Off The Wire
U.S. pandemic aid program saved 51.1 million jobs, but wealthy and connected also got loans
WASHINGTON (Reuters) - Some 51.1 million jobs were protected by a high-profile pandemic aid program, the Trump administration said on Monday as it revealed how a firehose of $521.4 billion in taxpayer cash washed across the landscape of America’s small businesses.
But the data underlined that in addition to mom-and-pop shops, the funds went to several well-heeled and politically connected companies, some of which got between $5 million and $10 million. Those include firms which lobby in Washington such as Wiley Rein LLP and APCO Worldwide, as well as law firms Kasowitz Benson Torres LLP, which has represented President Donald Trump, and Boies Schiller Flexner LLP.
Sidwell Friends School, an exclusive private school which educated former President Barack Obama’s daughters, took out a loan for between $5 million and $10 million, as did Saint Ann’s School in Brooklyn, which - with tuition exceeding $50,000 per year - is attended by the children of hedge fund managers and celebrities.
Some investment firms, such as those that run hedge funds for wealthy clients, also received checks. That included Advent Capital Management LLC, a New York-based debt investor with $9 billion in assets; Metacapital Management LP, a New York-based fixed income investor with more than $1 billion in assets; and Semper Capital Management LP, which invests nearly $4 billion in mortgage-backed securities.
None of those companies or schools immediately responded to a request for comment.
The colossal data set released by the Trump administration after some initial resistance, gives Americans their first full look at who got cash from the first-come-first-served program that has been dogged by technology, paperwork and fairness issues.
Senior administration officials at the U.S. Treasury Department and Small Business Administration (SBA), which jointly administered the Paycheck Protection Program, hailed it as a “wild success,” supporting about 84% of all small business employees.
To date, the SBA has released broad distribution figures for states, industries and the largest lenders. But the new data paints a much more detailed picture of which local communities and sub-sectors received support and whether it helped save jobs.
The Treasury and SBA released data for more than 660,000 loans of $150,000 or more, including recipient name, address, lender, business type, jobs supported, and some demographic information. That accounts for roughly 73% of the dollars granted, but only 14% of the 4.9 million loans, according to a summary of data the agencies released on Monday.
While the data does not say exactly how much money each borrower received, borrowers are placed in one of five bands: $150,000-350,000; $350,000-1 million; $1-2 million; $2-5 million; and $5-10 million. More than 4,800 loans were issued in the top band, while the overall average loan size was $107,000, the data shows. The Treasury released aggregate data on loans below $150,000 but did not name the borrowers.
Despite some eyebrow-raising recipients, the funds reached a wide swath of businesses - more than $67 billion for the healthcare and social assistance sector, $64 billion-plus for construction businesses, $54 billion for manufacturing and, at the smaller end, more than $7 billion for religious organizations, the data showed.
Treasury Secretary Steven Mnuchin had initially refused to name any recipients, saying it could expose borrowers’ proprietary business information, particularly if they are sole proprietors and independent contractors. Under pressure from lawmakers, he agreed to shine a light on large borrowers.
Launched in April, the unprecedented program allows small businesses hurt by the pandemic to apply for a forgivable government-backed loan from a lender.
More than 5,000 U.S. lenders participated in the program, with JPMorgan – the country’s largest bank by assets – accounting for $29 billion in loans. JPMorgan, Bank of America, Truist Bank, PNC Bank and Wells Fargo originated 17% of total PPP loans, according to the data.
In the scramble to distribute funds, the program was beset by technology glitches, documentation snags and revelations that some lenders prioritized their most profitable clients, leading to some affluent companies receiving funds while less well-heeled borrowers missed out.
There have been lingering questions over whether the most needy benefited, which are only likely to be compounded by Monday’s new data.
Roughly $30 billion worth of loans have been returned or canceled, a senior administration official said. Those include loans taken by large or publicly listed companies which attracted fierce criticism for breaching the spirit of the rules, as well as duplicate loans issued to borrowers that applied with more than one lender or companies that decided they did not want or need the loan after all.
The data shows loans that have been approved by the SBA, but does not provide information on those which have been forgiven so far. Loans that appear to breach the letter or spirit of the rules may not be forgiven, and senior administration officials confirmed on Monday that they still intended to conduct a full review of loans of more than $2 million.
The Department of Justice has already brought charges against several PPP borrowers for fraudulently seeking loans, while the Securities and Exchange Commission has also begun scrutinizing companies whose public disclosures may have been inconsistent with the declaration of need borrowers were required to make when seeking the loans.
Reporting by Michelle Price and David Lawder and Lawrence Delevingne; additional reporting by Andrew Sullivan, Michelle Conlin, Chris Prentice, Gui Qing Koh, Caroline Spiezo, Michelle Conlin; Editing by Tom Lasseter and Andrea Ricci