
Small business rescue earned banks $10B in fees - gnrlbzik
https://www.npr.org/2020/04/22/840678984/small-business-rescue-earned-banks-10-billion-in-fees
======
lordnacho
Gotta ask whether the banking system makes sense in its current form.

\- Part of it is actually a utility. Payments, sending money from one place to
another, making sure there's an account at the other end of that number.
Everyone needs this, yet being a huge international network there isn't a
whole lot that one bank offers that another cannot.

\- Part of it is deciding who to lend money to. Makes sense for the bank to
decide this with its own money.

\- Part of it is regulatory. We don't want money laundering. Have to ask
whether this really ought to be up to law enforcement to do, or as it is now a
massive burden on the banks, which also have bad incentives.

What if we had the central bank give everyone an account that was
interoperable with the rest of the banking system? Then if you want to hand
out money, you just do it. If you want to borrow money, find a lender.

~~~
theplague42
There have been suggestions over the years for the post office to offer
banking services. They have branches literally everywhere, they're independent
yet still a government agency, and have no profit motive.

~~~
alexpetralia
I could not imagine the amount of financial, operational, technological and
regulatory infrastructure that would need to be ported over, however.

~~~
toomuchtodo
We have the US Digital Service [1] and 18F [2]. We (US citizens) should demand
Congress to provide them the authority to deliver the modernization required
to implement such infrastructure. Use Login.gov [3] to provide for digital
identity management of these accounts. Perform in person KYC using USPS and
DHS/CBP branches, and identity proofing online using traditional service
providers (IRS already does this for your IRS account, SSA might, I haven't
checked recently).

The path to success is straightforward.

EDIT: So I did some digging, and it appears that the US Treasury has partnered
with Comerica Bank in Texas to provide this sort of service to Social Security
benefit recipients [4] (because the Treasury requires electronic payment of
social security benefits, and you can't leave seniors unbanked). The challenge
is going to be to find Congressional reps supportive of bringing this
functionality in house, which isn't unreasonable IMHO, to provide this as a
utility to all US citizens. I have already fired off a FOIA request to get
details on the contract between Treasury and Comerica.

[1] [https://www.usds.gov/](https://www.usds.gov/) | [2]
[https://18f.gsa.gov/](https://18f.gsa.gov/) | [3]
[https://login.gov/](https://login.gov/) [4]
[https://www.usdirectexpress.com/](https://www.usdirectexpress.com/)

~~~
basch
Would it be feasable for the government to acquire a mobile first bank and
graft it onto the post office? Either chime, bankmobile, moven, or simple.

Is it a space the government wants to compete against Apple and Google? If
every mobile phone in the country comes with a free integrated banking
service, how do you compete? Would the government better serve by using its
resources to regulate interoperability and compatibility, and rule following,
than by competing?

I totally get why a free post office bank would do great things to serve the
underbanked. But if the government is going to get into banking, id like to
see it go a step further, more like Singapore, and be some kind of new HSA
type account offering, a forced savings account that can be used to pay rent
and more.

~~~
monocasa
It's not politically feasible. The Republicans have been trying to kill off
the USPS for decades now, and would torpedo any effort to expand it's scope in
a way that that the USPS might be competent at.

~~~
toomuchtodo
Right, you need more reps who support protecting and expanding public goods
like the USPS, regardless of political affiliation.

------
tempsy
The thing here is the bank isn’t taking any risk here. All the loans are
guaranteed by the government. So banks are really just a middle man that is
transferring money from the SBA to a small business’s bank account and taking
on zero credit risk.

The government has the ability to send funds directly to people
obviously...that’s how they are sending the stimulus checks and send tax
refunds.

Banks are basically being compensated for doing paperwork.

~~~
agilebyte
Paperwork AND doing due diligence on the companies more effectively than the
government can right now.

~~~
tempsy
The point is the amount they are earning is overly generous for the work
completed.

