The Wall Street Journal - USA (2020-12-03)

A4| Thursday, December 3, 2020 PWLC101112HTGKRFAM123456789OIXX ** THE WALL STREET JOURNAL.

right direction. “They’ve gotten
reasonable and I think that
could help us get to a solution,”
he said.
Senate Majority Leader
Mitch McConnell (R., Ky.) didn’t
comment on the Democratic
leaders’ statement, but he said
earlier in the day that they
were showing “a new willing-
ness to engage in good faith.”
GOP leaders haven’t yet pub-
licly moved toward Democrats
in the renewed negotiations.
Earlier Wednesday, Treasury
Secretary Steven Mnuchin said
the White House backed the
GOP offer released Tuesday.
That proposal, similar to Sen-
ate Republicans’ previous
$519 billion bill, includes more
funding for small businesses,
legal protections for entities
operating during the pandemic
and a one-month extension of
expanded unemployment-insur-
ance programs that expire at
the end of December. It doesn’t
include Democrats’ desired
funding for state and local gov-
ernments.
“The president will sign the
McConnell proposal that he put
forward yesterday,” Mr.
Mnuchin said Wednesday. Mr.
Mnuchin said the White House
was reviewing the new biparti-
san proposal. President Trump
hasn’t weighed in on the dis-
cussions.
On the Senate floor Wednes-
day, Mr. Schumer said Mr.
McConnell “should not waste
the Senate’s time on another
inadequate, partisan proposal,
and instead should sit down
with Democrats to begin a true,
bipartisan effort to quickly
meet the needs of the country.”
While most lawmakers have

ContinuedfromPageOne

Stimulus

Talks Gain

Momentum

long agreed more aid is needed,

many feel more urgency now.

Legislative time is running out,

the pandemic is accelerating

across the country and a slew

of relief proposals approved

earlier this year are set to ex-

pire at month’s end, including

unemployment insurance and

expanded paid family and sick

leave. A new Federal Reserve

report said economic growth

began to slow last month in

parts of the Midwest and

Northeast as coronavirus cases

proliferated.

In part, Democrats are will-

ing to scale back their demands

for the next aid package be-

cause they know President-

elect Joe Biden will push for

more funding next year, aides

said, giving them a potential

second shot at more aid.

On Wednesday Mr. Biden, a

Democrat, said that any relief

package passed during the

lame-duck session “at best is

only going to be a down pay-

ment on what’s going to hap-

pen early next year.” He said

his transition team “is already

working on what I will put for-

ward in the next Congress to

address the multiple crises we

are facing, especially the eco-

nomic crisis and Covid.”

Some Democrats who

weren’t part of crafting the bi-

partisan proposal signaled sup-

port for it, including Sen. Chris

Murphy of Connecticut. Shortly

after being sworn in Wednes-

day, new Sen. Mark Kelly (D.,

Ariz.) said relief shouldn’t wait

until next year. “Compromise is

always a positive thing and we

need a bipartisan approach to

this,” he said.

The bipartisan plan, initially

unveiled with the backing of

nine senators and the 50 mem-

bers of the Problem Solvers

Caucus in the House, was also

drawing new support from

more Republicans. Sen. Shelley

Moore Capito (R., W.Va.) said

Wednesday she would back it.

Sen. Rob Portman (R., Ohio)

called it “within the range of

what most people would sup-

port” on Fox News Wednesday.

The bipartisan proposal

would run through March. It

includes $160 billion in state

and local funding, sought by

Democrats, and gives a nod to

a top Republican priority: legal

protections for businesses and

other entities. Lawmakers said

they would provide a short-

term suspension of liability

lawsuits related to Covid-19 at

the state or federal level, giv-

ing states time to put in place

their own protections.

The proposed package also

includes $288 billion for small-

business relief, including for

the Paycheck Protection Pro-

gram, $16 billion for the distri-

bution of a coronavirus vac-

cine, $82 billion for schools,

$25 billion for rental assistance

and $180 billion for additional

unemployment insurance, in-

cluding $300 a week through

March, aides said.

Lawmakers hope to attach

any coronavirus relief to a full-

year spending bill they are try-

ing to pass before current

funding expires on Dec. 11.

Few lawmakers want to lin-

ger in the Capitol beyond what

is necessary. House Majority

Leader Steny Hoyer (D., Md.)

said Wednesday that congres-

sional leaders hoped to finish

up by the end of next week to

give lawmakers time to quar-

antine before Christmas.

—Natalie Andrews

and Ken Thomas

contributed to this article.

