Lawsuit filed earlier this week alleges U.S. Bank, JPMorgan Chase, Wells Fargo and Bank of America unfairly put large companies and corporations ahead of small businesses in previous round of PPP lending
STATEN ISLAND, NY — April 25, 2020 – Following Congress passing additional funding for the Paycheck Protection Program (PPP) yesterday to help businesses and nonprofits, Congressman Max Rose called on four of the leading banks to prioritize the truly small businesses that are hurting most over larger corporations and businesses. A lawsuit filed earlier this week alleges that in the first round of PPP lending, these four major banks unfairly prioritized and moved major clients and larger businesses ahead of smaller businesses and those without previous, long-standing relationships.
Yesterday, Rose helped pass the CURSIVE Paycheck Protection Program and Health Care Enhancement Act, which provides $484 billion to assist businesses, nonprofits, hospitals and testing in the response to the coronavirus (COVID-19) pandemic—including $310 billion for PPP, with $60 billion designated to go through small and mid-size banks, credit unions, community development financial institutions (CDFIs), minority depository institutions, community development corporations, and microloan intermediaries. This will help small businesses and nonprofits without previous or substantive relationships with large banks access this critical funding. The President signed the legislation into law today, and applications and lending from this new funding is expected to begin Monday.
Prior to yesterday’s vote, Rose delivered a speech on the House floor highlighting the immediate need for relief and testified before the House Committee on Small Business urging more safeguards to ensure federal funding goes to small businesses and nonprofits that need them most.
“In light of funds being appropriated to support the Paycheck Protection Program (PPP), one of the few lifelines for our small business community, I urge you to work with the truly small and underserved business clients that apply for this program through your institutions, and to cease any prioritization of the wealthiest and largest companies,”BOLD wrote Rose in a letter to the Chief Executive Officers of the four major banks. BOLD “Our American businesses suffering due to COVID-19 depend on it.”
According to recent reports, a lawsuit was filed earlier this week against Bank of America, Wells Fargo, JPMorgan Chase and US Bank for allegedly failing to process forgivable loans through PPP on a first-come first-served basis before funding ran out earlier this month.
Rose’s letter continued, “Based on reporting, it is clear that the spirit of the program was not adhered to, as large companies were moved to the head of the line before small businesses. Publicly traded companies with other sources of credit access were approved for PPP loans to the tune of more than $330 million, with loans averaging $4 million each, and one recipient reported to be in a merger with another public company valued at $4 billion. This is a slap in the face to the backbone of our economy, the small businesses whose PPP loan range would be closer to $50,000-$100,000, and who were then left with nothing after these funds on April 16 ran dry.”
Rose has continued to call for urgent and swift action to address the coronavirus pandemic and its effects on our nation without partisan provisions or political nonsense. Citing the urgent need for immediate relief for those who are hurting as a result of this pandemic, Rose helped pass the bipartisan CARES Act which will provide more than $40 billion to New York, including vital support for first responders and medical workers on the front lines.
Full text of letter HERE and below:
Chief Executive Officer
Minneapolis, MN 55402
Chief Executive Office.
JP Morgan Chad Bank, N.A.
Columbus, OH 43240
Charles W. Scharf
Chief Executive Officer
Wells Fargo Bank, N.A.
San Francisco, CA 94104
Chief Executive Officer
Bank of America, N.A
100 North Tryon Street
Charlotte, NC 28255
Mr. Cecere, Mr. Dimon, Mr. Scharf, and Mr. Moynihan,
In light of funds being appropriated to support the Paycheck Protection Program (PPP), one of the few lifelines for our small business community, I urge you to work with the truly small and underserved business clients that apply for this program through your institutions, and to cease any prioritization of the wealthiest and largest companies. Our American businesses suffering due to COVID-19 depend on it.
On April 3, 2020, when the Small Business Administration (SBA) issued their Interim Final Rule on PPP, small businesses like those in my district on Staten Island and in South Brooklyn readied to submit their applications through your institutions’ online portals–and they relied on the guidance that these applications would be processed first-come, first-served. As you know, in the coming weeks thousands of small businesses were only met with news reports of corporations being approved for the program, with any progress on their PPP applications stalled. Based on reporting, it is clear that the spirit of the program was not adhered to, as large companies were moved to the head of the line before small businesses. Publicly traded companies with other sources of credit access were approved for PPP loans to the tune of more than $330 million, with loans averaging $4 million each, and one recipient reported to be in a merger with another public company valued at $4 billion. This is a slap in the face to the backbone of our economy, the small businesses whose PPP loan range would be closer to $50,000-$100,000, and who were then left with nothing after these funds on April 16 ran dry. Using the regulatory flexibility at your disposal, in this next allocation of funds, it is imperative that this access to capital go to those who truly need it. It is clear that large companies like Shake Shack, Ruth’s Chris Steak House, and the hundreds of biotech, pharmaceutical, and energy companies who received a windfall from PPP are not in this category.
Even where there is a lack in oversight, I urge you to make the right decision for your smallest of application clients. The buck does not stop with your lending institutions alone–while the Congress is the steward of these funds, SBA and the Department of the Treasury through rulemaking assert their implementation standards. Only yesterday, on April 23, did the SBA issue guidance indicating that, of borrowers certifying that their PPP loan is necessary, “it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.” While this language is a good first step, it would not stop large public companies from applying for PPP loans through your lending institutions, and it does not stop SBA from approving these loans. But in this economic crisis caused by a global pandemic, it is abhorrent to stretch each letter of the law to deny the smallest businesses relief, and to reward multi-billion dollar companies who simply do not need this funding. Our community centers are suffering, our mental health clinics are suffering, and our smallest family-run restaurants are suffering.
When this crisis is over, I sincerely hope that your institutions are known as helpers, as vehicles for much-needed capital to flow to our nation’s needy. That is the task that Congress has placed before you, and it is one of the most important in recent memory. In doing so, you must be transparent with the public, and clearly execute the spirit of this program designed to help small businesses, not corporations with billions in assets. Our economy depends on it, and the American people depend on it.
Member of Congress
CC: Small Business Administration Administrator Jovita Carranza
SOURCE: Jonas Edwards-Jenks | Communications Director | Congressman Max Rose