Most banks are only working with existing customers, so the DD is 99%
complete. Few are reviewing applications from brand new clients.

~~~
_curious_
Not to mention that the banks are biased and giving no risk handouts to their
most valuable clients (those at greatest risk of defaulting on obligations to
the bank).

------
bcx
I'd like to see a version of this article and headline that figures out the
effort required by the banks to administer a program like this.

Quick read looks like 2.8% off the top, for 0 risk (10/349).

Total businesses receiving loans was 1.6M
([https://www.pymnts.com/loans/2020/sba-lenders-approval-
ppp-l...](https://www.pymnts.com/loans/2020/sba-lenders-approval-ppp-loans/))

Average money a bank made per loan was 10,000,000,000/1,600,000 (assuming all
banks made an equal distribution of loans)

Or $6250 per loan. Given that all loans ran out about 1 week after the program
was started.

I imagine the person effort per loan was pretty variable, but that's some
pretty crazy capture by the banks.

(Banking sector employs almost 1.5M people), So even if every employee working
at all banks, was allocated to work on one loan each for a week. (HINT THIS
DIDN'T HAPPEN) the annualized salary for each of these people would have to be
6250*52, or 325K, which it's not).

I guess my question, is how was the decision made to offer banks such a big
kicker for administrating loans with nonzero, but practically 0 risk?

(of note, theoretically banks are going to need to do some serving of the loan
over it's lifetime, and deal with this loan forgiveness program, etc.. so if
that's the case and it's more like 2-3 weeks of person work per loan, you
still get some pretty big numbers, but they feel a bit more sane)

~~~
javagram
FWIW, the banks didn’t feel like it was 0 risk, many of them were doing a lot
of due diligence, document checking, etc. because they were worried about it.

I’ve seen stories of small business owners talking about how difficult it was
to get the loan through due to having to go back and forth with documents etc.
although I’m sure it varied per bank.

2.8% doesn’t seem like that much for me, especially considering the goal was
to get the money out the door as fast as possible due to the emergency, and
setting up and hiring a government bureaucracy to administer and give the
loans would have cost far more in time than the solution of giving it through
the banks.

~~~
dylan604
Why did it need to be a bank to begin with? Are banks involved when the
government hands out low interest loans for natural disasters. Do they take
cuts from that money? If so, I've never heard of it before. What about the
9/11 fund? Did banks get a cut of that money as well? Why is this situation
different?

~~~
javagram
The goal here was to give the money out ASAP as businesses and their employees
had already been forced to shutter by the pandemic and lockdown orders and
were rapidly marching toward insolvency.

Stuff like the 9/11 compensation fund was on a much longer timeline and was
also much smaller - the 9/11 fund was open ended, but ended up being about $7
billion, compared to the $349 billion PPP.

Remember the PPP is intended to give out money to the entire country and that
is a huge scale. There was no available mechanism to give out the money, the
SBA administers a EIDL grant/loan program but lawmakers on both sides of
congress didn’t believe the SBA could give the money out fast enough, so this
system of having the banks get money from the SBA was created.

------
brentm
Not a popular opinion but considering the effort involved, should they not
have earned fees? Should they have donated their time and resources? I'm sure
it took a monumental effort to pull it together with the lack of clarity being
handed down and the volume of loans to process in a short period of time. If
the government wanted to do for $0 fees they would have figured out how to do
it themselves. If a private business has to do it then they should be paid. If
we are complaining about this what about 3M and everyone else making tons of
money off of PPE? Obviously it isn't very palatable to hear about others
making money off of this kind of thing but we need incentives for people to
step up and help.

~~~
celticninja
could they have done it at cost? Yes. Did they need to make a profit off this?
Probably not. Are they relatively unaffected (due to prevalance of online
banking and also reduced costs due to physical banks being closed)? Yes.

~~~
dtwest
Wow this is misinformed. Posting incorrect information in such a cocky way is
detrimental to the forum.

Look at any global bank's stock price throughout this crisis. Being a lender
to the businesses of a shut down economy is not very profitable.

~~~
celticninja
Stock price does not tell you how the fundamentals of a business are
operating. Especially not in this environment, everyone's stock price is down.
Also these are the banks that got a huge bailout from the government a decade
ago for failures of their own making.

If a big bank goes under due to coronavirus then I will of course apologize
for being wrong, but I doubt that will happen. Too big to fail remember. So we
bailed them out now they could be a little more civic minded. And as I said,
do it at cost, pay your staff, but don't be thinking about the next dividend
payments to shareholders or bonus remuneration to the CEO

~~~
dtwest
Everyone's stock price is not down. Another false statement. The majority are
down though, as they should be.

