The move will prevent oversight of 4.5 million businesses that took a government Paycheck Protection Program loan. One critic called it "unconscionable, jaw-dropping corruption."
By Molly Redden
The Trump administration said on Wednesday that it plans to keep the identities of more than 4.5 million businesses that received a government bailout through the Paycheck Protection Program a secret.
The lack of transparency is a stark break from the past. Normally, the Small Business Administration discloses the names of borrowers from the program on which it based PPP, The Washington Post reports.
But Treasury Secretary Steven Mnuchin, in testimony before the Senate Committee on Small Business and Entrepreneurship, said his department considered that information “proprietary” and “confidential.”
That secrecy extends even to internal attempts at government oversight. The Government Accountability Office, which is supposed to brief Congress on whether COVID-19 relief funds are being distributed as intended, says the Treasury has refused to give the agency the names of recipients.
“Unconscionable, jaw-dropping corruption,” tweeted Public Citizen, a nonprofit consumer advocacy group, in response to the news.
The Paycheck Protection Program has distributed more than $500 billion in low-interest and forgivable loans and is part of the gigantic Congressional spending effort to rescue businesses from the devastation of the coronavirus pandemic.
PPP loans are intended for small businesses, many of which scarcely have the savings to weather a global economic downturn. Businesses that receive the loans have several months to defer payments, and the government will forgive large portions of the loans if a business uses the bulk of the money to keep workers on its payroll.
As the U.S. experiences record unemployment, Republican and Democratic lawmakers alike have credited the program with staving off an even worse unemployment crisis.
But the program has also been plagued by design flaws and accusations of corruption.
The program doled out millions of dollars to dozens of large, publicly traded companies that didn’t qualify as small businesses or had other avenues for raising capital. Shake Shack, which in recent years was one of the fastest-growing restaurant chains in the country, received and return a loan worth $10 million.
The program also benefitted multiple companies with financial troubles that long predated the pandemic and executives which used the loans to shore up bonuses.
The Small Business Administration left it up to banks to determine who should receive loans, allowing some banks to prioritize their wealthiest clients. Meanwhile, mom-and-pop stores found themselves in a mad dash to apply before each round of money dried up.
“I can count on one hand — literally on one hand — the number of businesses in my district who have received assistance,” Rep. Adriano Espaillat (D-N.Y.), who represents upper Manhattan, complained after the first round of loans.
Without adequate oversight, public watchdogs have noted, it would be easy for the money to follow existing trends of inequality.
“We need to know if there are racial or ethnic or gender implications of who got this money to understand its impact on inequality,” Amanda Fischer, policy director at the Washington Center for Equitable Growth, told HuffPost in April.
To give more minority communities access to the loans, secondary rounds of the loan program set aside some money for small community banks.
But Republicans in Congress have resisted demands from Democrats to show where the bulk of the money is going.
Rep. Katie Porter (D-Calif.) and Sen. Kamala Harris (D-Calif.) are now calling for all loans made under the program to be made public.
“Full transparency of PPP data is the only way to quickly and fairly show who is using this program to line their pockets,” Porter said in a statement.
Molly Redden
Senior Politics Reporter, HuffPost
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