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The Finance 202: Trump administration's small business rescue has a rocky rollout. Again.

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with Brent D. Griffiths

The hits keep coming for the Paycheck Protection Program.

The Trump administration’s push to save small businesses ravaged by the coronavirus shutdown just suffered its third miserable round of headlines this month. The rollout of an extra $310 billion for forgivable loans was beset by technical glitches and a renewed bout of finger-pointing.

Depending on whom you ask, the effort is either an imperfect but undeniable success in delivering rescue funds to 1.6 million businesses and counting – or a mismanaged disaster unto itself.

This week's headaches started as soon as the Small Business Administration reopened the online portal on Monday for banks to submit loan applications. The portal, called E-Tran, crashed within the hour. It continued melting down throughout the day, as banking officials took to Twitter to register their frustration:

The snarl felt like a reprise of the initiative’s botched debut earlier this month, when banking officials howled over similar foulups with the online process; blown deadlines for guidance from the administration; basic, unanswered questions about the terms of the loans and their own due diligence responsibilities.

And it has endured a rolling series of anger-stoking stories about publicly-traded companies securing multimillion-dollar help through big banks while mom-and-pop operations remained locked out. 

Monday brought another: The Los Angeles Lakers confirmed they received a loan through the program — and would return it. “The Lakers’ decision to return the loan, which was for $4.6 million, comes after the SBA said Monday that more than $2 billion in small-business loans to companies during the first round of funding has already been returned or declined by companies,” Aaron Gregg, Renae Merle, and Ben Golliver report.

It didn’t have to be this way.

Looked at through the administration’s preferred lens, the program has been moving at speeds the federal government typically can’t contemplate to open a gusher of relief all over the map. 

It's true: The fact that the PPP is on track to deliver $660 billion in roughly a month is in itself a huge feat. That’s almost as much as the entire Recovery Act doled out to stem the economywide carnage during the Great Recession. Compounding the challenge, it is squeezing through the eye of a Washington needle: the volume of loans the SBA is handling in this compressed time frame is more than twenty times greater than it processed over the course of last year.

And despite the attention the loans secured by publicly traded companies have received, they make up a fraction of a percent of what the program has delivered, according to a Strategas analysis:

Then again, per my colleagues: “Nearly 80 percent of the small businesses that applied for a loan were still waiting for an answer when the first round of funding ran out, according to a survey by the National Federation of Independent Business.” 

The record of some biggest lenders bears that out. “Bank of America, for example, reported receiving 279,000 applications in the first five days of the program launching, of which it processed at most 15%, based on a Reuters analysis of SBA disclosures,” Pete Schroeder and Michelle Price of Reuters report. “JPMorgan, the top lender in the first round, said it had 300,000 loan applications in train of which it had processed 10% by the time the first round of funds ran out.”

One participant's experience highlights the program’s mixed record.

I first checked in with Caroline Devoy, a Houston CPA, at the beginning of the month as she was helping steer ten clients through the process. At the time, two days after the SBA started accepting applications, all ten had managed to submit them but none had heard back.

Now, she tells me, five have received loans, three have been told they are in line to receive help from this second tranche of PPP funding, and two are still in limbo. “A part of me thinks it’s ridiculous they couldn’t do this properly,” she says of the program’s managers. “Another part of me thinks it’s significant they were able to do it at all.” 

She continues: "And for my clients that are getting it, it truly is the difference between them making it and laying everybody off, because that’s what they were going to have to do.”

Given the program’s speed, “I’m hoping somebody does a postmortem on it. Probably [allowing applications from companies with] 500 employees is a little high,” she said. 

The administration has already acknowledged as much, moving to tighten restrictions on who can apply in an attempt to squeeze out bigger companies. And Congress earmarked $60 billion of the second round of funding for smaller lenders to administer.

The PPP faces more turbulence ahead.

