We are very serious, Mr. New Administrator, about this. You are going to have to do something about it or we are going to be knocking at your door. You think these farmers are bad, you wait until these veterans' organizations get going.

Mr. CARDENAS. I can appreciate that.

Mr. MONTGOMERY. OK, sir.

Mr. JONES. Mr. Chairman, I'll return to you this document which was loaned to us by a member of the staff.

Mr. MONTGOMERY. Thank you. Without objection, it will be put in the record.

Mr. MONTGOMERY. We have four more witnesses. I'd like to call Mr. Philip Riggin, deputy director of the National Legislative Commissions, and Mr. James G. Bourie, director for economics of the American Legion.

You may proceed in any manner you like. We hope your statement will be brief and we can get to the point of how you feel about this situation in this hearing.

STATEMENTS OF E. PHILIP RIGGIN, DEPUTY DIRECTOR, NATIONAL LEGISLATIVE COMMISSION, AND JAMES G. BOURIE, DIRECTOR FOR ECONOMICS, THE AMERICAN LEGION

Mr. RIGGIN. Thank you, Mr. Chairman. Again, my name is Phil Riggin, deputy director of the legislative division of the American Legion.

We recognize the time constraints and we are prepared to summarize.

With me this morning is Jim Bourie, who is director of our economics division, who will be delivering a summary of our statement and we'll both be available for any questions that the subcommittee may have after the completion of his remarks.

Mr. BOURIE. Mr. Chairman, before I begin I have a correction in my prepared statement on page 2 on line 3, strike the word "homes" and insert the word "businesses."

Mr. Chairman, and members of the subcommittee, the American Legion is grateful that this subcommittee is holding oversight hearings to assess the recent progress of the Small Business Administration in implementing special consideration for veterans, and is appreciative of the opportunity to present our views on this important program.

The American Legion's involvement with the SBA dates back to 1969, when the Administrator, Mr. Hilary Sandoval, after meeting with the Legion's special SBA subcommittee, issued a bulletin to the field stating that veterans, especially returning Vietnam veterans, were to be given priority in all loans with the most liberal interpretation as possible of all SBA rules and regulations. Mr. Sandoval also recognized the returning Vietnam-era veteran as one of America's finest resources.

They remain so today, and are at an age when most individuals contemplate owning their own businesses.

This priority bulletin formed the genesis of special consideration for veterans that Congress later enacted in Public Law 93-237. However, it took the SBA nearly 2 years to publish regulations implementing this legislative mandate. The hard truth is that the SBA never fully embraced this legislative mandate to provide spe

cial consideration for veterans. They were at no time a top priority program.

Even now, 6 years after the enactment of Public Law 93-237, four SBA Administrators, and going into our fourth President, little has been done for veterans by the SBA.

Yet, the American Legion and other service organizations continue our elusive pursuit in hopes that one day we can happily end this frustrating experience. This is a sad commentary indeed, as the Nation has become so suddenly military minded, with the present administration urging young men and women to enter the Armed Forces.

Any right minded young person must compare the propriety of such a request with the treatment rendered to yesterday's young person who did answer the call.

There is, nonetheless, some positive movement within the SBA concerning special consideration for veterans.

Last spring, the SBA appointed Dr. Al Prendergast to not only head the Division of Field Service, but also to assume control of its very inactive veterans program.

Mr. Prendergast first instituted over 100 nationwide veterans workshops. Recent statistics of these workshops reveal that the American Legion cosponsored approximately 20 percent of them, more than any other service organization and will continue to cosponsor as many as possible in the future.

In following up on these workshops, the Legion received detailed reports from nearly 25 State departments representing over 1 million veterans.

Comments ranged from well organized and informative, outstanding, to all show. Nothing was mentioned about veterans, but for the most part the departments had high praise for the veterans workshops and hoped that they would continue in the future.

This is not to state, however, that there are no problems. The field reports indicate that local SBA offices must advertise these workshops more, with emphasis on being designated specifically for veterans. They must be held at a convenient time and place, such as on weekends, when one would not lose a day's work in order to attend.

There must be increased involvement with the SBA and the VA, and also increased involvement on the part of local veterans affairs officers with service organizations and continuing and regularly scheduled veterans workshops.