Senate Majority Leader Mitch McConnell at the Capitol Wednesday, as lawmakers worked to hammer out a virus-relief bill before the end of the year.

STEFANI REYNOLDS/BLOOMBERG NEWS

U.S. NEWS

cision. I was merely imple-

menting the Cares Act,” Mr.

Mnuchin said, echoing com-

ments he made on Tuesday

before the Senate Banking

Committee.

Mr. Mnuchin also said that

the programs weren’t needed

anymore and that the money

he hadn’t approved for the

programs, as well as other

funds that wouldn’t be needed,

would be better used on an-

other pandemic relief bill.

Mr. Mnuchin said he had ex-

plained his reasoning and un-

derscored that his decision

wasn’t politically motivated in

a recent phone call with Janet

Yellen, who is President-elect

Joe Biden’s nominee to serve

as the next Treasury secretary.

He said she didn’t express an

opinion during the call.

The Treasury Department’s

decision last month to allow

loan backstops for corporate,

municipal and other credit

markets, as well as a program

to support lending to small and

midsize businesses and non-

profits, to expire on Dec. 31

touched off a partisan fight

over whether and how the Bi-

den administration should be

allowed to use the programs.

Republicans defended Mr.

Mnuchin’s decision at Wednes-

day’s hearing and compli-

mented the Fed and Treasury

in their crisis response.

Democrats see the pro-

grams as a potential tool for

the Biden administration to

deliver more aid to hard-hit

businesses, cities and states if

Congress doesn’t act to ap-

prove more spending.

“There is simply no justifi-

able reason to take these tools

away,” said Rep. Maxine Wa-

ters (D., Calif.), chairwoman of

the House Financial Services

Committee, before which Mr.

Mnuchin and Federal Reserve

Chairman Jerome Powell ap-

peared.

The Fed issued a rare objec-

tion to Treasury’s decision last

month, saying it would have

preferred to extend the pro-

grams until the pandemic cri-

sis had passed.

“We were concerned that

the public might misinterpret

[the Treasury’s decision] as

the Fed stepping back and

thinking our work is done,”

Mr. Powell said on Wednesday

before the same committee.

“We needed to send a signal to

the public to that effect.”

Mr. Powell, who has a law

degree, declined to say if the

Fed agreed with the Treasury’s

reading of the law. “We don’t

have a role in reading it,” he

said.

Mr. Mnuchin also asked the

Fed last month to return

around $170 billion that the

Treasury had previously com-

mitted, and Mr. Powell had said

he would do so even though

the Fed isn’t legally obligated.

Democrats sparred with Mr.

Mnuchin, who at times leafed

through a large binder contain-

ing the Cares Act, over his legal

interpretation. “You’re claiming

falsely...what the law says, and

you’ve gotten into a disagree-

ment with [Mr. Powell], who is

actually a lawyer,” said Rep.

Katie Porter (D., Calif.).

Legislative proposals Repub-

licans have made in recent

months to rescind the lending

programs in January 2021

wouldn’t have been necessary

if the Cares Act actually re-

quired what Mr. Mnuchin said

it had, Ms. Waters said.

Separately, Mr. Powell said

that despite the prospect that

vaccinations could boost the

economy by the spring, it was

too soon for the Fed to con-

sider pulling back its support.

“We’re not going to until we

feel confident that it’s no lon-

ger necessary,” he said.

In addition to the emer-

gency loan programs, the Fed

this year has cut its short-term

benchmark rate to near zero

and is purchasing $120 billion a

month in Treasury and mort-

gage-backed securities. The Fed

believes that adding to its asset

portfolio, or balance sheet, pro-

vides additional support to the

economy when interest rates

are pinned near zero.

“The time will come to start

thinking about balance-sheet

issues,” Mr. Powell said. “It’s

well into the future. We know

how to do it, and that’s slowly

and carefully.”

WASHINGTON—Treasury
Secretary Steven Mnuchin de-
fended his decision to allow a
suite of emergency lending
programs to expire at the end
of the year against criticism
from Democrats who said he
had misinterpreted the law
that enabled them.
At a House oversight hear-
ing on Wednesday, Mr.
Mnuchin said the $2 trillion
Cares Act pandemic relief bill
that Congress approved on a
bipartisan basis in March
didn’t allow him to extend five
emergency loan programs. The
Fed and Treasury had estab-
lished those programs with
some of the $454 billion Con-
gress had made available in
the law.
“This was not a political de-

BYNICKTIMIRAOS
ANDPAULKIERNAN

Mnuchin Defends Lending Programs’ End

closed in August.

