Photograph by Nathaniel St. Clair
A scandal blew up over the small business loan fund recently. The first, $350 billion Paycheck Protection Program (PPP) was created to help small business – walloped by Covid-19 lockdowns – keep paying employees. But the banks were in charge of disbursing these loans. And it turned out these banks doled out $365 million in forgivable loans to big, publicly traded chains like Potbelly Sandwich Shop, Shake Shack and Quantum Corp. Amid the outcry, Shake Shack returned its $10 million loan. Potbelly and Sweetgreen said they would do so too. As of April 27, 13 big corporations promised to return the money they had illegitimately received, with reportedly $2 billion returned to or declined from the program. But the banks were exposed as having aided 94 or more publicly traded companies in snatching government handouts from mom and pop businesses. Many of those 94 plus firms, including cruise ships, have evinced little shame. They do not intend to return their loans. They helped empty the fund. Not a good look. They should be compelled to return the money.
Some of that PPP money went to corporate mega-donors to Trump’s reelection campaign, according to The Intercept. These donors got lots of money. At the top of the list were luxury hotels run by the Bennett family. They received more PPP money than any other donor known so far. The Bennetts have given liberally to Trump and the GOP. Also receiving these loans that don’t have to be repaid was a firm connected to a lobbyist and Trump fundraiser; also, Continental Materials Corp; Easy Post and several other Trump and GOP benefactors. This smacks of corruption.
Among other rich corporations grabbing so much cash they depleted the small business fund was bio-tech Athersys, which received $1 million, according to Zerohedge, “despite raising nearly $60 million in a Monday stock offering. Meanwhile Nikola Motor…announced a $4 billion valuation in early March,” but borrowed $4 million from the PPP. Also in the headlines was national chain Ruth Chris Steakhouse, snagging $20 million from the small business fund, which it will now return. The AP reported that small business loans went to “companies with thousands of employees, past penalties from government investigation and risks of financial failure.” Nothing like free money for those already swimming in cash.
The banks were the root of the problem. So on April 23, Senator Marco Rubio – taking time out lately from his bloodthirsty verbal assaults on the Venezuelan government – wrote to 12 bank ceos about how they chose these borrowers. An excellent question, and no doubt the answers will be doubletalk. Among those banks, JP Morgan stands out. To cite Zerohedge again: “Of all the banks that shafted small business out of Coronavirus relief, JP Morgan takes the cake.” These banks acted as conduits, rewarding their cronies. Their cronies are big, rich corporations. So what if the money was intended for small business? The banks prefer the super-rich.
The government seems disinclined to punish the banks responsible for this looting. The next development – the new, second PPP bill – proves this point. Fully aware of this recent costly ripoff, Congress sat down with Treasury and wrote a new loan bill – with no new constraints! No language that, given the last plunder, new safeguards would prevent its repetition. No attack on the banks for essentially abetting a swindle. Treasury Secretary Steven Mnuchin did promise new guidelines, and urged big corporations to return their loans obtained under the first PPP. He threatened “severe consequences” if they did not, including investigations. Let’s hope he keeps his word going forward and expands the threats to encompass the banks, because that’s all we’ve got to prevent another debacle with the new funds.
The new bill passed the House 388-5. It puts $321 billion into the PPP, so companies can keep paying workers, and reportedly has already almost run dry. It also gives $60 billion in emergency loans for small businesses, $75 billion for hospitals and $25 billion for Covid-19 testing. This all sounds good, but if banks direct these monies to publicly traded companies again – and why won’t they? – it’s just more robbery by plutocrats, in whom the pandemic has brought out the worst. The government has showered trillions on billionaires, oligarchs and corporate chieftains, and they want it all, including those forgivable small business loans.
Meanwhile, over 26 million people have lost their jobs, and those who haven’t need help keeping them. But the federal government seems incapable of doing the decent thing: passing a bill specifically for those people and no one else. The empire’s rulers are blinded by right-wing, trickle-down dogma – hence their kneejerk reaction to disaster is to stuff cash into the hands of the rich. This dogma is a form of extreme stupidity and one that, tragically, spells ruin for multitudes of Americans.