Sub-committee survey: Treasury hindered CDFI’s participation in PPP
The Trump administration threw roadblocks in front of community development finance institutions that wanted to participate in the Paycheque Protection Program in its early days, while at the same time encouraging the biggest banks to give loans to their best customers, a House subcommittee accused Friday.
“As a result of these delays and challenges, many small minority and women-owned businesses that traditionally rely on CDFIs and [Minority Depository Institutions] had difficulty securing PPP loans during the critical first phase of the program, “staff of the Democratic-controlled House selection subcommittee on the coronavirus crisis said when the results of their inquest were released. the PPP program.
At the same time, “the Treasury has encouraged private banks to limit their PPP loans to existing clients, excluding many minority and women-owned businesses,” the subcommittee said. “Documents obtained by the subcommittee show that the Treasury privately told lenders to ‘go to their existing customers’ when issuing PPP loans.”
CUNA Advocacy Chief Ryan Donovan said the findings of the subcommittee’s investigation are not surprising.
“The challenges that credit unions and other small lenders have faced as they navigate PPP and the archaic SBA system have been well documented,” he said. “It was so difficult at times that they had to shut down the system for the big lenders in order to allow the small lenders to process the loan applications. So when you think about all of these issues and the delays in starting the forgiveness process, the report’s findings, while incredibly disappointing, are sadly not surprising.
The subcommittee reported that CDFIs and MDIs were largely excluded from the first cycle of PPP loans. During this first round, these institutions granted only 65,000 loans out of 1.67 million. It was only later that the Trump administration set aside P3 funds for these lenders.
Banking officials told the subcommittee that the Treasury wanted banks to lend to their existing customers, with one JPMorgan official telling the panel that “From the start, the Treasury understood that banks were working with existing customers.” .
The report says Treasury Department officials have denied the allegation.
The panel said the Treasury and the Small Business Administration should issue clear guidelines asking financial institutions to prioritize underserved markets in a manner consistent with fair lending laws.
The subcommittee also said that if Congress were to extend the PPP, Trump administration officials should work with CDFIs and MDIs to ensure they are equipped to handle additional loan volume and have the necessary resources. ‘technical assistance to process new loan requests.