I am not defending bailouts, I'm saying you should get your facts straight.

~~~
celticninja
OK, not everyones individually, but look at all the major stock exchanges and
their value is down. This is a good indicator that the vast majority, and
therefore it means that most investors are affected similarly. Are pension
funds down? Yes. Are most retail investors down? Yes. Anyone who is up is not
up enough to make a difference to the market in general. So dont be
disingenous, you know what i meant by 'everyone' in this instance.

------
eezurr
That's about a 2% fee which doesn't seem out of line with other transaction
processing fees that are out there. That fee probably has built in insurance
for fraud and other failures. And also the cost of the transaction. I bet that
fee is the same fee as a year ago?

~~~
jhwang5
This is the wrong way to think about it. Rates are nearly negative, so 2% is
practically 10, 100X the rates banks can earn otherwise. It's basically free
money shoveled into banks, a massive boon.

~~~
bmelton
Genuinely curious how federal interest rates have any relation whatsoever to
fees for service and why they're being correlated here.

An uncharitable reading might assume a spurious correlation.

------
antoncohen
Lawsuits claim banks prioritized loans to large businesses. JPMorgan disputes
those allegations, claiming it processed loans fairly. By fairly it means it
put all the small business loans in one large FIFO queue, and all the large
business loans in a separate much shorter FIFO queue. Effectively prioritizing
large business loans.

~~~
_curious_
Interesting...what are your sources here?

~~~
antoncohen
This article and the Bloomberg article[1] that is currently on the front page.

From this NPR article:

> We funded more than twice as many loans for smaller businesses than the rest
> of the firm's clients combined," the bank said in a statement to clients.
> "Each business worked separately on loans for its customers. Business
> Banking, Chase's bank for our smaller business customers, processed loan
> applications generally sequentially"

Note "Each business worked separately on loans" and "processed loan
applications generally sequentially". They divide their consumers up into
large business and small business groups, assigning dedicated staff to each
group. There are far more small businesses, making the queue for small
businesses much deeper. Even though there were more workers (staff) pulling
from the small business queue, there weren't enough to make up for the
discrepancy in queue depth.

From the Bloomberg article:

> More than 300,000 customers of JPMorgan’s business banking unit, which
> serves smaller firms, applied for loans through the Paycheck Protection
> Program

> By comparison, about 5,500 larger, and sometimes more sophisticated,
> customers of the commercial banking business applied for funding.

> The data reveal that, in the race to get a loan in the first-come, first-
> served program, larger businesses had a leg up over smaller ones -- even
> when applying through the same bank.

> its commercial bank, with fewer clients, was able to process applications
> faster, said a person familiar with the matter.

[1] [https://outline.com/HacVTV](https://outline.com/HacVTV)

------
1123581321
We did our PPP loan for our agency through a small regional bank that bent
over backwards to help local businesses understand the legislation and apply
on time. The bank paid a bunch of salaries to be able to do this. It’s
completely reasonable that they earned a small, disclosed-in-advance fee from
our loan to pay for those operations.

~~~
alistairSH
Banks took almost 3% of the total bailout funds for loans that have almost
zero risk (government backed and almost exclusively made to existing
customers).

On a $350k loan, the fee was 5%, or $17.5k. On a larger loan, the fee as a %
goes down, but the total value goes up. These larger loans, to my knowledge,
carry no more risk, nor any more work by the bank.

Yes, the banks should earn a minimal (and probably fixed) filing fee. No, they
should not receive 3% of the amount set aside for small-business assistance.

~~~
1123581321
I agree those numbers are accurate. If I understand correctly, you intend for
$17.5k to be a shockingly high number, but smaller banks already receive
percentage origination fees on large loans that cover fixed operation costs
and are not overly profitable.

------
volak
Banks make somewhere around 450 billion in revenue each year.
[https://www.statista.com/forecasts/409713/banking-revenue-
in...](https://www.statista.com/forecasts/409713/banking-revenue-in-the-us)

This program made them 1/3 of 1 month's normal revenue

~~~
megous
That also means that they could have easily waived the fees without taking
much of a hit, just out of solidarity.

~~~
volak
Businesses are not a charity - according to reported Q1 earnings last week
they're losing million of dollars everyday just keeping the lights on.

They've lost far more even with the fees they collected from this program.

As someone said above - doctors are not working for free, why should bank
employees?

