U.S. lenders, businesses brace for disclosure on small
business pandemic aid
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[June 26, 2020] By
WASHINGTON (Reuters) - Americans will soon
get a first full look at which businesses received $515 billion of
taxpayer funds when the government, after initial resistance by
President Donald Trump's administration, releases borrower data for one
of its highest- profile pandemic aid efforts.
The colossal data set for the Paycheck Protection Program, to be
released by the Treasury Department and Small Business Administration in
the coming days, will provide transparency for a first-come-first-served
program that from the outset was plagued by technology, paperwork and
That could make life uncomfortable for borrowers that broke the spirit
or letter of the rules, and for banks that shoveled the money out the
door. The aim of the $660 billion program was to help cash-strapped
companies keep workers employed and make rent.
"There's a level of anxiety," said Suzie Saxman, a partner at
Chicago-based law firm Seyfarth Shaw. "I've said to everybody: Prepare
to be disclosed, prepare to be audited."
The Treasury and SBA said they will release a swath of information,
including the names, addresses, loan amount ranges and jobs supported
for businesses that received $150,000 or more. That should account for
roughly 75% of the dollars granted, but only 15% of the 4.7 million
The agencies have not said when they will release the data.
Treasury Secretary Steven Mnuchin initially refused to release the data,
saying it included proprietary business information. But under pressure
from lawmakers, he agreed to shine a light on large borrowers.
"The opportunities for waste, mismanagement, abuse and corruption are
enormous, and we just canít know unless we have the information," said
Lisa Gilbert, executive vice president at the Washington-based
government watchdog group Public Citizen.
Launched in April, the program allows small businesses hurt by the
pandemic to apply for a forgivable government-backed loan from a bank,
the largest-ever of its kind.
[to top of second column]
A person in a mask walks on a nearly empty street in the coronavirus
outbreak near the Treasury Department in Washington, U.S. March 30,
2020. REUTERS/Jonathan Ernst
In the scramble to distribute funds, the program was beset by technology
glitches, documentation snags and revelations that some banks prioritized their
most profitable clients. As a result, more affluent companies got funds, while
less well-heeled borrowers missed out.
Those revelations left lingering questions on whether the most needy benefited.
To date, the SBA has released broad distribution figures for states, industries
and the largest lenders. But the new data will paint a much more detailed
demographic picture of which local communities and sub-sectors received support
and whether it helped save jobs.
While that is important data for economists and policy wonks, businesses and
banks are preparing for more backlash.
"The industry understands the need for transparency around this program but
believes SBA, Treasury and Congress should treat the release of this information
carefully," said Richard Hunt, president of the Consumer Bankers Association.
On Monday, the National Federation of Independent Business asked Mnuchin to halt
the data release.
Beyond the risk of negative headlines or regulatory scrutiny, businesses worry
that securing aid could scare off clients and vendors, or that companies working
from their home address could be exposed, said Seyfarth Shaw's Saxman.
For others, the data will be insufficient.
Maxine Waters, Democratic chair of the House Financial Services Committee, this
week said the data would provide "minimal disclosure" since, while covering the
majority by value, it would not include most of the loans issued. She called for
the full data set, adding: "We must ensure the administrationís transparent and
responsible stewardship of taxpayer dollars."
(Reporting by Pete Schroeder; Editing by Michelle Price, Tom Lasseter and Dan
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