Just as the Federal Aviation Administration doesn’t get credit for every plane that lands safely, the small business rescue effort will continue to be judged by its failures. Beyond the new technical issues:

  • It is already expected to burn through its second round of funding in a matter of days, people close to the program tell my colleagues. It isn’t clear if or when it could get refunded again.
  • The SBA faces growing pressure to provide transparency it has so far rejected into who has received loans. Trump added his voice Monday to those calling for the beneficiaries to be named. That should set off more recriminations about companies that took what is essentially free money despite having access to other capital.
  • Some public companies already are resisting pressure from the administration to return loans, Jeanne Whalen, Aaron Gregg and Michelle Ye Hee Lee report: “Companies in the hotel, cruise ship and medical-device sectors said they are qualified to receive the money under the [PPP] and need the funds to stay in business.”
  • Banks are also under scrutiny over how they processed applications amid reports they prioritized big, connected clients. Sen. Marco Rubio (R-Fla.) has asked big bank executives to provide detailed explanations of their methods.
  • And banks will continue to earn what look like handsome fees for their effort originating the loans. They pulled down some $10 billion for their work in the first round even as they faced lighter burdens than usual vetting applicants, an NPR investigation found.
  • Minority and women-owned businesses have found themselves disproportionately stiffed, with an estimate by the Center for Responsible Lending finding as many as 90 percent were shut out of the first round.

The bottom line: As long as the banking industry is teamed up with the Trump administration at the program’s helm, it is unlikely to earn widespread acclaim. 

Market movers

Oil prices are plunging again. Bloomberg's Sharon Cho and Alex Longley: "Crude whipsawed near $11 a barrel after a major index tracked by billions of dollars in funds bailed out of near-term contracts for fear prices may turn negative again. June futures fell as much as 21% in New York before paring some of the decline to trade 8.8% lower…

“Oil has dropped about 80% this year as the coronavirus outbreak vaporized demand for everything from gasoline to crude. The world’s biggest producers have pledged to slash daily output starting next month to balance the market, but the collapse in consumption has led to a swelling glut that’s testing storage limits worldwide. U.S. producers have started delivering crude to the nation’s emergency stockpile as commercial space runs out.”

Stocks rallied. WSJ's Anna Isaac, Xie Yu and Akane Otani: “Stocks rose Monday, with investors betting that stimulus measures and the easing of coronavirus-lockdown measures around the world could help kick-start economic activity… The Dow Jones Industrial Average gained 358.51 points, or 1.5%, to 24133.78. The S&P 500 added 41.74 points, or 1.5%, to 2878.48 and the Nasdaq Composite advanced 95.64 points, or 1.1%, to 8730.16."

Goldman: Investors could be looking through the pandemic's economic fallout. “U.S. stocks may be able to look through a dismal earnings season or two, and the deepest economic contraction in modern history, according to analysis by Goldman Sachs Group Inc,” Bloomberg's Gregor Stuart Hunter reports. “That’s based on historical analysis that suggests equities price in macroeconomic performance over a two-year horizon. As long as projections are -- as they indeed are now -- for the economy to rebound after the current and coming period of pain, then stocks don’t need to fall, the Wall Street bank concluded.”

The reopening debate

The White House is leaving states in charge of testing.

But pressure is mounting on the administration to take the lead: “Governors, congressional leaders and public health officials have pressed for a robust testing plan from the federal government, insisting that frequent and widespread testing is crucial to ending the stay-at-home orders that have idled businesses across much of the country. Trump responded Monday by announcing what the White House called a ‘blueprint’ for increasing testing capacity," Mike DeBonis, Chris Mooney and Juliet Eilperin report.

“But it leaves the onus on states to develop their own plans and rapid-response programs. A White House document said the federal role would include ‘strategic direction and technical assistance,’ as well as the ability to ‘align laboratory testing supplies and capacity with existing and anticipated laboratory needs.’… The administration’s top testing official, meanwhile, promised that the United States would conduct at least 8 million tests a month by the end of May.”

Vice President Pence on April 27 dismissed a question about his previous testing promises, saying he meant only that those tests would be available. (Video: The Washington Post)

The White House is preparing to release more guidance: The most detailed guidance to date on the administration's plan concerns “the phased reopening of schools and camps, child-care programs, certain workplaces, houses of worship, restaurants and mass transit, according to documents under review by administration officials,” Lena H. Sun and Josh Dawsey report.

“The guidelines have sparked sharp debates within the administration between public health experts and other officials who fear the guidelines could restrict worship services, damage the profitability of restaurants and upend daily life in a way they deem unnecessary.”

