Bad Bankers Are How Big Business Beats Small Business, But Congress Can Fix It

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Bad Bankers Are How Big Business Beats Small Business, But Congress Can Fix It

There are reasons major companies got massive loans from the Senate's 'small business' bailout while thousands of small businesses that applied immediately were told there was no money left.

By Christopher Bedford
April 22, 2020

There are reasons major companies got massive loans from the Senate’s “small business” bailout while thousands of small businesses that applied the first day funds were available were told there was no money left. Who is to blame, however, is more complicated.

Imagine bankers who won’t deliver you taxpayer assistance unless you already owe them money. Imagine bankers who will put you at the back of the line so that franchises worth hundreds of millions or even a billion dollars can get the aid first. Imagine a law our leaders passed allowing it. Now understand that what you’ve just imagined appears to be exactly what has happened.

The federal coronavirus bailout has first-come-first-serve rules that kick in once a bank sends a loan application to the government’s Small Business Administration (SBA), but in the interest of speed amid a crumbling economy and under an intense lobbying campaign from corporate interests, the end text of the law was vague at best on how banks are required to treat applicants before sending their requests to the SBA. Because of this, banks that wish to are able to pick winners and losers based on their own incentives, such as previous relationships, existing debts, or simply the potential to earn a profit.

A series of class-action lawsuits filed Sunday in Los Angeles allege that four banks — Wells Fargo, Bank of America, JPMorgan Chase, and US Bancorp — rushed loans to the biggest businesses to maximize their earnings. “In the last three days of [the Paycheck Protection Program],” or just when funds began to run low, the lawsuits notes, “banks processed loan applications for $150,000 and under at twice the rate of larger loans.” According to the plaintiffs, this indicates that the larger loans had been pushed to the front of the line.

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https://thefederalist.com/2020/04/22/bad-bankers-are-how-big-business-beats-small-business-but-congress-can-fix-it/

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four banks — Wells Fargo, Bank of America, JPMorgan Chase, and US Bancorp

   

Round up the usual suspects.

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Report: Banks earned more than $10 billion in fees processing small business loans

By J. Edward Moreno - 04/22/20 10:02 AM EDT

Banks that processed the small business loans allocated by Congress in the $2.2 trillion stimulus bill made $10 billion in fees, according to financial records obtained by NPR.

The fees were earned while processing loans that require less review than regular bank loans and have little risk for banks.

All federally insured banks and credit unions could process the loans before they are approved by the Small Business Administration (SBA) .

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https://thehill.com/policy/finance/494065-report-banks-earned-more-than-10-billion-in-fees-processing-small-business