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Report: Computer woes hurt storm relief
Problems with new SBA system causing delays in getting checks to hurricane victims, newspaper says.
September 30, 2005: 8:02 AM EDT

NEW YORK (CNN/Money) - A balky new government computer system is delaying low-interest loans for homeowners and businesses hurt by Hurricane Katrina, according to a published report.

USA Today reports that as of Wednesday, only one check has been issued by the Small Business Administration out of the 28,488 emergency loan applications that had been received from the hurricane zone. The checks are supposed to go out within 21 days of being received. Hurricane Katrina hit Aug. 29, 32 days ago.

The newspaper reports that SBA workers say the new computer system is causing paperwork that once took 30 minutes to process to now take hours. The newspaper also reports that the network that connects inspectors with their offices is frequently down and that workers in the field can't read the screens of their tablet-style computers in the glare of Gulf Coast sunlight.

SBA spokeswoman Carol Chastang told the newspaper the magnitude of the storm, not the computer system, is causing problems, as the devastation has slowed processing because inspectors can't get to damaged property.

"This is unlike any disaster we've ever had to handle," she said.

And the newspaper reports that SBA Administrator Hector Barreto defended the agency's new computers last week in congressional testimony, saying the $23.7 million system was state of the art, more secure and an improvement over the system it replaced.

But the newspaper reports that since the new computers went into service in December, there have been 41,578 loan applications have been received. Of those, 14,935 have been fully processed and 3,618 approved a rate of 24 percent, or less than half the approval rate under the old system.

Even before Katrina, some of the frontline SBA employees were warning the new system would not be able to respond to a major disaster, according to the newspaper.

Early this year, employees in SBA's Sacramento office complained in a letter to Sen. Dianne Feinstein, D-Calif., that the new system is causing "terrible delays, logjams and confusion," and predicted that in a major disaster, "it will result in a spectacular failure."

For a look at Katrina relief-related computer fraud, click here.  Top of page

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