More states begin to reopen: “Texas, Ohio and other states took steps to ease lockdown orders and reopen their battered economies, as reported U.S. coronavirus cases neared one million,” the Wall Street Journal's Jennifer Calfas, Elizabeth Findell and Newley Purnell report.

“After weeks of closures and social-distancing orders in the U.S., states from Mississippi to Tennessee to Colorado began to permit some businesses to reopen Monday, welcoming customers back and letting some employees return to work. Over the weekend, some businesses had resumed in Georgia, Oklahoma, Alaska, Texas and South Carolina, with social-distancing measures in place.”

Coronavirus fallout

In the U.S.:
  • At least 984,000 cases have been reported; 55,681 people have died.
  • Trump's intel briefings warned of the virus for months: “U.S. intelligence agencies issued warnings about [the virus] in more than a dozen classified briefings prepared for [Trump] in January and February, months during which he continued to play down the threat, according to current and former U.S. officials,” Greg Miller and Ellen Nakashima report.
  • The Fed is expanding aid to local governments. “The Federal Reserve said Monday it would broaden the number of local governments from which it will buy debt through a forthcoming lending program,” WSJ's Nick Timiraos reports. “The Fed will allow one borrower for each county of at least 500,000 people and city of at least 250,000, down from earlier cutoffs of 2 million and 1 million, respectively.”
  • School leaders plot unprecedented changes for the fall: “Many overwhelmed school systems remain focused on running remote education that was set up on the fly. Others, though, are deep into planning for what they see coming: an in-between scenario in which schools are open but children are spread out in places where they are normally packed together,” Laura Meckler, Valerie Strauss and Moriah Balingit report.
Corporate impact:
  • We're on the cusp of a meat shortage: “Plant shutdowns are leaving Americans dangerously close to seeing meat shortages at grocery stores. Meanwhile, farmers are facing the likely culling of millions of animals and mass burial graves could soon be dug across the heartland," Bloomberg's Michael Hirtzer and Jen Skerritt report. “'The food supply chain is breaking,' said John Tyson, chairman of Tyson Foods Inc., the biggest U.S. meat company.”
  • Tech giants are amassing power after previously being under threat: “As many start-ups collapse, tech giants will expand on the power they’ve accumulated using the playbook of the last decade: snapping up talent, buying or copying rivals, and eroding traditional industries. Some of those weakened companies may disappear altogether and cede even more territory to tech,” Elizabeth Dwoskin reports from San Francisco.
  • Apple delays mass production of iPhones: “Apple Inc. is pushing back the production ramp-up of its flagship iPhones coming later this year by about a month, according to people familiar with the changes, as [the pandemic] weakens global consumer demand and disrupts manufacturing across Asia, the heart of the consumer electronics supply chain,” WSJ's Yoko Kubota reports.
  • GM suspends dividend, share buybacks: “GM, which has been forced to shut some production in North America along with other car makers, had earlier said it has postponed work on at least half a dozen future models to conserve cash during the pandemic,” Reuters's Ankit Ajmera reports.
  • Secret group of scientists and billionaires act as backdoor to the White House: “This group, whose work hasn’t been previously reported, has acted as the go-between for pharmaceutical companies looking for a reputable link to Trump administration decision makers. They are working remotely as an ad hoc review board for the flood of research on the coronavirus, weeding out flawed studies before they reach policy makers,” WSJ's Rob Copeland reports of “Scientists to Stop Covid-19.” "The eclectic group is led by a 33-year-old physician-turned-venture capitalist, Tom Cahill."
  • Verizon, AT&T and Comcast will not cancel customers or charge late fees through June 30: “Comcast said in addition to extending the commitment through June 30 and making its Wi-Fi hotspots available for anyone who needs them, it would extend a pause in its data plans to give all customers unlimited data for no additional charge," Reuters's David Shepardson reports. "Other major U.S. internet and wireless companies are expected to announce this week they too are extending the commitments through June."
Around the world:
  • Trump's WHO funding freezes gives China an opportunity: “But his largely unpopular decision this month to suspend funding to the global health agency for 60 days in the middle of a pandemic could have impacts that reverberate beyond the current crisis: Enhancing China’s standing in the world while reinforcing perceptions of the United States as an unpredictable partner,” Emily Rauhala reports.
  • Airbus to furlough over 3,000 staff in Wales: “Airbus has given its starkest assessment yet of damage from the crisis, telling the company’s 135,000 employees to brace for potentially deeper job cuts … Earlier this month, the group said it would furlough some 3,000 French workers by tapping a government-backed scheme for four weeks,” Reuters's Alistair Smout reports.
  • Fiat Chrysler resumes some Italian operations: Fiat Chrysler resumed van production on Monday at its Atessa plant in central Italy, a week before the country plans to start lifting a national lockdown ….,” Reuters's Giulio Piovaccari reports. “… Some businesses deemed ‘strategic’ and exporting companies were allowed to resume activity sooner to reduce the risk of being cut out of the production chain and losing business.”

