How US banks enrich themselves in the coronavirus crisis

US, WASHINGTON (ORDO NEWS) — When Congress adopted the Paycheck Protection Program (PPP) in March, lawmakers hoped that loans to small businesses would save millions of jobs. Small companies, unlike large corporations, during the financial crisis cannot pay salaries to their employees without assistance.

However, America’s leading banks, which have voluntarily agreed to process and submit tens of thousands of applications to the Small Business Administration, are slow and opaque.

The result is very similar to the failed financial support of 2008: almost 80% of the 30 million small and medium-sized companies have still not received anything, despite the fact that they timely filed for a PPP loan. At the same time, appeals from large corporations, including well-known hotel and restaurant chains, were considered as a matter of priority, and money was given to them.

For example, the largest US dealer network AutoNation received almost $ 80 million under the program, although the company itself costs billions of dollars. Applications from a large number of small enterprises (for which PPP was created) were frozen for unknown reasons. Meanwhile, the federal government has already transferred hundreds of millions of dollars of loans for banks, writes The National Interest.

Private banks were attracted to the Wage Protection Program just to accelerate the transfer of state money into the hands of extremely difficult small enterprises. Congress hoped that experienced commercial financial institutions would quickly process and submit all applications to the Small Business Administration.

The problem is that the authors of the law did not include in it any mechanisms that would ensure the priority of public interests over the vested interests of banking giants such as JP Morgan Chase, Bank of America and Wells Fargo. It was expected that everything would work on a first-come-first-served basis, but in reality, banks give priority to their valuable customers. In other words, federal money is used by banks to enrich themselves and support their large customers.

However, Congress still hopes that after the Salary Protection Program has recently been increased by more than $ 300 billion, banks will prove that they can act in the public interest and support America’s small business in need of urgent assistance. Banks have publicly stated that they will now perform better. But is it?

Wells Fargo announced the acceleration of processing loan applications, for which thousands of employees were additionally sent to this work. JP Morgan Chase and Bank of America made similar statements. But this is not enough, experts say. Banks should also demonstrate greater transparency in processing loan applications and maintain closer communication with applicants.

Today, small companies are not informed about the order in which their loan applications are submitted to the Small Business Administration.

The Trump administration and congress need to increase pressure on banks. Lawmakers, according to Politico, are already preoccupied with numerous problems: “Despite the adopted” Urgent Assistance and Economic Incentive Package to Combat the Consequences of the Coronavirus Pandemic “(CARES) and other similar legislation, congressmen receive many complaints about failures of the small business lending program, and also about how large corporations, using various loopholes, receive money intended for small enterprises.In addition, due to bureaucratic delays, the sending of checks for testing is delayed. their financial difficulties of American households.”

Trump understands that his political future is largely dependent on the success of this program, as it can help revive the American economy. In this regard, it is very important to ensure that banks do not engage in dubious and unethical practices, and in case of violations, financial institutions and their management are held to the most stringent responsibility.

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