~~~
triceratops
> doctors are not working for free, why should bank employees?

Are rank-and-file bank employees getting a big chunk of those increased
earnings? Seems like both doctors and bank employees are simply continuing to
earn their regular paychecks, as they should. It's the banks' shareholders
that are making _way_ more money for basically zero risk. And execs, who get
paid mostly in stock. That's the problem here.

~~~
volak
But as I pointed out in the original post - the 10B in fees is in line with
revenue the banks receive during normal times. And going off the earnings the
banks posted last week, they are losing millions every day just keeping the
lights on.

There is no increased earnings there is in fact very big losses. Which is
another thing people tend to forget when discussing exec pay. The execs take a
hit when business is bad, but the majority of employees continue getting paid.

Exec pay is high but you can't forget that much of the risk / responsibility
should the business do poorly is on their heads not the majority of the
workforce.

~~~
triceratops
> you can't forget that much of the risk / responsibility should the business
> do poorly is on their heads

The worst outcome for any employee, exec or lowly serf, is the loss of their
job. But it's far more devastating for a rank-and-filer to lose their job than
for a highly-paid exec to lose theirs. So...no the majority of the workforce
also takes on most of the risk should the business do poorly.

~~~
volak
Not true actually. The _majority_ of employees do not get fired. Only a
_minority_ do

And the minority that is let go get 3-6 months of severance and unemployment
benefits until they inevitably find a new job - which btw is far easier to do
when you are not an executive of a floundering business.

~~~
triceratops
> The majority of employees do not get fired. Only a minority do

A minority end up fired but all of them potentially can be.

> And the minority that is let go get 3-6 months of severance

This is not written into any employment contract. 3-6 months sounds absurdly
generous.

> unemployment benefits until they inevitably find a new job

UI benefits only offer partial wage replacement.

> which btw is far easier to do when you are not an executive of a floundering
> business.

Part of the reason execs get paid highly is to take on that risk. They have no
excuse for not building up a healthy nest egg to get through periods of
unemployment. Execs don't live paycheck-to-paycheck, or if they do, surely
they should know better about managing money wisely. Otherwise why did they
even have their jobs?

Execs also have way better personal networks for finding new jobs. Their
friends are other execs in other companies. So it's not at all obvious that
they'll be unemployed for longer than average Joe Pink Slip.

------
solarhoma
No surprise here. Yes, these programs will help out small businesses. But, the
rich need their cut first.

Hopefully investigative journalists will be able to find the corruption/fraud
in a few years.

~~~
Ididntdothis
There will be plenty reporting about corruption and nothing will happen. This
is just a continuation of 2008. People have accepted this corruption as
normal.

~~~
seph-reed
I solemnly swear to stand by those who fight corruption, even when they go too
far I will recognize and respect their intent, I will remember them as heroes,
and I will do everything I can to make their sacrifice not be in vain.

~~~
covidacct
Xi Jingping consolidated power by rallying people around the flag of anti-
corruption. Same with Putin. Obviously, neither of those people is anywhere
close to non-corrupt.

Don't rally around anti-corruption. Rally around accountability, oversight,
openness, and balances of power.

Doing things right is harder than calling out others for doing things wrong,
and plenty of horrible corrupt people are all too happy to call out wrong-
doers. Support people who do things right, not people who complain about
others doing things wrong.

~~~
Ididntdothis
“Xi Jingping consolidated power by rallying people around the flag of anti-
corruption. Same with Putin. Obviously, neither of those people is anywhere
close to non-corrupt.“

So did trump with the talk of “deep state” and the “swamp”. It’s always the
same playbook.

------
hateMyIdeas
The money ran out before our company could get 1k.

