Government Failures Will Continue
Small business is supposed to start getting help Friday. Will they?
Tomorrow the program to help small businesses get access to rapid loans in response to COVID19 is supposed to launch. But as with everything that Trump is involved with, it appears to be in serious trouble.
Banks are warning that a $350 billion lending program for struggling small businesses won’t be ready when it launches Friday because the Trump administration has failed to provide them with the necessary guidelines and set requirements for the loans that are unworkable.
The lenders complain that Treasury Secretary Steven Mnuchin boxed them in with an unrealistic deadline and that the ground rules they’ve been given for the program, which is intended to deliver rapid aid to a huge number of ailing businesses, could delay the assistance for weeks or longer.
It appears the Treasury has really drug their feet on this. Just this past Tuesday, or 2 days ago, Treasury released new guidelines saying the loans won’t go exclusively through the Small Business Administration, but rather through any federally insured bank. So they gave the banks 2 days to get this going.
So how bad is it expected to be? Let’s go back to the original article:
The banks, which will be responsible for processing loan applications and doling out money, are expecting millions of applications from businesses. Some fear a disaster that could dwarf the failed kickoff of the Obamacare enrollment web site in 2013.
Or as Trump will coin it “the greatest success ever!”
And why are the banks so worried over this? Well they don’t want a repeat of 2008.
Yet banks not only have operational and technical questions about how the program will work but also bigger concerns about the degree to which they’ll be responsible for verifying borrower information — and then held liable if things go wrong. The industry was subject to billions of dollars of fines and lawsuits after the 2008 financial crisis and doesn’t want to repeat the experience.
While the head of Treasury, Steve Mnuchin, was the point person for the administration in negotiating this program through Congress, he apparently didn’t prepare his own agency for how to execute it. Even after it was signed into law, they didn’t know what to do. As the clock approached midnight, they decided to really spitball things and try to put it off onto the banks. Now small business, workers and even banks will pay the price for this failure of leadership.