), including more routinely 

and consistently obtaining supporting documentation from an applicant and conducting 

more frequent site visits, as appropriate; 

(3) establish a date by which the Administrator shall eliminating the backlog of applications for recertification; 

(4) ensure that the Administration eliminates the backlog described in paragraph (3) 

by the date established under paragraph (3), 

using officers and employees of the Administration or by entering into a contract with a 

private entity; 


rfrederick on PROD1PC67 with SENATE
November 19, 2008 CONGRESSIONAL RECORD — SENATE S10663 

(5) establish and implement a time period 

for completing a recertification; and 

(6) develop measures and implement plans 

to assess the effectiveness of the HUBZone 

program that take into account— 

(A) the economic characteristics of the 

HUBZone; and 

(B) contracts being counted under multiple 

socioeconomic subcategories. 

SEC. 5. REPORT. 

Not later than 2 years after the date of enactment of this Act, the Comptroller General 

of the United States shall submit to the 

Committee on Small Business and Entrepreneurship of the Senate and the Committee 

on Small Business of the House of Representatives a report regarding the implementation of this Act. 

By Mr. KERRY (for himself, Mr. 

SPECTER, Mr. LAUTENBERG, Mr. 

INOUYE, Mr. BROWN, Ms. 

STABENOW, Mrs. FEINSTEIN, Mr. 

DODD, Mr. CASEY, Mr. 

LIEBERMAN, Mr. WHITEHOUSE, 

Mrs. CLINTON, Mr. SCHUMER, 

MS. SNOWE, Mr. MENENDEZ, and 

Mr. CARPER): 

S. 3700. A bill to encourage and support the development of high-speed 

passenger rail transportation in the 

United States, and for other purposes; 

to the Committee on Finance. 

Mr. KERRY. Mr. President, this has 

been a volatile time for our financial 

system and our economy. Hopefully, we 

will be able to agree on a short-term 

stimulus relief that will help families 

who are suffering and states meet their 

financial obligations. 

Next, we need to create new jobs by 

updating our infrastructure to help respond to the current challenges to our 

economy. I believe a first-rate American rail system is a critical part of the 

efforts to create jobs and expand our 

economy. It will also help make our air 

cleaner, ease traffic congestion, save 

families’ money and time, and lessen 

our dependence on foreign oil. 

That is why today, Senator SPECTER

and I are introducing the High-Speed 

Rail for America Act of 2008. Senators 

LAUTENBERG, INOUYE, BROWN, 

STABENOW, FEINSTEIN, DODD, CASEY, 

LIEBERMAN, WHITEHOUSE, CLINTON, 

SCHUMER, SNOWE, and MENENDEZ are 

cosponsors. This legislation provides a 

bold new vision of how we approach 

transportation policy to expand our 

economy and keep up with changes in 

our society. 

The High-Speed Rail for America Act 

of 2008 builds upon the Passenger Rail 

Investment and Improvement Act of 

2008 which reauthorizes Amtrak and 

authorizes $1.5 billion over a five-year 

period to finance the construction and 

equipment for 11 highspeed rail corridors. I want to thank Senator LAUTENBERG for his leadership on reauthorizing Amtrak and making investment 

in high-speed rail a priority. 

Today, Amtrak’s Acela train on the 

Northeast Corridor is capable of reaching 150 miles per hour. However, due to 

a lack of infrastructure improvements, 

the Acela train only travels at 150 

miles per hour on an 18-mile stretch in 

Rhode Island and a 10–mile stretch in 

Massachusetts. We must make appropriate improvements to our railroad 

tracks and bridges to allow high speed 

rail to work properly. 

While the U.S. is investing heavily in 

other forms of transportation, our investment in world class rail is dwarfed 

by other countries. For example, Germany’s federal government gives its 

states $8.9 billion a year for rail 

projects, France spends twenty times 

more per capita on rail than the U.S., 

and the Ministry of Railways in China 

invested $19.6 billion in rail in the first 

half of 2008 alone. That is why we need 

to provide a constant source of funding 

for investment in high-speed rail. The 

High-Speed Rail for America Act of 

2008 will take our outdated and underfunded passenger rail system and 

transform it into a world class system. 