Another example how the 10% is taxed to pay for the 0.1%.

------
erikig
Some quick numbers:

\- 10bn in Fees

\- 4975 Lenders

\- $2m per Lender

I think this number doesn't seem unreasonable given the fact that the banks
themselves are businesses - they have employees, training, technology, risks
etc.

~~~
triceratops
Is it a ton of extra work for them (the banks) though? With the way things are
banks are no longer doing much of other things they normally would - business
loans, mortgages, auto loans etc. This program would merely occupy those
otherwise-would-be-idle employees' time. And the banks aren't loaning out
their own money either, so where's the risk?

~~~
heartbreak
> Is it a ton of extra work for them though?

Anyone who attempted to obtain a PPP loan from their local bank knows that
yes, it _was_ a ton of extra work for them.

~~~
triceratops
For the bank or the applicants? And was it on top of work that the bank was
already doing? Because as I argued, many of the bank's normal functions were
effectively turned off so it's not _extra_ work for the bank. It replaces the
other work they'd be doing.

------
jhwang5
Bank charging 2% on this flow is criminal, in the sense that interest rates
are nearly negative, so 2% is practically 10, 100X the rates banks can earn
otherwise. It's basically free money shoveled into banks, a massive boon.

~~~
RubenvanE
While I agree that the fee might be high, the comparison between the two is is
a false equivalency.[1] A transaction fee is something completely different
from an interest fee. The first is a one time fee while the other is continues
over time.

[1]
[https://en.wikipedia.org/wiki/False_equivalence](https://en.wikipedia.org/wiki/False_equivalence)

~~~
jhwang5
No. whether I charge you a fee through an explicit transaction cost, or I
charge you based on a hidden spread to some rate, it’s still revenue from the
perspective of banks. It’s a common trick used by consumer banks (to
masquerade interest based spreads as no fee loans).

------
_iyig
Wish I lived in a world where $10 billion in graft got someone arrested.
Jailed, if I’m recklessly ambitious.

------
A4ET8a8uTh0
I will admit that I am mildly aggravated by the roll out of CARES act for
several different reasons. This is just a topping on the cake really.
Yesterday, my wife told me that her doctor's office is furloughing 7 people (
not her, but I am sure next move will include her too ) so I do get a little
sour when I find out that companies with built-in access to financing (
publicly traded companies ) got approximately surprisingly high chunk of those
funds(1). Needless to say, I am not unbiased, because of this.

It is however a little aggravating and a little reminiscent of 2008, where
well connected get rescued, where the rest is left to fend for themselves.
That is a recipe for pitchforks.

1\. [https://www.marketwatch.com/story/here-are-the-public-
compan...](https://www.marketwatch.com/story/here-are-the-public-companies-
that-got-coronavirus-aid-meant-for-small-businesses-2020-04-22?mod=home-page)

------
lonelappde
The headline misses the point. The total means nothing out of context.

What's the fee per loan?

>Loans worth less than $350,000 brought in 5% in fees while loans worth
anywhere from $2 million to $10 million brought in 1% in fees.

I've read that the average loan is $50K, so that's $2500 per loan, which seems
high, And 1% of a $1millio loan is ridiculous, as it's not subsidizing the
smaller loans, AND these loans are scaled to #employees, so the size of the
loan is proportional to the #people benefited and so the fees should be per
loan (cost based), not per $ lent.

~~~
lmeyerov
The root problem was Trump team didn't put in enough money, included too many
rich businesses, and didn't require a fair order. Banks knew they didn't have
enough meat yet were feeding a frenzy: of course the big dogs pushed through
to the front.

So now we blame Banks instead of Trump. Yet if Trump repeats the plan without
prioritizing actual small businesses, the co's big enough for in-house
accountants and big loan relationships will keep getting the lion's share.

~~~
beervirus
> Trump team didn't put in enough money

You know, the president doesn't write legislation or appropriate money. That's
on Congress.

~~~
lmeyerov
Yes, because we know exactly where the buck doesn't stop.

They're getting ready for round 2, and if the rule setters do the same thing,
we'll get the same result.

