Wells Fargo, BofA, among banks under investigation for PPP loans – Orange County Register

By Laura Davison and Mark Niquette, Bloomberg

House panel overseeing coronavirus response launches inquiries into how several banks, including JPMorgan Chase, Bank of America, Wells Fargo & Co and Citigroup Inc., made decisions on how to implement loans to small businesses under the government’s paycheck protection program.

The inquiries, launched by the Democrat-led select subcommittee on the coronavirus crisis, aim to determine whether banks and Treasury Department guidelines have favored larger, well-connected businesses over small businesses in rural communities. or minority groups when granting loans to small businesses to combat the economic crisis. fallout from the coronavirus pandemic.

“Some major lenders have apparently created a two-tier system for processing PPP loan applications,” according to letters sent by the committee on Monday. “The wealthiest bank customers had access to a personalized application process that ensured their requests were processed first.

“Other applicants had to use poorly performing electronic portals, faced significant processing delays and sometimes had to find another lender to review their application,” the letters say.

Republicans on the subcommittee did not sign the letters asking the banks to turn over documents. a high-profile federal coronavirus relief initiative.

The subcommittee asked the banks for records of the PPP requests they have received and the advice they have received from the Trump administration to prioritize underserved and rural markets, as required by the law in response to reports that the big banks favored their biggest customers.

The SBA has failed to take steps to prioritize underserved borrowers while issuing rules that hurt businesses and contradict the law that created the PPP, according to an inspector general report released in May. After the PPP launched on April 3, many borrowers complained that the banks would not. accept their PPP request unless they have an existing loan relationship, and the big companies got funding at the expense of mom and pop stores in the first round of funding.

Entities such as Shake Shack Inc. and the Los Angeles Lakers have repaid PPP loans after a public outcry, and the SBA and the Treasury have taken steps to ensure that more minority small business owners and other business owners disadvantaged small businesses have access to PPP financing. But lawmakers say they still hear complaints that these companies still need help.

The committee also called on Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza to release details of which companies received funds and in what amount after Mnuchin testified at a Senate committee hearing on Wednesday. last that this information would be withheld because it is proprietary or confidential.

Lawmakers criticized Mnuchin’s decision not to disclose details of the companies that received the loans. Pelosi said in a June 12 statement. “The administration must immediately reverse this decision and respect its obligation to disclose this data.”

Leaders of the House Ways and Means, Financial Services and Small Business Committees also sent a letter to Mnuchin and Carranza on Saturday asking them to provide the names of all PPP loan recipients by June 19, at the latest. the dollar amount received and the names of all applicants who have not received a loan.

“At a minimum, we owe this information to the American people,” the letter said. “As the pandemic continues to cause financial hardship for countless small businesses, we need to understand if this program is working as intended and how best to help businesses move forward. “

PPP loan applications, which are forgivable if borrowers meet certain criteria, indicate that this data will “automatically” be released. Additionally, the SBA, which oversees the loan program, told Bloomberg News in April that such loan-specific information would be made public “in the near future.”

The SBA reported that as of Friday, loans were approved for nearly 4.6 million small businesses for a total of $ 512.3 billion, with about $ 130 billion in funding remaining before the agency shut down. to accept new requests on June 30.

The panel requested that the documents be submitted by June 29.

About Arla Lacy

Check Also

Alabama Small Businesses Can Apply For SBA COVID-19 Disaster Loans

the SBA program will help qualified businesses and nonprofits recover from the economic losses associated …