By JORGE C. CORRALEJO
The economy of Greater Los Angeles has been drastically transformed. We can no longer depend on Hollywood, the defense industry or home builders to expand our economy and create hundreds of thousands of job opportunities.
Mayor Antonio Villaraigosa is a symbol of this transformation much like Tom Bradley, who beginning in the early '70s, moved Los Angeles to the forefront in becoming a world-class city that could compete with New York, London, Paris and Tokyo.
The future of America, and particularly for Los Angeles, can no longer depend on global corporate giants or "too-big-to-fail" financial institutions, most of which have laid off tens of thousands of workers and outsourced jobs to Asia. Instead, we should focus on the resources that are unique to Greater Los Angeles.
The most unique is the hundreds of thousands of small minority-owned businesses and, in particular, the approximately 200,000 Latino-owned businesses in Los Angeles County. They clearly have a unique competitive advantage in an area where more than 50 percent of the population is Latino, and in a state where 37 percent is Latino. And by 2040, Latinos will be the majority demographic group in California.
For 30 years, Latino organizations, including business organizations, have urged the government to recognize this extraordinary resource and to help fertilize it with seed money, for technical assistance and capacity building. Instead, the federal government has, for example, focused on providing hundreds of billions of dollars in agricultural subsidies not to grow crops and in defense contracts to build weapons for enemies that no longer exist.
Recently, President Obama, who received the overwhelming support of minority communities, including the Hispanic community, unintentionally continued this outdated focus on large corporate interests through his $785 billion economic stimulus plan and the $700 billion TARP program to bail out "too-big-to-fail" financial institutions.
In early March, we met in Washington, D.C., with the secretary of the treasury, the chairman of the Federal Reserve, and the chairman of the House Financial Services Committee to urge a new leadership vision far more likely to maximize the use of L.A.'s untapped resources, its hundreds of thousands of minority-owned businesses.
Three of our leadership positions that can quickly be implemented, particularly with the strong support of our mayor, within the next six months:
- Create a national fund of $100 billion focused on small business lending, capacity building and technical assistance. These funds are also far more likely to reduce L.A.'s listed unemployment rate of 11 percent since the majority of new jobs are created by small businesses.
- Transform a battered, but critical agency, the Small Business Administration, into a Cabinet-level position where its newly confirmed director, Karen Mills, can become a powerful advocate for minority-owned small businesses and the jobs they create. The SBA may also be the best mechanism, in coordination with Secretary Hilda Solis' Labor Department, to address the tragically high unemployment rates in Los Angeles for African-Americans and Latinos. Based on recent Wall Street Journal and New York Times statistics, the real rate of unemployment for these groups exceeds 25 percent once discouraged and part-time workers are included.
- Many relatively healthy financial institutions that do substantial business in Los Angeles, and were forced to accept federal TARP funds, have informed the Obama administration that they intend to quickly return these funds. Instead of these funds being set adrift with no real purpose, the Latino Business Chamber of Greater Los Angeles has urged that healthy megabanks, such as Wells Fargo, JPMorgan Chase and U.S. Bancorp, allocate their $56 billion in TARP funds for small business lending, job creation, technical assistance and capacity building. Greater L.A. would be the largest beneficiary of such a revised TARP program.
The newly formed Latino Business Chamber is committed to working with a wide range of business associations on these projects. It held its first planning meeting, attended by a number of major Asian-American and African-American associations such as the Black Business Association, just five days before it and the BBA left for Washington to deliver this message to the secretary of the treasury.
Our message of working together is to mine the "Gold of L.A." This is the community of small minority-owned businesses that is presently the subject of discussion with many major banking leaders such as U.S. Bancorp Chairman and Chief Executive Richard Davis. Davis, along with Mayor Villaraigosa, were keynote speakers at the Latino Business Chamber's April 2 reception.
The chamber is planning to host the new director of the SBA, Karen Mills, in the near future, as well as senior management from financial institutions, the Federal Reserve and the Federal Deposit Insurance Corp. One goal of these meetings will be to expand and empower a reorganized SBA, which would truly serve a genuine "Main Street."
Jorge C. Corralejo is the founding chairman of the Latino Business Chamber of Greater Los Angeles. He has owned a small business for 25 years in downtown Los Angeles.
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