EXCLUSIVE: The top Republican on the House Subcommittee on the Coronavirus Crisis is urging committee Chairman James Clyburn to withdraw his investigation into the implementation of the Paycheck Protection Program at large banks, as the Trump administration has agreed to provide the information that panel Democrats requested.
Clyburn, D-S.C., who chairs the committee and serves as the House majority whip, last month launched an investigation, seeking documents and information on the disbursement of funds under the PPP from eight national banks, the Treasury Department and the Small Business Administration.
HOUSE PASSES EXTENSION TO PPP BUSINESS PROGRAM
But in a letter obtained exclusively by Fox News, Rep. Steve Scalise, R-La., who serves as the House minority whip, penned a letter to Clyburn on Thursday urging him to narrow his inquiry.
“Considering the exculpatory information obtained pursuant to your investigation, and the redundant and extraordinarily burdensome nature of your requests, we respectfully advise you to withdraw your allegations and close this inquiry with respect to the banks,” Scalise wrote.
Clyburn’s initial letter to the eight national banks requested that they and the administration “release the names of all PPP borrowers—as the SBA routinely does for similar loan programs.”
Scalise defended the administration, noting the Treasury Department agreed to provide that PPP data, “under conditions that reflect the legitimate concern that certain loan-level data should remain confidential because it contains proprietary information about millions of small businesses, and the salaries of sole proprietors and independent contractors.”
“There is no such agreement with the banks, which find themselves forced to choose between exposing their small business customers or withholding information from Congress,” Scalise wrote. “In light of the Treasury Department’s commitment to provide the data you requested, you should withdraw your request to the banks and allow them to focus on continuing to service PPP applicants.”
Meanwhile, Scalise went on to state that “the banks did not create a ‘two-tier’ system to benefit wealthy clients” as Clyburn had alleged in the beginning of his investigation.
“In fact, the banks submitted complete applications to SBA on a first-come, first-serve basis,” Scalise explained. “The banks in question had largely similar experiences in the days before and after the PPP launched.”
TREASURY DEFENDS NOT RELEASING PPP LOAN INFO, CITES SMALL BUSINESS PRIVACY CONCERNS
Scalise cited a series of staff briefings, where he claims the banks “described an ‘all hands on deck’ environment where thousands of employees worked day and night to implement the program in accordance with a constantly evolving set of guidelines.”
“These economic first responders developed the machinery that eventually allowed PPP to reach 4.8 million small businesses,” Scalise wrote. “The evidence shows the systems they built—in a matter of weeks—did not consider an applicant’s wealth, as you allege. In fact, bank staff who processed and submitted applications to SBA had no way to determine whether an application came from an existing client or a new customer.”
Scalise also accused Clyburn and committee Democrats of having “mischaracterized why banks were able to process applications from existing clients more quickly than those form new customers.”
“Simply put, the disparity is attributable to vetting requirements that apply to new customers,” Scalise wrote. “Those vetting requirements exist so the Treasury Department and financial institutions can detect and prevent money laundering and terrorism financing.”
Scalise went on to say that the banks confirmed that the requirement to collect and verify Bank Secrecy Act information from new customers “allowed applications from existing clients to move through the process faster.”
Meanwhile, Scalise referenced Clyburn’s initial letters to the Trump administration and to the banks, where he claimed that they “failed to reach ‘underserved and rural markets,’” and that large banks prioritized wealthy clients at the expense of ‘small businesses in underserved communities.’”
“The data show otherwise,” Scalise wrote, noting that nearly 210,000 PPP loans totaling $16.3 billion went to Community Development Financial Institutions and Minority Depositary Institutions.
Scalise’s letter comes as congressional Democrats have called on the Treasury Department and the Small Business Administration to release more information about the nearly 4.6 million recipients of PPP loans and grants, including the amount of money each small business received from the program — despite applications for the funds telling would-be recipients that their information would be kept private.
The PPP was created as part of the more than $2.2 trillion “Phase 3” stimulus package, known as the CARES Act. It ran out of funding in early April, spurring Congress to pass the “Phase 3.5” relief package to replenish the funds.
The House of Representatives quickly passed a bill Wednesday night to extend the window for business owners to apply for coronavirus relief loans through the PPP.
A day after the Senate unanimously approved the extension, the House also passed the legislation by unanimous consent, sending the bill to President Trump’s desk.
The deadline for small businesses to apply for coronavirus relief funds expired Tuesday, but the legislation would reopen the application process until Aug. 8.
During the pandemic, Congress allocated $659 billion to small businesses in PPP loans that could be converted to grants if they met certain requirements. Congress already passed legislation to loosen some of the restrictions on the loans that businesses found too burdensome given that many are still closed or operating at reduced capacity due to prolonged stay-home restrictions.
As of 5 pm Tuesday, the Small Business Administration had approved 4,866,647 loans worth roughly $521 billion across 5,459 lenders.
The average loan size was $107,199.
Fox News’ Marisa Schultz contributed to this report.