Yesterday i asked Why does Trump want to hide who took out small business loans?

In addition to members of Congress wanting to hide the loans they received, Wall Street on the parade discovered more questionable details.

Even though the loans are guaranteed against losses by the SBA, the Federal Reserve has launched its own program, called the Paycheck Protection Program Liquidity Facility, to reimburse the lenders who make these loans. So far, the Fed has repaid $ 57 billion of those loans as of June 10, out of a total of SBA-approved loans of more than $ 500 billion.

The odd thing about these Fed refunds is that $ 5.3 billion in refunds, or 9% of the $ 57 the Fed refunded, went to a small New Jersey bank, Cross River Bank. According to the SBA, as of May 30, 5,454 lenders had made loans under the PPP program. Cross River Bank is just one of those 5,454 lenders and yet it received 9% of the repayments from the Fed. How does this make sense?

According to the FDIC, Cross River Bank has only one branch and has only been in existence for 12 years. The $ 5.3 billion the Fed repaid to Cross River Bank is more than double its total assets of $ 2.5 billion as of March 30. Cross River Bank has made over 50% of the dollar amount Wells Fargo has made in PPP loans, but it only has 250 employees instead of the 250,000 employees working for Wells Fargo to review and process these PPP loans.

The secret bank behind the fintech boom

On December 31, a Forbes investigation revealed The secret bank behind the fintech boom.

Cross River is not your typical community bank. There are no cashiers here, nor any ATMs or safes. There are startup touches – a kitchenette filled with LaCroix sparkling water, gourmet coffee, and a game room.

Unlike the banks of yesteryear, virtually all of Cross River’s loan officers are not human. These are applications. Cross River’s loans come mostly from around fifteen venture-backed financial technology startups called fintechs, which have names like Affirm, Best Egg, Upgrade, Upstart, and LendingUSA. Fintechs supply customers; Cross River provides the licenses and the infrastructure. It owns 10-20% of every loan it issues, and the massive volume of fintech loans has propelled Cross River to $ 2 billion in assets, up from $ 100 million a decade ago.

Once you get past the fancy iPhone apps and inflated stories of big data mining and AI-generated lending decisions, you realize that many fintechs are nothing more than aggressive lending equipment. for little-known FDIC-insured banks.

Dirty details

Wall Street on Parade discusses more Dirty details.

Despite originally promises of transparency, US Treasury Secretary Steve Mnuchin is now preventing Congress from releasing a list of recipients.

Congress sold the plan to the public on the basis that the loans would go to small businesses with fewer than 500 employees. The funds were to be primarily used to keep workers employed and to enable businesses to survive coronavirus shutdowns.

Instead, our search for documents with the Securities and Exchange Commission reveals that dozens of debt zombie companies that trade on the Nasdaq have secured the loans. Dozens of publicly traded companies with large lines of credit from banks have obtained the loans. Dozens of companies with more than 500 employees have obtained loans. It is starting to appear that tens of billions of dollars in PPP loans were simply rushed through the door with little control over who got the loans.

Meanwhile, back in Ohio

Meanwhile, back in Ohio, Nearly 24,000 Ohioans Must Pay Unemployment Checks.

Marnie Behan received a surprising message last month from the Ohio Department of Employment and Family regarding her ongoing unemployment benefits. Instead of sending her the next unemployment benefit, they said she had to reimburse the state.

The bill was close to $ 3,000. She had 45 days to refund the money, or the case would be sent to the Ohio attorney general.

There are 24,000 accounts like Marnie Behan’s in the state of Ohio alone.

Transparency? Ha!

Taxpayers funded this $ 500 billion slush fund. We have the right to know how the money has been spent.

By the way, Treasury Secretary Steve Mnuchin and promised transparency.

Slush fund rules

There are rules for small fry, determined in arrears, and rules for large tuna also determined in arrears.

While the new rules for the little ones demand a refund of $ 3,000, the new rules for the big tuna will mask who has received hundreds of billions of dollars.

Now, for obvious reasons, the Trump administration wants to sweep this all under the rug and hide it.

Mike “Mish” Shedlock

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