HB: Hispanic Business held a CEO Roundtable in New York on June 10. Several of the participants mentioned the idea of securitizing business loans for small or medium-size companies. They used the example of the home-mortgage lending market. Is that viable?
Mr. Campos: It's a very viable idea. But there are difficulties inherent with business loans. They don't share as many common features as mortgage loans – a property as collateral, and terms and interest rates that have become standardized. With the wide range of businesses, they have a wide range of assets. And some businesses, such as software and developmental businesses, don't have any assets for collateral. So there is a challenge to create a risk assessment for these particular loans. It's not insurmountable. What's happened, you have a few large syndications by finance companies that have sold [loan] pools. And you also see it in credit card debt, for example, where you have personal assets [for collateral].
But I think it's a worthwhile idea. Somebody has to come up with a business plan and get it funded, undertake a small portfolio to begin with, and show it can be done. What I think we really need – and this would apply to the other minority communities as well, but I see it being done a little more successfully by the African-American community – is our leadership going to the sources and pitching the business plan of raising capital. I'm talking about CEOs and people who have some celebrity from government service. And they should bring a few deals with them. I know that advocacy groups like NCLR [National Council of La Raza] and others in the last 12 months have gone to various corporations and received significant contributions to their building fund, for example. That's terrific. But if that can be raised for a specific advocacy group, why can't we raise equity money that would have a return? That has to happen.
The New American Alliance and HACR [Hispanic Association for Corporate Responsibility] are interested in creating equity funds. Once that happens, I think we'll show much better progress. Also, there's nothing wrong having major backers interested in a specific area. [Large banks] for example, could support their areas of expertise. We have huge companies that "harvest" the Hispanic community, like Univision. They live and die selling advertising in Spanish for the Hispanic community. They should look to invest and support other ventures, because, after all, that increases their advertising base.
HB: Another issue is representation on corporate boards. Here the SEC has weighed in, not necessarily in terms of ethnic diversity, but the Sarbanes-Oxley law has changed the rules for board. What do you see happening in the boardroom, and how might the Hispanic community increase its presence?
Mr. Campos: I see an opportunity here. Sarbanes-Oxley was the landmark reform that occurred two years ago. Through Sarbanes-Oxley, the SEC implemented Congress' direction to change corporate governance. The SEC now requires the audit committee of a public company must be composed of independent directors, and the audit committee must manage the relationship with the outside auditor. The auditor [firm] doesn't report to - nor is it hired by - the CEO or CFO anymore. The relationship is with the audit committee. It's an important reform. So there's opportunity there for individuals with an accounting, auditing, and financial background to serve on these boards.
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