Reed: Trump Admin’s Inability to Account for Over $500B is Negligent, Makes PPP Less Effective & Hinders Economic Recovery
Senior member of Banking Committee says Trump Admin’s refusal to disclose where over half a trillion dollars of U.S. taxpayer-backed small business loans have gone is unacceptable & urges Republican Leadership to join Democrats in demanding transparency and accountability to prevent Americans from getting ripped off
WASHINGTON, DC – After the Trump Administration backtracked on an earlier commitment to publicly release data and declared it will not disclose where over $500 billion in U.S. taxpayers funds have gone, U.S. Senator Jack Reed (D-RI) called for Congress to take bipartisan action to prevent U.S. taxpayers and small businesses from getting fleeced.
Last week, in a major departure from good government policy, Treasury Secretary Steve Mnuchin stated that information about who is receiving forgivable loans from the Paycheck Protection Program (PPP) is “proprietary” and the federal data is now “confidential.” Treasury is even slow walking providing data on PPP to the Government Accountability Office (GAO), which is a non-partisan government watchdog and is required to prepare its first oversight report on CARES Act spending by June 25.
Senator Reed warned that if the Trump Administration insists on withholding this information, it could result in billions of taxpayer dollars being wasted and misused, resulting in lasting damage to Main Street businesses and the U.S. economy.
Senator Reed, a senior member of the Banking Committee, and a cosponsor of the recently passed Paycheck Protection Program Flexibility Act (Public Law No. 116-142), stated: “I support PPP and it has made a real difference. But the Trump Administration’s mismanagement of PPP is hindering economic recovery and potentially wasting billions of dollars. The Administration’s inability or refusal to account for over half a trillion dollars is negligent and makes PPP less effective. To protect the public and ensure this program is working as intended, there must be a strong, bipartisan commitment to transparency and oversight. Small businesses across Rhode Island have let folks know they’re getting these loans so I’m hard pressed to see why the Administration won’t release this information. There’s just no good reason to keep this information from the taxpayers and it’s sadly just another example of the President’s poor understanding of the importance of disclosure when it comes to this kind of massive program.”
In April, Senator Reed sent a letter to Treasury Secretary Mnuchin and SBA Administrator Jovita Carranza urging the Trump Administration to immediately and continuously disclose non-confidential information related to PPP borrowers and lenders in order for Congress and the public to accurately evaluate PPP’s effectiveness. Reed is also a cosponsor of S. 3604, the Transparency and Oversight of COVID-19 Small Business Recover Assistance Act, which would require the SBA to provide Congress and the public with data on PPP and the Economic Injury Disaster Loan (EIDL) and Emergency Grants Program, including daily and weekly reports detailing the total loans approved and disbursed under these programs.
“There needs to be a full, public audit of where these taxpayer-funded loans have gone and who is benefitting. This is the taxpayer’s money, not the President’s personal slush fund. We already know the Los Angeles Lakers were inappropriately awarded millions of dollars in the first round, while average mom and pop businesses were completely shut out. Now the Trump Administration is back pedaling on disclosure and Congress needs to put on a full court press to prevent taxpayers from getting ripped off,” Senator Reed continued. “At this rate, PPP could go down as well-intentioned but poorly executed and widely and wildly abused due to lack of oversight. If Congress doesn’t step up, then wealthy, well-connected companies that are adept at hoarding resources could make out like bandits while those most in need -- and the very jobs the program was designed to protect – could very likely be shut out and forced to shutter. Under this Administration, the economic hole is getting deeper for taxpayers, workers, Main Street, and out-of-work Americans. We need effective solutions to help get the economy working. Instead, the Trump Administration is just trying to cover up the facts and its own failures.”
According to the Associated Press: “The loan application for the Paycheck Protection Program includes this notice to potential borrowers: Under the Freedom of Information Act and with certain exceptions, the SBA "must supply information reflected in agency files and records to a person requesting it.
“Nearly a dozen news organizations, including The AP, The Washington Post and The New York Times, have sued the SBA in federal court for not having released the loan data despite several requests under the Freedom of Information Act. They accuse the agency of violating the FOIA law. The SBA has declined to comment on the lawsuit.”
Senator Reed has long been a proponent of PPP reform and helped pass the Paycheck Protection Program Flexibility Act to help thousands of Rhode Island small businesses who have been approved for $1.8 billion across two rounds of PPP loan approvals.
Congress created the Paycheck Protection Program in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law No. 116-136) and appropriated an initial $349 billion for the program, which was intended to be a lifeline for small businesses and workers. PPP originally offered forgivable small business loans to cover two months-worth of payroll and overhead costs. But PPP has been plagued by problems, mismanagement, and lack of sound guidance from the Trump Administration. After the first round of PPP funding lapsed, Senator Reed sought important legislative fixes and updates to the program. Unfortunately, Congressional Republicans blocked any legislative fixes from being included in the second round of PPP funding, which increased the overall allocation to $659 billion. After continued pressure from the business sector and Democrats, Congressional Republicans ultimately came to the table and helped pass changes to PPP including, extending the loan forgiveness period from 8 weeks to 24 weeks, altering the threshold that must be directed to employee wages from 75 percent to 60 percent, and increasing the loan term from two years to five years.
In an effort to ensure oversight of the novel coronavirus (COVID-19) relief funding, the Council of the Inspectors General established a Pandemic Response Accountability Committee to oversee PPP and other CARES Act spending. However, President Trump recently demoted and replaced the Inspector General who was to oversee how PPP loans were administered, and instead President Trump elevated one of his former White House lawyers to the post.