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Friday, Jun 2, 2023

Congressman Brad Sherman Reports from Washington

The San Fernando Valley Business Journal spoke with Congressman Brad Sherman by phone, as he is wintering in Washington, D.C., awaiting the birth of his first child, a daughter. Sherman represents the 27th Congressional District which incorporates Burbank, and much of both the eastern and western parts of the San Fernando Valley. He serves on the Committee on Foreign Affairs, chairing the subcommittee on Terrorism, Nonproliferation and Trade; the Committee on Financial Service; and the Judiciary Committee. He and his wife Lisa, who works for the State Department in Washington D.C. will be staying back east for the holidays because she is giving birth to their first child on Jan 10. “That’s worth enduring a Washington winter for,” said Sherman. Before our interview, we asked several local business leaders if they had any issues or concerns that they would like us to ask him about. We put three of those questions to Sherman and then asked a few of our own. Question: Roberto Barragan, president of the Valley Economic Development Center, said SBA lenders are trying to get $1 billion of TARP money to be invested in organizations like the VEDC across the country. “I put a phone call in today to Congressman Sherman asking him to support it,” said Barragan. “And I’m also pushing to allow credit unions to be re-regulated so they can lend more to small businesses. … That’s an important change that needs to occur to allow more lending.” Answer: As far as the VEDC goes — whether $1 billion is the right number nationwide we’re not sure yet. It’s a wonderful request, they do good work, but we haven’t decided yet how much to commit. I support the concept. I am indeed supporting the credit union request. Small business is having such a difficult time getting loans now and credit unions are among the healthy financial institutions. Q: Jim Link, CEO of the Southland Regional Association of Realtors, said, “Brad has been very supportive of a lot of the issues we’ve brought forward.” In particular, he referenced a four-point housing stimulus plan from the National Association of Realtors. We asked Sherman about what he thought of the plan. A. I haven’t had a chance to analyze the National Realtors Association plan but the single most important part of that plan for the Valley is for us to restore the current but unfortunately temporary increase in the conforming loan limit. Right now it’s scheduled to drop again to $625,000 in January. We need to restore it. There are an awful lot of homes in the Valley where a $625,000 loan isn’t going to make it. That means people can’t buy or sell. Gary Miller and I and others have introduced a bill next year that would deal with that. Q: Dan Blake, director of the San Fernando Valley Economic Research Center, wants to know what Sherman is doing about getting funding for infrastructure projects in California, saying ” it is a way to jumpstart the economy that doesn’t depend on consumers buying more (foreign goods).” A: The stimulus bill is being worked on. I just met with the chair of the transportation and infrastructure committee of the house. He’s got $85 billion worth of projects ready to go nationwide and he’ll be talking to the speaker about that. I think it’s important that the funding be not just for big projects but also for deferred maintenance. I mean, what’s the value in building more freeways out in the Inland Empire if you can’t resurface Reseda Boulevard? Dealing with the deferred maintenance issues and making little improvements at intersections and onramps and offramps — all of that is important and is even more shovel-ready because you don’t face an EIR (environmental impact report) or neighborhood controversies that you would face with any really huge project. But I tell you, 100 small projects will get traffic moving in the Valley as well as one big project. And it’ll save your suspension. Q. Tell us about your stance against the initial $700 billion bailout and why you decided to vote for the automaker’s bailout. A. I voted against the $700 billion package twice and I voted for the auto bailout. One of the reasons is the $700 billion cost $700 billion, and the auto bailout was $14 billion. You’ve got to get the most bang for your buck when you spend federal dollars to try to get this economy going. We can’t afford to be stupid. I will say this for what Paulson is doing on the $700 billion, and that is it hasn’t been all that effective but it hasn’t been nearly as expensive as it could have been. By buying preferred stock — which is a pure bait and switch, he told us he’d never do that — but by buying preferred stock, he’s getting an asset that in most cases will be valuable when it’s redeemed. Q. Some business people are saying that the banks seem to be holding onto the money rather than lending it as planned. What are your thoughts on that? A. It’s not enough for banks to just lend the federal money; they have to leverage the federal money. A bank should be lending 10, 15, 20 times of their reserves and so when we put capital in, that should liberate them to lend an awful lot more. I don’t think that just taking over other banks is a bad thing because we need to get the endangered banks saved and I’d rather have it done by B of A than the FDIC. But we do need the lending. I think that the plan to get Fannie Mae and Freddie Mac to buy an awful lot more loans is really going to help real estate and what we’ve seen is that if you do qualify, mortgage rates are pretty attractive. We’re never going to have easy money for people with questionable credit the way we did up until now. You cannot build the future of the housing market or the economy on, ‘Well, we’ll sell houses and cars to people who have bad credit and we’ll just loan them money.’ We can’t do that any more. But at least we need a situation where people with good credit can get houses and cars. We need to build enough rental housing where if you can’t afford to buy a house you have a place to live. The good news is, reasonable mortgage rates are available to those with damned good credit and I’d like to see decent mortgage rates available to those with good, but not damned good, credit. The business lending side, though, is just awful. Q. What can we do about that? A. We can let credit unions make more business loans. That’s one thing. We can get the Fed buying more different types of paper, like student loans and credit cards. I don’t know how precisely that would affect small businesses but it would help. Up to recently so many people are getting those letters trying to get them to sign up for credit cards. Now those same people are getting letters saying, ‘We gave you that credit card but now we’re cutting your credit line and raising your rate,’ and that’s just not good for anybody with a store. We can’t just be trying to restore the economy of 2007 which was built on too much debt and I encourage everybody to pay off their credit cards at the end of the month. … Yes, we could get the economy moving again if everyone would max out their credit cards and everybody could buy a house too big for them to afford and buy three big screen TVs. But we need to return to normalcy, to get people buying what they can afford so they can pay their credit card at the end of the month. Q. How would you wrap up the year in a sentence or two? A. The apocalypse, disaster, terrible. The only thing you can say about this year is it’s not as bad as next year’s going to be. We had 12 months of this year and only 4 of them really sucked. We’re looking at 12 months that really suck next year. Hopefully only 11 or 10 but better plan for 12. This has been an absolutely terrible year for the economy. Everything that could go wrong did and next year is not going to be a good year. Q. Do you see any good news on the horizon? A. There is one silver lining: $40 a gallon barrel of oil … is damn good for the economy here and it means some of the worst people in the world aren’t getting quite as much money. The other silver lining is that the excesses of the first seven years of the decade are being squeezed out but instead of it being done slowly it’s all at once. We will never again loan $800,000 to somebody who’s making $800 a week. That was stupid. They did a lot of it, and they’re going to stop doing it. It will be several decades before we repeat the kinds of stupidity we engaged in in the middle of this decade.

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