Back in October, a group of Democratic House members wrote to the Small Business Administration asking for an investigation how an owner of dozens of hotels had spent Paycheck Protection Program funding while laying off many of the workers whose paychecks the program was supposed to protect. Now, the signs are good that President-elect Joe Biden is going to take exactly that kind of oversight seriously. (Disclosure:Kos Media received a Paycheck Protection Program loan.)
A recent report from Bloomberg Law notes that, back in April, as the Trump Consumer Financial Protection Bureau was saying it would do basically nothing to enforce the provisions of the CARES Act, former CFPB head Richard Cordray called for tougher enforcementâ€”and Cordray is reportedly under consideration to lead the CFPB again. Cordrayâ€™s former deputy director, who should have succeeded him as acting director, is heading up the Biden transition efforts on the CFPB.
That all means that hotel ownersâ€”and othersâ€”who took money intended to protect jobs only to lay off tons of workers, could face more consequences than they had anticipated.
â€śCongress passed the Paycheck Protection Program to help small businesses keep workers on payroll,â€ť Rep. Katie Porter said in a statement at the time she joined with UNITE HERE Local 11, the hotel workersâ€™ union, to call for an investigation into the hotel layoffs in her area. â€śColumbia Sussex received millions of taxpayer dollars, yet they continued to lay off workers in the middle of the COVID-19 crisis. We need a full audit to see whether this taxpayer-funded program is actually helping the American peopleâ€”not big corporations.â€ť
In the letter to the SBA, Porter and her colleagues noted that â€ťColumbia Sussex affiliates borrowed enough money under the PPP to retain more than half its total workforce, but there are reports of Columbia Sussex hotels in California and Alaska operating at 10 percent of normal staffing.â€ť Whatâ€™s more, â€śwe are concerned that Columbia Sussex may have double countedâ€™ employees as working at multiple affiliates tied to the same hotels, potentially inflating the total value of PPP loans.â€ť
This wouldnâ€™t be the first caseÂ of shady dealings around PPP loans, whether itâ€™sÂ predatory lendersÂ getting the funds while some of theÂ businesses that needed help the mostÂ getting left out, orÂ applicants lyingÂ about why they needed the money and how they qualified for loans. The Biden administration canâ€™t go back in time and make things better last summer, but it should make it a priority to ensure that the PPP gets tough oversight and enforcement.
ThisÂ blogÂ was originally published at DailyKos on November 18, 2020. Reprinted with permission.
About the Author: Laura Clawson is labor editor at Daily Kos.