Invariably, the question was asked at these workshops, "What about funding?" The reply was nearly always the same, that no direct funds are available for veterans: Then what are the use of these workshops if only to generate false hope.

The SBA makes it quite clear that they are withdrawing entirely from the direct loan programs, and are emphasizing instead the guaranteed loan programs, thus forcing the veteran into a volatile money market with its 20-plus percent interest rates requiring him, in some instances, to pledge 90 percent of the loan. But not everyone has the same problem as veterans do with the SBA loans, even for questionable ventures.

The Washington Post recently ran articles entitled "SBA Programs Hit for Links to Crime", "Massage Parlor Became Part of

U.S. Loan Deal," and "Woman found Guilty of Investment Fraud," to name only a few. Millions of taxpayers' dollars wasted for illegal and questionable purposes.

A close scrutiny of the SBA's fiscal 1981 and 1982 budgets reveal no direct funds available to veterans. Funding comes from various sources and is manipulated on the basis of district needs.

Mr. Chairman, the American Legion is very concerned that the SBA fully implement special considerations for veterans. Our National Commander, Michael J. Kogutek, has accepted an invitation to sit on the SBA's Advisory Council, which recommends policy and procedure to the SBA. He will undoubtedly provide important input to improve veterans programs. Unlike the past, when many State departments of the Legion simply gave up on the SBA, attitudes are presently changing.

As previously stated, nearly 25 Legion State departments reported some involvement with the SBA. This indicates several important factors: First, a willingness to cooperate with the SBA on veterans programs; second, increased demand for veterans programs on small business; and, third, a greater sensitivity on the part of local VAO's to the business needs of veterans, especially Vietnam-era veterans.

We believe now is the prime opportunity for the new Administrator to seize the moment and build a meaningful veterans program. If not, what little confidence the American Legion now has in the SBA will be dashed and a potential friend may be transformed into a formidable foe.

We are respectfully recommending to the new Administrator that he issue a strong directive to be included in all field manuals that special consideration be given veterans. However, we are also first recommending that the SBA establish a small 90-day committee to study and clarify special consideration as the term now is only replete with vague and misleading connotations, fostering a sense of confusion and, thus, avoidance.

Most of all, the new Administrator must insure that veterans have separate, direct funds available. Nothing else will suffice. Mr. Chairman, the American Legion is not unreasonable in its request. Impatient, yes. We are working very hard to simply see that the SBA complies with the law in a meaningful way, nothing

more.

We also fully understand the problems facing the new Administrator and, again, pledge our assistance.

Mr. Chairman and members of this subcommittee, the American Legion thanks you for allowing us to present our views.

[The prepared statement on behalf of the American Legion appears on p. 35.]

Mr. MONTGOMERY. Thank you for your good testimony, right to the point.

Let me ask you, do you think that the bill that we've introduced H.R. 1139, would improve the situation? Have you had a chance to study this piece of legislation?

Mr. BOURIE. Mr. Chairman, I haven't had an opportunity to study it in depth, but I appreciate the intent behind it. Something must be done. I think there may be some problems with the VĂ running this program. You establish, or propose to establish, a $25

million fund. Well, startup costs and running the program may exceed three times that amount, and in the time of budget restraint, we might run into some problems. Offhand, I would probably feel a little more comfortable if the SBA were running it, only because they have the personnel and the expertise and it would be very easy to integrate this program to it. But my fear there, and that may sound like quite a mouthful, is that given their past experience in the veterans' programs, that money is going elsewhere.

Mr. MONTGOMERY. I wish I would have asked the SBA what their percentage is on collection of direct loans and secured loans. I don't think they have that good a record either, do they?

Mr. BOURIE. No, sir, Mr. Chairman. It is the proverbial "which came first, the chicken or the egg" with veterans, since they never really had a program. Where do veterans fit in in their scheme. They can sit here and give us all the statistics in the world. No. 1, as Mr. Jeffries pointed out, they are counted twice, and veterans are counted twice, or perhaps three times. By their own admission, it totals up beyond 100 percent. And so it depends on who is placing the heat on them-our veterans, our minorities, our women? Let's count the groups up. The basis of this whole thing is that they just do not have a veterans' program. It is fragmented; it operates in a vacuum; money is shuffled around from district to district. I speak to the district people once a week, and what they tell me is far different.

