Head of Small Business Administration Resigns

Hector Barreto, the head of the Small Business Administration, resigned on Tuesday after facing months of criticism over the agency's handling of recovery efforts in the Gulf Coast.

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Steven Preston, a senior vice president at The ServiceMaster Co., a publicly traded firm, is being tapped to replace him, according to a White House statement.

In a letter to President Bush, Barreto said he leaves the SBA with a stronger sense of accountability, efficiency, and results-oriented management.

"I am confident that the foundation has been established for even better results in the future," Barreto said in the letter.

Barreto, who led the agency since July 2001, will become the national chairman of the Latino Coalition, a Hispanic lobbying group based in Washington, according to SBA spokesman Raul Cisneros.

Cisneros called the move a "strictly personal decision."

"They approached him earlier this month," Cisneros said, adding that SBA staffers were not taken completely off-guard by the decision.

Despite deep cuts to its budget, the SBA saw a surge in activity under Barreto, backing more loans to small businesses nationwide in the past two years than at any other time the its 50-year history.

Yet, to achieve this, Barreto introduced fees for many of the agency's loan programs — a move that drew heavy criticism from members of Congress and small-business advocacy groups alike.

Under Barreto, the SBA was also attacked for mishandling economic recovery loans after the Sept. 11 terrorist attacks, funding shortfalls in its flagship 7(a) program, shuttering its only venture-capital program, and failing to meet small-business contracting targets for minority-owned businesses.

More recently, Barreto has repeatedly defended the agency's hurricane-recovery efforts in the Gulf Coast, amid a growing backlog of disaster loan applications from local small businesses.

In December 2005, Rep. Nydia Velazquez (D-N.Y.) called on Barreto to resign, saying he was "running the agency into the ground".

On Tuesday, she said his decision to step down the "right thing to do."

"He simply wasn't up to the challenges of running this agency," Velazquez said in a statement.

Sen. John Kerry (D-Mass.), the ranking member on the Senate Committee on Small Business and Entrepreneurship, called Barreto's resignation a time for a change.

"America's entrepreneurs need an advocate, not more of the same Bush administration big-business agenda," Kerry said in a statement.

Rep. Don Manzullo (R-Ill.), the House Small Business Committee chairman, said Barreto's leadership helped streamline the SBA by learning to do more with less, saving taxpayers nearly $100 million annually in federal subsidies.

Barreto faced "unparalleled challenges to the SBA's disaster loan program from the 9/11 terrorist attacks and Hurricanes Katrina, Rita, and Wilma," Manzullo said, calling him a good friend and a tremendous leader.

The National Federation of Independent Business, a Washington-based lobby group with more than 600,000 members nationwide, was quick to endorse Steven Preston's nomination to succeed Barreto.

Preston, a former executive vice president of The ServiceMaster Co., who earned an MBA from the University of Chicago, is someone who "clearly understands the value of setting goals and achieving results in a large, complex organization," NFIB president Todd Stottlemyer said in a statement on Tuesday.

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