The data also signal the dif-

ficulty of tracking borrower in-

formation in a massive pro-

gram where the responsible

agency didn’t issue loans di-

rectly. Financial institutions

processed PPP borrower appli-

cations and funded and dis-

bursed the loans, which are

backed by the SBA.

More than 900,000 records

didn’t have information on how

many jobs the loan supported

or reported zero jobs were sup-

ported, despite the mandate

that borrowers spend most of

their loan to keep workers on

payrolls. More than 3,000 re-

cords omit details on some part

of the borrower’s address. Sev-

eral dozen include no business

name.

An SBA spokesman said

cases where information such

as names and addresses are

missing indicate a lender didn’t

provide those details to the

agency’s system or the bor-

rower didn’t provide the infor-

mation to the lender. Borrowers

weren’t required to provide in-

formation on their applications

about the number of jobs sup-

ported or retained, the spokes-

man said.

U.S. District Judge James

Boasberg ordered the release of

the new information on PPP

borrowers in response to a law-

suit filed by news organizations

under the Freedom of Informa-

tion Act. Plaintiffs included

Dow Jones & Co., publisher of

The Wall Street Journal.

The SBA’s inspector general

said in October there were

“strong indicators of wide-

spread potential abuse and

fraud in the PPP.” The watch-

dog counted tens of thousands

of companies that received

PPP loans for which they ap-

pear to have been ineligible,

such as corporations created

after the pandemic began.

The PPP was a centerpiece

of the $2.2 trillion coronavirus

relief bill known as the Cares

Act, which was passed by Con-

gress in March. It offered for-

givable loans to small busi-

nesses and nonprofits,

independent contractors and

self-employed workers.

“SBA’s historically success-

ful Covid relief loan programs

have helped millions of small

businesses and tens of mil-

lions of American workers

when they needed it most,” an

SBA spokesperson said in a

statement about the new dis-

closures.

Congressional lawmakers

have also touted the program’s

success and issued proposals

to reopen it to offer further

assistance to ailing businesses

amid signs that the economic

recovery is cooling as winter

approaches. Treasury Secre-

tary Steven Mnuchin, in Sen-

ate testimony Tuesday, also

called for additional aid for

small businesses.

Several of the congressional

proposals have sought to ad-

dress what some small-busi-

ness owners, advocates and

lawmakers say were flaws in

the original program. A pro-

posed package from Senate

Majority Leader Mitch McCon-

nell (R., Ky.), for example,

would require companies tak-

ing a second PPP loan to dem-

onstrate a reduction in gross

revenues.

That would be a contrast

from PPP’s first iteration,

which lawmakers hastily de-

signed in an effort to get

money quickly to struggling

businesses. PPP applicants

were required to provide little

documentation and only had

to certify that economic un-

certainty made the loan re-

quest necessary to support

business operations.

Those relatively low barri-

ers helped spur an initial rush

for the program, and some of

the loans flowed to larger,

well-known brands that later

returned the funds after public

backlash.

Tuesday’s disclosures

showed some large restaurant

chains were among those bor-

rowers that received the pro-

gram’s maximum loan amount

of $10 million.

WASHINGTON—The Small

Business Administration’s re-

lease of new information on

borrowers under the Paycheck

Protection Program highlights

how money flowed to both

mom-and-pop businesses and

larger firms, and it raises ques-

tions about the agency’s ability

to track key information about

aid recipients.

The SBA’s disclosure Tues-

day provided the names, ad-

dresses and precise loan

amounts for millions of PPP

borrowers. The SBA had previ-

ously issued some detailed in-

formation for PPP loans above

$150,000, though the bulk of

the program’s loans were

smaller than that.

The new data show that 609

companies received the pro-

gram’s maximum loan amount

of $10 million. Such a loan size

would indicate a firm had a

larger number of employees,

since borrowers generally re-

ceived funding that amounted

to roughly two and a half times

their pre-pandemic average

monthly payroll.

The data offer the most de-

tailed look yet at the govern-

ment’s signature coronavirus

relief effort for small busi-

nesses, just as lawmakers again

consider whether to renew the

initiative. The program, which

started in April, had issued

more than five million loans to-

taling $525 billion when it

BYAMARAOMEOKWE

ANDANTHONYDEBARROS

Disclosures Show Breadth of PPP Loans

Money flowed to

both mom-and-pop

businesses and

larger firms.

every

one

deserves a decent

place to live.

Learn more at

habitat.org.