The High-Speed Rail for America Act 

of 2008 builds on the authorization of 

highspeed rail grants by providing billions of dollars in both tax exempt and 

tax credit bonds. It provides assistance 

for rail projects of various speeds. The 

bill creates the Office of High-Speed 

Passenger Rail to oversee the development of high-speed rail and provides a 

consistent source of funding. This office will ensure that we have the leadership to keep this mission on track. 

High-speed rail is often the fastest 

and most reliable way to get from 

downtown to downtown between most 

cities 100–500 miles apart. High-speed 

rail can save up to an hour per trip 

when compared to air travel and reduces trip time by more than 50 percent compared to driving. The legislation provides $8 billion over a 6-year 

period for tax-exempt bonds which finance high-speed rail projects which 

reach a speed of at least 110 miles per 

hour. This speed is often most practical 

for corridors of less than 100 miles or 

for less travelled routes which cannot 

justify the investment into world class 

high-speed rail traveling at 150 miles 

per hour. 

The High-Speed Rail for America Act 

of 2008 also creates a new category of 

tax-credit bonds: qualified rail bonds. 

There are two types: super high-speed 

intercity rail facility bond and rail infrastructure bond. Super high-speed 

rail intercity facility bonds will encourage the development of true highspeed rail. The legislation provides $10 

billion for these bonds over a six-year 

period. Rail projects that reach a speed 

of at least 150 miles per hour will be eligible for these bonds. This would help 

finance projects including the proposed 

California corridor and make needed 

improvements to the Northeast corridor. 

Rail infrastructure bonds will fund 

projects approved by the U.S. Department of Transportation and be part of 

a State’s official rail plan. The HighSpeed Rail for America Act of 2008 provides $5.4 billion over a 6-year period 

for this type of bond. The Federal Rail 

Administration has already designated 

ten rail corridors that these bonds 

could help fund, including connecting 

the cities of the Midwest through Chicago, connecting the cities of the 

Northwest, connecting the major cities 

within Texas and Florida, and connecting all the cities up and down the 

East Coast. These are projects that are 

ready to go, but they need a source of 

financing. 

The need for a bold shift in the way 

we approach transportation is clear. 

Traffic congestion continues to worsen 

in cities across the country, creating a 

$78 billion drain on the U.S. economy 

with 4.2 billion lost man hours of work 

and 2.8 billion gallons of wasted fuel. 

Last year, domestic flight delays cost 

the economy $41 billion and consumed 

about 740 million additional gallons of 

jet fuel waiting on the ground. Passenger rail reduces congestion and is 

an effective alternative to highway and 

air transportation. Americans want alternatives—and we can deliver them. 

We must focus on making the transportation sector part of the solution to 

global climate change. The transportation sector accounts for approximately one-third of U.S. CO2 emissions—and automobiles make up 60 percent of that. Public transportation is 

an essential part of the solution to 

global warming. According to the 

American Public Transportation Association, public transportation reduces 

CO2 emissions by 37 million metric tons 

annually and saves the average American household over $6,000 annually. 

The demand for alternative forms of 

transportation is only growing. The 

number of people riding Amtrak surged 

by more than 13 percent in July 2008 

from a year earlier—the most passengers carried in any month during 

Amtrak’s 37 year history. Amtrak ridership set an all-time record for fiscal 

year 2008, achieving growth of 11 percent. 

As we look towards economic stimulus legislation next year, we must 

rethink the approach we have taken towards mobility in this country. Countries around the world have realized 

the benefits of high-speed rail and continue to build out their systems as we 

fall farther and farther behind. For far 

too long, we have not made adequate 

investment in our infrastructure. We 

cannot let this pattern continue. 

We have all heard the skeptics and 

cynics dismiss the idea of high-speed 

rail for decades, but due to high energy 

prices, increased passenger rail ridership, and the need to reduce greenhouse gasses, the time is ripe for a big 

change. Not only will this change create a modern and reliable transportation network in the Untied States, it 

will provide tens of thousands of good 

new jobs and help stimulate the sluggish economy. 

I pledge to continue fighting for the 

development of a modern high-speed 

rail system connecting the major cities 

across America, and I ask all my colleagues to support making this vision a 

reality. 

By Mr. DODD (for himself and 

Mr. HATCH): 


rfrederick on PROD1PC67 with SENATE