Report 2016-133 Recommendation 9 Responses
Report 2016-133: SAFE-BIDCO: At Risk of Insolvency, It Needs Increased Oversight if It Is to Receive State Funding and Continue to Help Small Businesses in California Gain Financing (Release Date: April 2017)
Recommendation #9 To: State Assistance Fund for Enterprise, Business, and Industrial Development Corporation (SAFE-BIDCO)
SAFE-BIDCO should by October 2017 establish policies and procedures for a supervisorial review process of its loan files to ensure that its loans comply with the requirements of its programs.
6-Month Agency Response
SAFE-BIDCO did not provide a response for the reason noted below in the State Auditor's Assessment of Status.
- Estimated Completion Date:
- Response Date: December 2017
California State Auditor's Assessment of 6-Month Status: Resolved
SAFE-BIDCO was seized by the California Department of Business Oversight (Business Oversight) in September 2017 and is no longer in operation. Business Oversight in July 2017 required SAFE-BIDCO to prepare plans to liquidate the business. On September 15, 2017, citing our April 2017 audit in part, Business Oversight issued an order taking possession of SAFE-BIDCO and appointing an agent to assist in liquidating the entity. Business Oversight noted in its order many of the same concerns we identified in our audit, including SAFE-BIDCO's operating losses, declining capital, and declining loan production. In particular, Business Oversight found that SAFE-BIDCO had no viable plan for improving its sustainability or protecting its creditors. Business Oversight's action to liquidate SAFE-BIDCO has effectively resolved the need for our recommendations.
60-Day Agency Response
Starting the second quarter of FY17/18 we will start using a new check off list for file content, to be signed off by the staff member assembling the file and the head underwriter, after the assembling is completed.
- Estimated Completion Date: October 2017
- Response Date: June 2017
California State Auditor's Assessment of 60-Day Status: Pending
Agency responses received are posted verbatim.