With the US economy in somewhat of freefall and in desperate need of an end to the CCP Virus to ensure survival, see The Hill, once again a government bailout program has failed to meet the needs of working-class Americans. The CARES act included the Paycheck Protection Program (PPP) meant to help small businesses retain employees for at least 8 weeks. Two weeks after the program was signed into law it has run through $349 billion. Where did the money go? The horror stories are just beginning to come out.
There are stories in every media outlet. A few touting how effective the program has been in getting the money disbursed but more showing the money went to the wrong hands. Here are a few: Fox Business - CARES act tax changes benefit millionaires, Fox Business - High-end businesses qualify for PPP, NBC News - small business owners get 0 lenders get billions. I could add many more links but I do not wish to overwhelm.
Some of the interesting facts coming out are: 1) 45% of all loans under the program exceeded $1 million. If businesses payroll for 8 weeks exceeds $1 million surely they have access to other funding and are not truly in need of a government bailout. 2) The program was designed to assist businesses with fewer than 500 employees but a loop hole allowed for these businesses to file by location and if the individual location had fewer than 500 employees they still got into the program. This allowed large franchise corporations to become participants. They could file and the franchisee could also file thereby double dipping into the program. Even the same banks making the loans could apply if they applied by branch, all while charging the government fees for processing the applications and making the loans. 3) Businesses earning residual income such as hedge fund managers, law firms and others could file and qualify.
Americas Economy runs on the backs of the small businesses but not small businesses with 500 employees. On the backs of family owned and operated businesses employing fewer than twenty individuals. For the most part these business have never been incorporated. The are individuals doing business as (dba). This means they are taking all of the risk upon themselves. If they fail to pay bills the creditors come directly after them, not after a corporation. Hair salons, nail salons, spas, barber shops, small restaurants, bars, pubs, small hotels and motels, all deemed non-essential under the stay at home orders issued by the states, these are the businesses employing 100s of thousands of Americans. 22 million of whom have filed for unemployment in just three weeks. But too small to take advantage of the program set up for their protection, supposedly. Their only hope has always been the piggy bank they have to break into during every business slow down.
I couldn't sleep last night with all of this running through my head. So, I got up and I wrote letters. One to the President urging him to have the designated Inspector General to initiate an investigation into this failure. Democrats held up the bill for almost 10 days because they said it did not have teeth in it to ensure this didn't him. The Pelosi and Schumer came out and said they had managed to get controls similar to those under the TARP program incorporated. For those of you who do not recall TARPs failure you can refer to my article here. In particular I recommend the book by Neil Barovsky towards the bottom of the article.
I also wrote to each of my Senators and to my Congressman. I urge everyone who believes we are being taken advantage of by those in power to do the same. Whether these consequences were intended or not they merit rectification and it will take an Act of Congress to make that happen. Not through another bailout program that will steal dollars from us for years to come but through an amendment allowing the Treasury Department to recoup immediately the funds disbursed to those corporations and businesses that were not or should not have fallen under the program. Congress must also go after the banks who have allowed this to happen. The program was not intended to be based on the credit worthiness of the businesses but on their need. Instead banks looked at the creditworthiness of the applicants and doled out the billions to those who still had revenues and also had other financial opportunities they could have gone to.
While politicians and pundits continue to tell us the economy will quickly recover once the CCP virus is under control, the 22 million workers out of work today and the millions more who continue to lose their jobs are not going to be reemployed in three weeks, three months or three years.