Select Subcommittee Launches Investigation into Disbursement of PPP Funds: press release (June 15, 2020)

Summary

In a June 15, 2020 press release, the Select Subcommittee on the Coronavirus Crisis states that Chairman James E. Clyburn and all Democratic Members sent letters to the Treasury Department, the Small Business Administration, and eight national banks seeking documents and information on the disbursement of PPP funds. The letters follow reports that large banks created two-tier systems for processing PPP loan applications, and they urge guidance directing lenders to prioritize entities in underserved markets and the release of the names of all PPP borrowers. Of the companies sent letters on May 8, 2020, the release says one returned its $10 million PPP loan and the remaining four produced information and documents. Maxine Waters and Nydia Velázquez also signed the letters.

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Select Subcommittee Launches Investigation into Disbursement of PPP Funds

June 15, 2020

Press Release

Subcommittee Demands Immediate Actions to Improve Equity and Transparency

Washington, D.C. (June 15, 2020) —Today, Chairman James E. Clyburn and all Democratic Members of the Select Subcommittee on the Coronavirus Crisis sent letters to the Treasury Department, the Small Business Administration, and eight national banks seeking documents and information on the disbursement of funds under the Paycheck Protection Program (PPP). The letters also urged immediate steps to ensure that remaining PPP funds are allocated to businesses truly in need and to increase transparency so taxpayers can see whether federal funds are being diverted due to waste, fraud, and abuse.

The letters follow multiple reports that large banks created two-tier systems for processing PPP loan applications that benefit wealthy existing clients at the expense of truly struggling small businesses in underserved communities, and that the Trump Administration's guidance on PPP " did not fully align with " the law passed by Congress.

" The CARES Act specifically encouraged SBA to issue guidance ‘to ensure that the processing and disbursement of covered loans prioritizes small business concerns and entities in underserved and rural markets,' including businesses owned by veterans, members of the military, socially and economically disadvantaged individuals, and women," the Select Subcommittee Members wrote. "Unfortunately, SBA and Treasury failed to issue clear guidance, potentially undermining this core principle of the program. … Despite Congress' clear intent, this guidance made no mention of prioritizing loans to underserved communities."

The Select Subcommittee's letter urges the Trump Administration to immediately issue guidance to lenders directing them to prioritize entities in underserved markets, including businesses owned by veterans, members of the military, socially and economically disadvantaged individuals, and women.

The letter also urges the Administration to provide more transparency about the administration of PPP.

"Among other steps, the Administration should release the names of all PPP borrowers—as the SBA routinely does for similar loan programs. Contrary to Secretary Mnuchin's recent testimony, there is nothing ‘proprietary' or ‘confidential' about a business receiving millions of dollars appropriated by Congress, and taxpayers deserve to know how their money is being spent."

On May 8, 2020, the Select Subcommittee sent letters to companies that had received at least $10 million in PPP loans, despite having more than 600 employees, a market capitalization of more than $25 million, and publicly traded stock. The letters asked the companies to return the funds or provide documents and information explaining why they believed they were eligible to keep the PPP loan. In response, one company, which had recently paid $6.5 million to resolve allegations of defrauding the federal government, returned its $10 million PPP loan. The remaining four companies produced information and documents to the Select Subcommittee. The Subcommittee is not currently planning further steps with respect to these four companies but may revisit the issue if new information arises.

The Select Subcommittee's investigation builds on inquiries led by Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, and Congresswoman Nydia Velázquez (D-NY), Chairwoman of the House Small Business Committee, into the management of the PPP. Both Chairwomen also serve on the Select Subcommittee and signed today's letters.

Click here to read today's letter to the Treasury Department and Small Business Administration.

Click below to read today's letters to PPP lenders:

JPMorgan Chase

Bank of America

PNC Bank

Truist Bank

Wells Fargo Bank

U.S. Bank

Citibank

Santander

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