Last Friday, the U.S. Treasury Department announced it would make public more information about businesses that received loans from the Paycheck Protection Program, the $670 billion federal effort to help employers hurt by the coronavirus-damaged U.S. economy.
The decision is a reversal from Treasury Secretary Steven Mnuchin’s previous position that the names of recipients would be confidential.
Several news organizations have sued to force the government to release data about the program, which has provided taxpayer money to 4.7 million small businesses. There also have been efforts in Congress to achieve greater transparency.
It should go without saying that it is a vital public interest to see how government money is spent. Already, big publicly owned companies have bellied up to the federal trough to get a chunk of the money using loopholes in the law. Once they were found out, many returned the funds. Still, many did not. In addition, there have been legitimate questions raised about how the money has been distributed. Of the $500 billion that’s been loaned out so far, a third has gone through just 34 big banks, according to the Financial Times. Critics of the program say it is shutting out some smaller, community banks and those that cater to low-income communities.
Initial information indicated that, in general, small businesses in Iowa had pretty good success at accessing the program compared with most other states, including Illinois. But we don’t know much beyond that. Without more information, there's no way to evaluate how that money has been used in our communities.
In response to the criticism, the Treasury Department last Friday said that it would release the names of companies that received $150,000 or more, along with other data.
The disclosures would not detail how much each entity got, but that information for a range of loans would be released. For example, the names of companies and other data would be made public for those entities that got loans in the $150,000 to $350,000 range, $350,000 to $1 million, $1 million to $2 million, $2 million to $5 million and $5 million to $10 million. The government says the disclosures would cover 75% of the money loaned out. It did not say when that information would be released.
Even so, the new policy still will keep a lot of information secret. Rep. James Clyburn, D-South Carolina, said that the disclosure would still keep confidential the names of more than 80% of recipients, presumably meaning those that have received loans of less than $150,000.
This is troublesome. Politico reported last week that four members of Congress, including members of both major parties, have ties to businesses that have been recipients of PPP loans, and that congressional aides said many more likely are benefiting. If so, this is outrageous. We know some businesses have had difficulty getting money; the idea that lawmakers who created the fund would be in line ahead of them is unconscionable.
Sen. Joni Ernst, R-Iowa, says she is introducing legislation to force members to disclose whether they or their families benefited from the program. That's a good idea, but it doesn't go far enough. More robust disclosure, in the public and private sectors, is vital.
Early on, it was clear that some companies that had ready access to cash were getting money from this program. The government then took steps to try to put a stop to it.
How successful have these efforts been? Have the larger banks that controlled distribution of much of this money been fair to applicants?
Without adequate disclosure, it is impossible to answer these questions. We believe the Treasury Department, after initial resistance, took a needed first step toward accountability, and we are hopeful that it acts quickly to release the information it has promised. But lawmakers and the public should continue to press for a fuller accounting.
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