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Katie Porter called for an investigation into PPP layoffs. Under Biden, that could actually happen

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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.)

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 enforcement—and Cordray is reportedly under consideration to lead the CFPB again. Cordray’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 owners—and others—who took money intended to protect jobs only to lay off tons of workers, could face more consequences than they had anticipated.

“Congress passed the Paycheck Protection Program to help small businesses keep workers on payroll,” Rep. Katie Porter said in a statement at the time she joined with UNITE HERE Local 11, the hotel workers’ union, to call for an investigation into the hotel layoffs in her area. “Columbia 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 people—not big corporations.”

In the letter to the SBA, Porter and her colleagues noted that ”Columbia 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.” What’s more, “we are concerned that Columbia Sussex may have double counted’ employees as working at multiple affiliates tied to the same hotels, potentially inflating the total value of PPP loans.”

This wouldn’t be the first case of shady dealings around PPP loans, whether it’s predatory lenders getting the funds while some of the businesses that needed help the most getting left out, or applicants lying about why they needed the money and how they qualified for loans. The Biden administration can’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.

This blog was originally published at DailyKos on November 18, 2020. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos.


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Working People Need a Strong CFPB with a Leader Who Supports Its Existence

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The Consumer Financial Protection Bureau was created after the Great Recession of 2008 wreaked havoc on the U.S. economy, causing millions of families to lose their homes to foreclosure and forcing millions of working people onto the unemployment rolls. Its mission is to protect working people from tricks and traps in consumer financial products like home mortgages and credit cards.

The CFPB has proven extremely effective. Since its creation in 2010, the bureau has returned $12 billion to consumers wronged by lenders. Twenty-nine million consumers have received relief.

The bureau owes much of its success to strong leadership. Sen. Elizabeth Warren (D-Mass.) originally had the idea to create the CFPB when she was a law professor at Harvard and led the bureau in its infancy. In 2012, she was succeeded by Richard Cordray, who had a strong record of pursuing wrongdoing against consumers as Ohio attorney general before his time at the CFPB.

Cordray, however, resigned last week, and President Donald Trump named Office of Management and Budget Director Mick Mulvaney to replace him.

There are a few problems with this. First, Mulvaney already has a job leading the Office of Management and Budget and has shown no intention of stepping down from the post. Mulvaney also has been highly critical of the CFPB, calling it a “joke…in a sick, sad way.” Finally, there are legal questions about who gets to lead the bureau when the director steps down—the deputy director or someone appointed by the president.

In addition, Mulvaney’s former chief of staff, Natalee Binkholder, left Mulvaney’s congressional staff to go to work as a lobbyist for Santander, a bank that has faced sanctions from the bureau and is reportedly facing a CFPB lawsuit alleging that it overcharged consumers for car loans.

We learned the hard way from the financial crisis in 2008 that working people need the CFPB. We need the bureau to fight to protect us from predatory lenders and, in order to be effective in doing that, it needs to be led by a strong, full-time director who believes in its mission. Consumer financial protection is a full-time job, not a side gig for someone who things it’s a “joke.”

This blog was originally published at AFL-CIO on November 28, 2017. Reprinted with permission. 

About the Author: Heather Slavkin Corzo is the director of the AFL-CIO Office of Investment. She joined the AFL-CIO in 2007 as a research analyst and was the senior legal and policy adviser from 2007 through 2014.


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