Mnuchin defends administration's pandemic response and urges approval of more aid
Washington — Treasury Secretary Steven Mnuchin defended the Trump administration's response to the economic crisis caused by the coronavirus pandemic while urging lawmakers to approve additional relief for millions of Americans struggling to pay rent and put food on the table.
In his first appearance before the House Select Subcommittee on the Coronavirus Crisis, Mnuchin also defended his department's implementation of the Paycheck Protection Program (PPP), a $659 billion initiative to provide loans to small businesses. A report released Tuesday by the subcommittee's Democratic majority found that thousands of loans were vulnerable to potential fraud or abuse, and urged Treasury to increase oversight of the program.
On another front, the treasury secretary said he doesn't support an extension of a federal moratorium on evictions, but does want to see assistance for cash-strapped renters. How that might be accomplished absent a larger deal on another round of relief isn't clear, but Mnuchin said the administration would be releasing more information soon.
"After the market closes, we will be releasing specific information from the administration on the moratorium. I think you will be pleased with the impact," Mnuchin testified. "We did have bipartisan agreement about putting more money for rental assistance. Again, we may differ on the amount. But I can say we have, I can say we have agreed with Democrats on the idea of providing money for rental assistance."
Negotiations on Capitol Hill for additional financial assistance have stalled, although the president has attempted to extend additional unemployment benefits through executive action. Mnuchin recognized the need for more aid from the federal government and said he is willing to negotiate with Democratic leaders.
"I very much agree with you and those other experts that more fiscal response is needed," Mnuchin said during the hearing. "I'm prepared to sit down with the speaker at any time to negotiate."
The report on the small business loan program by the subcommittee's majority staff acknowledged that PPP has "helped millions of small businesses and non-profit organizations stay afloat during the coronavirus crisis." However, it also said that "a lack of oversight and accountability" by the Trump administration "may have led to billions of dollars being diverted to fraud, waste, and abuse, rather than reaching small businesses truly in need."
"The administration should exercise additional oversight to ensure PPP funds have only gone to eligible businesses," the report said.
The program was established as part of the $3 trillion coronavirus relief bill passed in March and initially provided $349 billion in loans to small businesses. An expansion in April poured another $310 billion into the program, which is administered by the Small Business Administration (SBA). The SBA is a division of the Treasury Department.
Mnuchin defended the program, which did provide millions of Americans and businesses with assistance. Republicans on the subcommittee released their own report on Tuesday, calling the administration of PPP a "resounding success."
"President Trump and his administration worked day and night to ensure the Paycheck Protection Program worked as intended to protect Americans' jobs and keep our economy afloat during the pandemic," said Congressman Steve Scalise, the ranking member of the subcommittee. The GOP report noted that PPP helped keep millions of jobs afloat during the pandemic.
The newly formed panel launched an investigation into the implementation of the PPP in June, amid reports that larger companies were receiving loans intended for small businesses. The report said that the Treasury Department and SBA have only committed to auditing loans which exceed $2 million, leaving the vast majority of loans unexamined.
The analysis identified 10,856 loans which were granted to borrowers that received more than one loan, totaling more than $1 billion. Of these loans, only 65 would be subject to additional scrutiny. It also identifies more than 600 loans totaling over $96 million that went to companies that are forbidden from doing business with the federal government.
"The substantial number of PPP loans provided by SBA to suspended and debarred companies raises doubts about whether the SBA or Treasury consulted the government's list of debarred and suspended contractors before approving loans," the report said.
The report showed that more than 350 loans went to government contractors with "significant performance and integrity issues."
"Treasury and SBA guidance does not prohibit companies with poor contract performance from receiving PPP funds, but the significant volume of loans extended to companies with documented performance and integrity issues raises a question of whether nearly $200 million in taxpayer funds have been allocated responsibly," the report said.
Subcommittee staff also found red flags for more than 11,000 borrowers and $3 billion in loans when compared to a federal database of companies that do business with the government. Finally, the report found that SBA and Treasury approved hundreds of loan applications that lacked key information about the borrower.
The report recommended that Treasury and SBA tighten internal controls for loan forgiveness, expand oversight of borrowers and cooperate with congressional investigators and internal watchdogs.
"Treasury's cooperation with the Select Subcommittee's inquiry is vital to ensuring that the Subcommittee can fulfill its oversight responsibilities," the report said.
The pandemic has ravaged the American economy and left millions unemployed. Congressional Democrats and White House officials have been unable to reach a deal on a new economic stimulus package, allowing programs such as an expanded unemployment insurance benefit to expire. President Trump has taken executive actions to boost economic aid, but it is unclear how fully these measures will be implemented.
Kimberly Brown contributed reporting.