WASHINGTON – Treasury Secretary Steven Mnuchin said Tuesday that any small business loan over $2 million will be subject to “full review” before it could be forgiven, as the Trump administration scrambled to address mounting criticism of a new program that some big companies and even the Los Angeles Lakers used to obtain taxpayer-backed loans.

Amid an outcry about large companies receiving the loans, the Lakers repaid the $4.6 million it borrowed. Mnuchin said in an interview on CNBC Tuesday that it was “outrageous” that the NBA franchise had obtained the money in the first place. It’s unclear if other professional sports teams received similar loans. The organizations aren’t required to disclose it, and the government has not provided any records.

In a subsequent interview on Fox Business, Mnuchin said firms that improperly took these loans could be subject to “criminal liability.”

The uproar came after the White House has rushed to disburse hundreds of billions of dollars in emergency spending, both through corporate bailout programs and also through things like $1,200 stimulus checks sent to millions of Americans. There has been very little government scrutiny of these payments, as the oversight structure that Congress put in place to monitor the money has remained mostly dormant.

The small business loans facing the most scrutiny came through the new Paycheck Protection Program that Congress created as part of its $2 trillion coronavirus relief bill in late March. The program was initially funded with $349 billion in taxpayer money and then last week Congress directed another $310 billion for the program. The Treasury Department said the initial $349 billion funded 1.6 million loans, but only several hundred were disclosed publicly, mostly by the companies themselves.

Hours after the Lakers’ loan was made public on Monday, President Donald Trump told reporters that he’d be open to having the names of all loan recipients disclosed publicly but hedged and said it should be studied by lawyers.


“I wouldn’t mind doing that,” he said. “I don’t know what the legal status of something like that – I would like to do that, as far as I’m concerned. I’m not involved in that process, but I would certainly like to have it listed. I’d have to find out if there’s a legal problem. But if there isn’t, I would do it gladly.”

The PPP was intended to help businesses with fewer than 500 workers stay afloat and keep employees on payroll, but loopholes allowed multiple larger businesses to tap into the program. Under the program, companies obtain loans from banks, and then the federal government will repay the loan if companies retain or rehire workers and meet other requirements. Little scrutiny goes into borrowers at the beginning of the process, however, and firms are required to “self certify” that they meet the requirements.

Mnuchin said he would be announcing additional review by the Small Business Administration to ensure the loans are being used as intended.

“I’m going to be putting out an announcement this morning that for any loan over $2 million the SBA will be doing a full review of that loan before there is loan forgiveness, so we will make sure that what is the intent for taxpayers is fulfilled here,” Mnuchin said, while insisting that the program has been an “overwhelming success” and that a million loans had gone to companies with fewer than 10 workers.

Details on how the new review would be conducted were not immediately available.

The Paycheck Protection Program, initially funded at $349 billion, was swamped by demand and ran out of money within weeks. Last week Congress passed a new bill adding $310 billion to the program, but that money, too, is expected to be quickly exhausted.


Since banks and lending institutions are the ones that actually distribute the money, the SBA has said it has no way of knowing who the recipients are and cannot make that information public. As a result, information about larger organizations like the Lakers, Shake Shack and Ruth’s Chris Steakhouse that have gotten loans has all come to light through media reports and searches of public securities filings, not through any mandated disclosure.

The situation has angered lawmakers of both parties. On Friday, Senate Minority Leader Chuck Schumer, D-N.Y., and other key Senate Democrats released a letter calling on the SBA inspector general, Mike Ware, to investigate reports that “some lenders participating in the SBA’s Paycheck Protection Program have prioritized the applications of their larger and wealthier clients to the detriment of smaller businesses adversely impacted by the coronavirus pandemic.”

“The lack of a prior relationship with a larger bank should not stand in the way of lending to small businesses that are truly small, unbanked, underserved, minority or woman-owned,” the senators wrote.

The $2 trillion Cares Act passed last month, which created the PPP, established a new inspector general, a congressional oversight panel, and a consortium of inspector generals to monitor funding. But none of those entities is currently operational and the public has received scant information about who is getting the money.

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