“We have significant concerns that the two-tiered system that some banks reportedly developed for wealthy clients may have diverted PPP funds intended for vulnerable small business owners in underserved and rural markets,” they wrote in letters to JPMorgan, Citibank, Bank of America, Wells Fargo and other large financial institutions.
In addition to the letters to lenders, House Democrats on the oversight panel wrote to Mnuchin and Small Business Administration head Jovita Carranza urging them to release the names of all Paycheck Protection Program borrowers.
Democrats have applied new pressure on the administration after Mnuchin said last week he did not plan to disclose details on borrowers receiving the aid because the information was “proprietary” and “confidential.”
“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,” the House Democrats said in the letter.
Earlier Monday, Mnuchin said he was planning talks with lawmakers seeking details on the loans, as he faced a growing backlash.
On Twitter Monday, Mnuchin said “I will be having discussions with the Senate [Small Business Committee] and others on a bipartisan basis to strike the appropriate balance for proper oversight of #ppploans and appropriate protection of small business information.”
Earlier this month, Senate Small Business Chair Marco Rubio (R-Fla.) and Sen. Ben Cardin (D-Md.), the committee’s top Democrat, asked the Trump administration to start publishing the names and other details of Paycheck Protection Program loan recipients. Then Treasury said last week that loan-level data would risk disclosing “proprietary data of millions of small businesses and the salaries of sole proprietors and independent contractors.”
“Chairman Rubio plans to work closely with [the Small Business Administration] and Treasury to ensure enough data is disclosed about the program to determine its effectiveness and ensure there is adequate transparency without compromising borrowers’ proprietary information,” Rubio spokesperson Nick Iacovella said Monday.
Democrats have also raised concerns that some businesses obtaining loans were actually larger and more financially sound than those the program was intended for. Clyburn’s panel in May pressured some businesses to return multimillion-dollar loans, a name-and-shame strategy that Republicans said was misguided.
On Monday, Carranza urged lenders participating in the Paycheck Protection Program to focus attention on the communities most in need before the program stops taking applications for new aid.
Carranza asked banks to “redouble your efforts to assist eligible borrowers in underserved and disadvantaged communities, allowing us to expand economic opportunity, before the upcoming deadline of June 30, 2020, to obtain a loan number for a PPP loan.”
“SBA wants to ensure that entities in underserved and rural markets, including veterans and members of the military community, small business concerns owned and controlled by socially and economically disadvantaged individuals, women, and businesses in operation for less than two years benefit from PPP,” she said in the message.
Almost $130 billion remains in the business aid program. Rubio said on Twitter Monday that racial disparities during the Covid-19 outbreak and economic downturn will be a focus in “our next phase of PPP.”