There are no funds available for veterans, nothing at all. We have nothing in our field manual, the bible for the SBA, on special consideration. They don't know what the heck it means. What does "special consideration" mean?

Mr. MONTGOMERY. Well, you have stated it well. Are any SBA people still in the room?

[Affirmative response from audience.]

Mr. MONTGOMERY. You are, OK. I certainly hope you will carry this back.

I think you have really stated it well, Mr. Bourie. You've pinned it down. You've gotten to the bottom line.

The Chair will be glad to recognize any other Members at this time.

I think you pointed out the question-we have some problems and SBA is just not geared to working with the veteran. I think you are right; I think pressures are coming from other areas which is the way it works up here in this town. Who puts on the most pressure is the one that comes out better.

So, I think these hearings are certainly worthwhile; do you agree with that?

Mr. BOURIE. Absolutely, and I hope to see more in the future and gage their progress as time goes on.

Mr. MONTGOMERY. Thank you very much.

Mr. DANIELSON. Mr. Chairman, I just want to echo my chairman's concern and echo what I previously said. I'm glad to know that the gentleman is still here from SBA and I hope he is a good message carrier. I think he probably is.

I don't know that we have a statutory mandate for SBA, maybe there is. I'm just pleading ignorance. I don't know that there's a

statutory mandate for "loans to the disadvantaged," for "loans to women, for "loans to handicapped." I'll bet there is no such category for "loans to others," and "other" is one of the categories here.

I just think that when the Congress says you must give special consideration to veterans, they ought to at least open up a new sheet in the ledger and call it veterans. That is my comment. Mr. MONTGOMERY. Thank you very much.

We would like to thank our American Legion witnesses.

Mr. BOURIE. Thank you, Mr. Chairman.

Mr. MONTGOMERY. We would like to call Mr. Thomas Wincek, chairman, and Mr. Robert Sniffen, vice chairman, of the Vietnam Veterans Foundation.

I'd like to welcome these gentlemen. You've been by to see me and I know you are sincere in your efforts. You may proceed in the manner you would like.

Your statement will be put in the record in full.1

STATEMENTS OF THOMAS WINCEK, CHAIRMAN, AND ROBERT SNIFFEN, VICE CHAIRMAN, VIETNAM VETERANS FOUNDATION Mr. WINCEK. Thank you, Mr. Chairman. I'd like to start off by introducing our advisory board chairman, Mr. Woody Erdman. Mr. Erdman has joined the foundation approximately a year ago because of his concern as a World War II combat veteran that Vietnam veterans weren't getting the same opportunities in business as was afforded the World War II veteran.

By way of background, Mr. Erdman started his career as a sportscaster for the New York Giants, later he became chairman of the board of two banks, a publisher, owner and operator of over 20 radio and TV stations, and owner of the world champion Boston Celtics. The California Seals has recently nominated him SBA man of the year.

Mr. Erdman heads a team of bankers, lawyers, and senior business people across the country that have really taken on this issue as something that is really relevant to Vietnam veterans: To be able to give the same opportunities to go into free enterprise as was afforded veterans of other eras.

So for the first 4 or 5 minutes, I would like to turn it over to Mr. Erdman, our advisory board chairman of the Vietnam Veterans Foundation.

Mr. MONTGOMERY. We are certainly glad to have Mr. Erdman here. The Chair would like to say that this meeting will probably have to be over probably around 9:55. If the witnesses could summarize their remarks, as I requested the other witnesses, we would certainly appreciate that. It is nice to see Mr. Erdman again. His interest not only in trying to make money, but in trying to help the veteran, is certainly commendable by the Chair.

Mr. ERDMAN. Thank you, Mr. Chairman and members of the committee. My responsibility, as Tom has mentioned, as advisory board chairman of the Vietman Veterans Foundation is to point out clearly the myth of the war to end all wars and its relationship to small business in this Nation, and to enlist the support of the entire business, professional, and educational community.

1See p. 67.