He stuck US taxpayers with a big six-figure one, by his SBA loan default. Coming out clean was as if born again, fiscally. But with a second trip to the relief trough by law postponed for a term of years.
Hopefully no further SBA loan waste will go that direction.
Waste of government money seems a theme he pontificated, however he behaved with money
UPDATE: From Simons' report:
“Businesses succeed and don’t succeed all the time. If people don’t take risks with businesses we don’t have an economy,” he said. “On paper, everything worked. Everything looked responsible. If it didn’t, the bank wouldn’t have approved the loan.”
Nienow, 46, served in the state Senate from 2003 through 2006.
After being defeated for re-election, he won back the seat in 2010, and won again in 2012. His official Senate biography lists his occupation as a consultant. He makes $31,000 annually as a senator.
People do take business risks, but usually banks do not allow super leverage; and it remains unclear from reporting what exactly in Nienow's status, background, and Nienow's proposal-business plan resonated to induce such a loan.
"On paper everything worked. ..." means exactly what? Long ago, in earlier times, but somebody approved that banking risk, and in hindsight at least it looks like really bad banking judgment. What at the time prevailed? Is the banker who signed off on the loan still practicing - same bank or elsewhere? Firms such as CMDC often serve intermediary functions between SBA guarantee decisions and actual banker-borrower pairings. Was such a firm acting back when Nienow drew the big loan? And is the presence of an SBA guarantee a moral hazard against bad practices vs exercise of due caution by a banker in lending decision making?
Surely Nienow's default on an SBA guaranteed loan was not the first such default, nor will it be the last.
Moreover, Minnesota's DEED has had (and may still have) an "Urban Initative Program," of matching loans to small business where the default rate seems fairly high, and the average wages for subsidized jobs seems very low, or at least that was the case in a found DEED online report for 2006 (when residential construction segment problems were beginning to surface). This screen capture from within the report:
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Policy debates can rage over the wisdom of such programs as a place for government spending and risk assumption - risk shifting from the private sector, with at least one listed firm in that report having since failed as a business, with local political implications, and that loan was not made to either a woman or minority person (which the report seems to indicate as the majority of such business aid recipients with report Fig.2 identifying by pie chart that white male and white female loan recipients were each at the 7% level).
Is that good policy? Is that still a DEED program? And if so, is it funded from state general funds allocated to DEED or even in part from other DEED income streams such as employer paid UI insurance premiums (which should be earmarked and used only for the stated purpose)?
Nienow got his loan as a white male, and a legislator. Looking at the ending list of the DEED 2006 item, most of the ventures listed there looked to be more sound than Nienow's harebrained choose-a-summer-camp-brokerage adventure.