Politico, "Bankers plead with Trump: Fix small business rescue plan"

Summary

Politico article by Zachary Warmbrodt, dated 04/07/2020, reporting that bankers appealed to President Donald Trump on a teleconference to fix problems with a Small Business Administration system that is holding them back from issuing $350 billion in government-backed loans. It says Noah Wilcox, chairman of the Independent Community Bankers of America, told Trump that one-third of community bankers still lacked access to the SBA system. Bank of America CEO Brian Moynihan is quoted saying the bank has received 250,000 applications, and JPMorgan Chase Co-President Gordon Smith is quoted saying the bank has received 375,000 requests to apply, about $40 billion. The article says the Trump administration announced it was seeking another $250 billion.

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POLITICO

Bankers plead with Trump: Fix small business rescue plan

Problems with the Small Business Administation system have fed the anxiety of small businesses desperate to survive as the country shuts down.

Bank of America leadership was among those on a teleconference with President Donald Trump, who discussed the state of the Paycheck Protection Program. | Justin Sullivan/Getty Images

By ZACHARY WARMBRODT

04/07/2020 06:34 PM EDT

Frustrated bankers on Tuesday directly appealed to President Donald Trump to fix problems with a Small Business Administration system that is holding them back from issuing $350 billion in government-backed loans designed to avert mass layoffs during the coronavirus pandemic.

Trump discussed the state of the so-called Paycheck Protection Program on a teleconference with several of the biggest U.S. banks and small lenders. Attendees on the call included the CEOs of Bank of America, Citigroup and Goldman Sachs.

While the large lenders voiced no complaints, executives from small banks pressed Trump to bolster the SBA "E-Tran” system, which has periodically crashed since the small business lending program's hurried launch on Friday. Banks must use the system to authorize the federally guaranteed loans, which can be forgiven if small businesses agree to maintain their payrolls.

Noah Wilcox, chairman of the Independent Community Bankers of America and CEO of Grand Rapids State Bank in Minnesota, told Trump that one-third of community bankers still lacked access to the SBA system.

“That means those community banks have been boxed out and unable to serve their communities and their customers,” he said.

The call provided more evidence that the unprecedented lending program was getting off to a rocky start, a little more than a week after Congress created it as part of a record $2 trillion rescue package intended to shore up an economy that has already shed millions of jobs.

The problems have fed the anxiety of small businesses desperate to survive as the country shuts down. The loans have been in such high demand that the Trump administration announced Tuesday it was seeking another $250 billion to fund the effort. The Senate could move this week to approve the new relief.

On the White House call, Community Spirit Bank CEO Brad Bolton told Trump that many of his fellow bankers remained “on the outside looking in, unable to gain access to the SBA E-Tran system.” He urged Trump to deploy resources to make sure every community bank can use it.

“Mr. President, I know that you are a problem solver,” he said. “No challenge is too big for your leadership.”

Trump said there were a "few glitches — very few," as he tried to focus on the success of the program.

The president said the SBA had processed more than $70 billion in loans, though banks have reported they still don't have what they need from the administration to actually get funds to borrowers.

"We'll be running out of money pretty quickly, which is a good thing in this case, not a bad thing," Trump said.

A SBA spokesperson said the agency had no additional information to provide on the concerns banks raised at the meeting with Trump.

Banks have been mired in growing pains with the program as they’ve tried to issue the loans.

Lenders lacked guidance from the administration on how to proceed until the night before the launch. Late Monday, the Treasury Department tried to answer several other outstanding questions that banks had, including how to tally payroll taxes in loan applications.

But banks on Tuesday said they still lacked an SBA document template needed to close out the loans, and some were unsure if they could proceed with their own custom version.

"It's about the same as yesterday," said Paul Merski, group vice president for congressional relations at the Independent Community Bankers of America. "They're getting a trickle of loans through the SBA process.”

Appetite for the loans has been massive.

On the call with Trump, Bank of America CEO Brian Moynihan said his bank alone has received 250,000 applications — amounting to several thousand incoming applications per hour.

JPMorgan Chase Co-President Gordon Smith said his bank has received 375,000 requests to apply — coming out to about $40 billion — with applications ranging from $4,000 to $2.6 million.

With money already at risk of being depleted, Senate Majority Leader Mitch McConnell said Tuesday he planned to have the Senate pass a funding increase as soon as Thursday.

Treasury Secretary Steven Mnuchin said on the call with Trump that he hoped the House would follow suit Friday. But it was not clear if Democrats in control of the House would abide by that timeline.

Some in Congress believed that even the $250 billion sought by the Trump administration would be insufficient.

“Given the unprecedented demand for this program, and the massive need from small businesses, we need more, not less," North Carolina Rep. Patrick McHenry, the top Republican on the House Financial Services Committee, said in an interview. “Double the request may not be sufficient for the needs that small businesses are experiencing."

Lawmakers were keeping a close eye on how the program was functioning, well aware of what a formidable task it was for the SBA and Treasury Department. The $350 billion is 15 times what the SBA's flagship "7(a)" loan program gave out in fiscal 2019.

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