Trump administration will not say who got $ 511 billion in taxpayer-supported coronavirus loans

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The SBA originally intended to publish similar information for the new coronavirus loans. An SBA spokesperson told The Washington Post in an April 16 email that the agency[s] to publish individual loan data in accordance with the information currently available on the SBA.gov website once the loan process is complete, “and he made a similar commitment in response to an April 17 request for open files.

But the administration seemed to change course during a hearing Wednesday before the Senate committee on small businesses and entrepreneurship, the Secretary of the Treasury Steven Mnuchin and the administrator of the SBA Jovita Carranza having refused to discuss borrowers specific.

“With respect to the names and amounts of specific PPP loans, we believe that this proprietary information, and in many cases for sole proprietors and small businesses, is confidential information,” Mnuchin said at the hearing. . “The reason we don’t disclose names and amounts, unlike program 7 (a), is because of this problem. “

The Post is one of 11 media outlets that are suing the SBA for access to loan recipient files, loan amounts and other basic information the agency previously released. Responding to questions from The Post on Wednesday, a spokesman for the Treasury Department said that the release of “loan level data” could jeopardize the confidential business information of loan recipients.

“The idea that the administration is hiding something is flatly wrong,” said Brian Morgenstern, spokesman for the Treasury Department, in an email. “The secretary’s point is that the loan data with credentials could leak the proprietary data of millions of small businesses and the wages of independent contractors. We are fully committed to transparency while protecting sensitive information, ”wrote Morgenstern.

The Post’s Freedom of Information Act request does not seek salary information.

The apparent decision to withhold loan files is the latest in a series of measures taken by the Trump administration that could protect the federal coronavirus response from public scrutiny.

A provision unrelated to the Coronavirus Aid, Rescue and Economic Security (Care) Act allows President of the Federal Reserve, Jerome H. Powell, to request confidentiality of information relating to the billions of dollars intended for companies under the auspices of the Federal Reserve. And the Trump administration has taken steps to undermine the independence of executive oversight bodies, declaring that the special inspector general overseeing the funding of care law cannot report to Congress without “presidential oversight.”

Throughout the deployment of the Paycheck Protection Program, the SBA has been repeatedly criticized by members of Congress and government watchdogs for an alleged lack of transparency.

“The very first line of defense for the public to make sure that the money goes to the companies that are supposed to get it is through transparency,” said Craig Holman, lobbyist for Public Advocacy Group. Citizen. “This is a problem with PPP, but it goes far beyond that. . . . The whole response to the pandemic has been defined by a lack of transparency. “

The paycheck protection program is the cornerstone of the Care Act’s $ 2,000 billion economic stimulus package and the federal government’s broader response to the coronavirus pandemic. The program provides small business owners with low-interest loans that can then be canceled, with the amount of the cancellation contingent on continued employment levels. Loans are processed by private banks and regulated by the Small Business Administration and the Department of the Treasury.

Despite initial growth challenges, the program quickly expanded after its launch in early April, helping millions of small businesses continue to pay their workers during the economic downturn. It almost certainly contributed to a surprise drop in the national unemployment rate in May.

But it is feared that the unusually loose criteria for applying the SBA – a deliberate political choice that has increased demand for loans and allowed money to be spent quickly as the crisis deepens – could have the unintended effect of ” increase fraud and abuse.

In order to streamline the process, the SBA and the Department of the Treasury allowed lenders to take borrowers at their word about their needs and eligibility. Although the SBA later declared that any loan over $ 2 million would be audited, commercial applicants were initially subject to very little verification.

The Department of Justice has reported alleged fraudulent transactions between loan recipients. Reality star Maurice “Mo” Fayne was arrested and charged with bank fraud for spending more than $ 1.5 million on SBA loans for jewelry, expensive cars and child support. Fayne received a loan through a Georgian company called Flame Trucking.

Many large businesses and wealthy organizations have taken advantage of subsidized small business loans, which they claim were legal at the time of their application. Well-known restaurant and hotel chains, including Shake Shack, Ruth’s Chris Steak House and Ashford Hospitality Trust, initially received tens of millions of dollars through their franchises.

According to documents filed with the Securities and Exchange Commission, nearly 300 publicly traded companies received $ 1 billion in stimulus funding, prompting the SBA to rule after the fact that public companies with access to credit elsewhere do not would probably not be eligible. Many of these companies later returned the money, although the SBA declined to say exactly how much did it.

Defense groups said the decision not to release the records could protect other undeserving candidates from public scrutiny.

“Obviously, this is to prevent certain entities from being embarrassed or being revealed,” said Steve Ellis, president of the common sense taxpayer. “No one forced them to take the money, and it was already set up so they could return it without question. And they were told that this information would be made public when they applied for a loan. “

At the Senate hearing on Wednesday, members of both parties expressed frustration at not having received the loan files.

Senator Ben Cardin (D-Md.) Said that Congress must have access to loan data to carry out effective monitoring. He also criticized the SBA for failing to inform borrowers of major policy changes affecting them. Cardin said the Government Accountability Office, a non-partisan executive branch oversight agency, was also obstructed.

“How do we know which companies are still in need of help if we don’t know which companies have received help?” Cardin said. “We need the data to ensure that this assistance is as effective as possible.”

Senate Republicans at the hearing also expressed frustration that the loan data will not be released, although their concerns focus more closely on reports that Planned Parenthood received money through the program. The SBA has sent letters to at least a dozen local Planned Parenthood branches asking them to return the money, although he is not sure if any of them did. A subsidiary of Planned Parenthood told The Post that much of its loan funding has already been spent.

Asked about Planned Parenthood loans by Senator Josh Hawley (R-Mo.), Carranza, the administrator of the SBA, declined to discuss the issue.

“I have to take the position that I am not able to share the information of this borrower at the moment,” she said, offering to follow up with him privately.

Hawley seemed dissatisfied with the offer and asked why she would not discuss the matter under oath.

“How are we going to monitor if you don’t give us any details?” ” He asked.

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