Business Advice

is your arsenal for developing and maintaining sound financial plans and business strategy.

Inside: Budgeting | Compensation | Valuation

Free Trial: Intuit QuickBooks

Simple Start Free Edition 2009 for Windows

Departments

The Entrepreneurial Agenda by Robb Mandelbaum

Which presidential candidate would be best for entrepreneurs?

See our election guide.

Inc.com Featured Blogs

December 19, 2008

And The SBA's Next Chief Is REALLY...

Posted at 9:49 AM

...Karen Gordon Mills, a Maine-based investment manager, according to an account in today's Portland Press Herald. (ABC News reported the story yesterday.) Obama is said to make the announcement today in Chicago. (Hat tip to an alert and thoughtful reader for forwarding the Maine paper's story.)

Mills, who served on Obama's SBA transition team, has been described as a venture capitalist, but she's really from the world of private equity. According to a bio from Arrow Electronics, where she's a director, she's served since 1993 as the president of the Brunswick, Maine-based private equity group MMP Group and until 2007 was a founding partner in Solera Capital, a private equity partnership in New York. (She's also the lead director of Scotts Miracle-Gro and serves in Maine as chair of the Governor's Council on Competitiveness and the Economy.)

Though this certainly doesn't preclude her from doing well at the agency -- see, for instance, Steven Preston, who was an executive at ServiceMaster before George Bush appointed him administrator -- it's not exactly an ideal resume for working with and advancing small business. Unless, that is, your agenda includes expanding the definition of small business, something that Fred Hochberg, one of Obama's SBA team leads and a contender for agency helm himself, recently proposed.

There is a hint of bipartisanship here -- according to the Press Herald, Mills was recommended by Republican Sen. Olympia Snowe, the ranking member of the Senate Small Business Committee and long a close collaborator with the committee's Democrats. Snowe recently urged Obama to restore the agency to cabinet-level status, a view she shares with many Democrats (including Hochberg) and the SBA's small business allies (including the National Small Business Association).

The fact that Obama is set to announce Mills's appointment at the same time as he makes his choice for Secretary of Labor (Rep. Hilda Solis, Democrat of California) suggests that this is exactly what he intends to do.

Tags: Mills, NSBA, Obama, SBA, Snowe (R-ME)

1 Comment

Posted by: Prof. Samuel D. Bornstein at December 19, 2008 9:21 PM

With regard to the new SBA Administrator, Ms. Mills, I would like to bring a very important bit of information that relates to this economic crisis that was overlooked until now.

On Sunday, 12/14/08, CBS 60 Minutes aired a segment "The Mortgage Meltdown".

Scott Pelley's piece on the 2nd Wave of Foreclosures overlooked a critical fact.
The segment missed the fact that this next wave of Foreclosures in 2009 Will Take Self-Employed and Smaller Businesses who have these TOXIC mortgages. In fact, ALT-A, Option ARMS, Interest-Only, the TOXIC Mortgages that are considered the "Troubled" assets in TARP were specifically marketed to the self-employed who fell prey to them.

The upcoming defaults on these risky "Toxic Mortgages" will result in an increase in foreclosures. But worse, once these small businesses fail, the resulting loss of jobs will cause millions to add to the ranks of the unemployed. Note that self-employed business owners (16.2 million according to the SBA) employ between 1-10 employees.

An NASE survey at www.nase.org , was the first to provide compelling evidence of small business involvement in the upcoming toxic mortgage crisis. The survey was created by Prof. Samuel D. Bornstein and Jung I. Song, CPA of BornsteinSong Consultants in Oakhurst,NJ,and was conducted by the National Association for the Self-Employed (NASE) which issued a Press Release on November 21, 2008.

According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.

These small business owners will be at-risk of payment shock and default as their monthly mortgage payments skyrocket. Small business owners were especially targeted for these Alt-A loans which required little or no documentation of income which appealed to many small business owners who previously were unable to qualify.

The resulting defaults will be the cause of the upcoming second tsunami wave of foreclosures that will dwarf the subprime crisis and will take many homeowners and small business owners.

I would be happy to discuss the implications of the NASE Survey, since I created it and NASE ran it to its national membership (250,000). See the NASE website www.nase.org under NASE NEWS for the Toxic Mortgage Survey.

Thank you,

Samuel D. Bornstein
Professor of Accounting & Taxation
Kean University, School of Business, Union, NJ

Post Your Own Comments

Try a RISK-FREE Issue of Inc. Today!

Renew | Contact Us | Current Issue