Money on the Hill

House and Senate are at odds over what should be in the next phase.

McConnell signaled he might support some aid for states: “Senate Majority Leader Mitch McConnell (R-Ky.) released a statement confirming his intention to bring the Senate back into session May 4 and said his top priority would be ‘strong protections from opportunistic lawsuits’ for health-care workers and businesses,” Erica Werner and John Wagner report

“House Majority Leader Steny H. Hoyer (D-Md.) told Democrats on a conference call that the House, too, would be reconvening May 4. Earlier, House Speaker Nancy Pelosi (D-Calif.) said Congress might need to consider offering a guaranteed income to some Americans … Pelosi’s spokesman, Drew Hammill, dismissed McConnell’s call for liability protection, saying: ‘The House has no interest in diminishing protections for employees and customers.’

  • More on McConnell opening the door to state aid: “[The majority leader] said it would have to be done in a way to ensure the money goes to help them fight the coronavirus, not for general budgetary purposes as some governors have requested.” Governors, including New Jersey Gov. Phil Murphy (D), have previously complained that such restrictions on Cares Act funding made it too difficult to use.
  • Trump seems to be coming around to the GOP's position:

Pocket change

Supreme Court hands insurance companies a major victory.

The federal government may have to fork over up to $12 billion now: “The government must make good on its promise in the Affordable Care Act to subsidize insurance companies for offering low-premium policies to at-risk customers … Congress has balked at making the payments to insurance companies, but the court decided 8 to 1 that refusing to pay was not an option," Robert Barnes reports.

"The case had marked the Supreme Court’s fifth look at President Barack Obama’s signature domestic success. Unlike others — and another one the court will hear in the fall — it did not challenge the law’s underpinnings.

Polish airline may give Boeing rare good news: “Polish airline LOT is in talks with Boeing to modify its 787 Dreamliner jets into temporary cargo carriers, a LOT spokesman told Reuters …,” Anna Koper reports. “With passenger air travel virtually halted, airlines such as LOT are searching for alternative ways to generate revenue until demand picks up again.” 



  • 3M, Ford, Southwest Air, PepsiCo, Pfizer, Alphabet, BP, Caterpillar, UPS, Starbucks, Yum! China, Centene, Denny’s, UBS and TransUnion and Harley Davidson are among the notable companies reporting their earnings.


  • Q1 U.S. GDP numbers are released
  • The Fed concludes a policy meeting
  • Boeing, Carnival, Royal Caribbean, Yum! Brands, Facebook, General Electric, Valero Energy Microsoft, Spotify, Tesla, Aflac, Hasbro and eBay are among the notable companies reporting their earnings.


  • The Labor Department releases the latest jobless claims numbers
  • Amazon, Apple, American Airlines, Gilead Sciences, ConocoPhillips, McDonald’s, Hanesbrands  MGM Resorts, Molson Coors, Visa, Twitter, Whirlpool, Six Flags, Dunkin’, Kellogg and Planet Fitness are among the notable companies reporting their earnings


  • The Institute for Supply Management’s manufacturing index for April
  • Chevron, Clorox, AbbVie, Honeywell,  Phillips 66 and DISH Network are among the notable companies reporting their earnings


  • Warren Buffet's Berkshire Hathaway holds its annual shareholders meeting and announces its Q1 earnings 

The funnies

Bull session