JPMorgan, BofA and Citi among banks facing loan investigation (3)
A House panel overseeing the coronavirus response is examining whether several banks, including
The inquiries, launched by the Democrat-led Select Subcommittee into the coronavirus crisis, are also seeking details from the
“Some major lenders have apparently created a two-tier system for processing PPP loan applications,” according to letters sent by the commission 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.
The Trump administration faces criticism for not disclosing details of companies that have received billions of dollars through the PPP, a high-profile federal coronavirus relief initiative that forgives loans of up to 10 million of dollars if most of the profits are spent on payroll. .
The subcommittee asked the banks for records of all PPP requests they had received and any advice they had received from the Trump administration. Lawmakers want communication on the policy of the ‘first come, first served’ program, as well as the prioritization of underserved and rural markets as required by law in response to
An SBA spokesperson declined to comment. A Treasury Department spokesperson did not immediately respond to a request for comment on the letters. Treasury spokesperson
Bank of America, which processed more than 325,000 PPP loans averaging around $ 79,000 intended primarily for companies with less than 100 employees, declined to comment on the investigation. JPMorgan Chase said he has yet to receive the letter and declined to comment.
A Citigroup spokesperson said the bank would not comment on the letter until it had had a chance to review it. The bank said 80 percent of its PPP loans went to “micro-businesses,” or those with 10 or fewer employees, of which nearly two-thirds went to businesses with five or fewer employees.
Wells Fargo said in a statement that it “continues to work as quickly as possible to prepare and submit” PPP applications and that more than 80% of its 168,000 approved loans worth $ 10.2 billion were intended for companies with less than 10 employees.
After the PPP launched on April 3, many borrowers complained that banks would not take their PPP application unless they had an existing lending relationship, and that large companies were getting financing at the expense of stores. mom and pop in the first round of funding.
The SBA has failed to take steps to prioritize underserved borrowers while enacting rules that hurt businesses and contradict the law that created the PPP, according to an inspector general.
The subcommittee also called the Secretary of the Treasury
“There is nothing ‘proprietary’ or ‘confidential’ about a business receiving millions of dollars allocated by Congress, and taxpayers deserve to know how their money is spent,” said the deputy. – committee in his letter.
After a backlash from lawmakers, Mnuchin tweeted on Monday that he would meet with the Senate Committee on Small Business and Entrepreneurship and others on a bipartisan basis “to find the appropriate balance for proper oversight” with the “appropriate protection” of small business data.
Rubio said many small businesses are concerned about what disclosure of information will reveal about their business model, so even if there will be disclosure, it’s a question of what size loan will qualify. .
“If you’ve got a big loan, you know it’s impossible to avoid it,” Rubio said. “We’re going to need to know who you are.”
Yet a spokesperson for the
The heads of the House of 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. 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 this loan-specific information would be made public “in the near future.”
The SBA reported that as of Monday evening, loans had been approved for nearly 4.6 million small businesses totaling $ 512.6 billion, with about $ 130 billion in funding remaining before the agency ceased accepting. new requests on June 30.
The committee requested that the documents be submitted by June 29.
(Updates with Rubio comments, beginning at paragraph 20.)
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