People want to blame the banks -- and banks _share_ the blame -- but they are
not the root cause. The legislated rules are like physics, you don't get mad
at the water flowing wrong but at the people who planned the river. The
planning committee is doing all sorts of weird stuff, but the people with the
most control is republicans, and via veto etc, the president. Those are the
people deciding to whom the river flows and with how much water. They knew
there would be more applicants than money, and the bigger applicants would
have accountants and bank managers ready to leap, yet they still didn't put
any priority order in for small businesses. Instead, they spent that time
putting in carveouts for big hotel owners. If you think they didn't make it
fair, it's their blame.

I don't even know why we're doing this via banks to beginwith, that just adds
a massive & confusing middle layer of uninvolved for-profit companies. Feels
like not knowing how to use the system, or corruption... which is again, a
problem upstream.

~~~
beervirus
Saying that Trump is to blame for the implementation details because he has
the veto power is a little silly. Congress, on both sides of the aisle, has
responsibility for any flaws in the legislation.

~~~
lmeyerov
He's the president, if he cared, he'd prioritize SMBs. He's the check and
balance. Instead, congress, judicial, and executive are now all effectively
Republican controlled, with Trump de-facto leading the party because McConnell
decided to go with it. Trump can pass the buck during one of the biggest
losses of life in US history & the biggest recessions, but as the ultimate
elected check, no way should we give a free pass. He should do his job, leave,
or get the blame.

Anyways, this has gotten beyond HN. As an SMB owner, it's pretty clear what is
and isn't happening.

~~~
beervirus
Yeah it’s pretty clear that the president is responsible for legislative
drafting. :-/

~~~
lmeyerov
He's the shepherd, or not, if he declines to do his job. We elect the
president to preside. The pandemic has become the most important thing on his
desk.

The power relationship is more complicated, but that's what it boils down to.
For example, congress could take it in a direction he doesn't want to happen,
but they'd need 2/3rds for that. By default, it's his show.

------
chris_va
Maybe this is an unpopular opinion amidst the pitchforks, but do we not have
better things to worry about at the moment?

The system is inefficient and unfair, great lets put it on the list of things
to fix, but a ~3% fee is not world ending (unlike some other things) and seems
like a low priority.

~~~
JSavageOne
How is a 3% fee not outrageous when there is no work being done? If 3% of the
$1,200 stimulus checks owed to individual citizens went to private banks,
would you say it's not a big deal? (if so I hope you're not running for
Congress)

~~~
chris_va
Apparently not, though given our current congressional representatives, are
you sure that is a good metric to judge rational decision making?

3% is 3%. It's nonzero, so that's unfortunate. It's not a large fraction, so
it's just not a time sensitive problem.

Is it worth tying up media, political and financial resources in
blaming+lawsuits over the optics of a 3% fee, instead of just waiting to deal
with it next year?

Your question implies that 3% of loan applicants get nothing because of this
fee (which is inaccurate, since congress will just authorize more loans as
long as it's politically convenient). As I said, it's unfortunate, but it's
_not world ending_.

~~~
JSavageOne
I never said it's "world ending", it's a problem, and we need to fix it. What
a moronic thing to say "let's just deal with it next year". If the mafia was
extracting 3% of federally guaranteed loan money, your response would be "it's
not a big deal, let's just deal with it next year because we can just
authorize more loans?" I hope you're never elected to public office.

------
mihaaly
I hope they will start some ad campaign soon with pretty words about how
sensitive they are for the troubles of the society and how much they support
all the efforts in these troubled times! Not controversial making profit on
emergency measures, not at all! :/

------
kqvamxurcagg
Larger customers will have relationship managers at the bank who guide them
through the process step by step. Their customers likely even have their cell
phone number so communication is good and low friction. With the support of
accountants and lawyers who will have all information available to hand, I'm
sure the application was a breeze.

The current crisis has been a real eye opener. Our entire government and
economic system is bailing out corporations and preserving the wealth of asset
owners at the expense of taxpayers and society. This should be a perfect
opportunity for smaller companies to step in and win business from corporates
who have engaged in monopolistic practices for years and engaged in excess
risk taking. But that isn't being allowed to happen because corporates are
judged as too big to fail. I find this whole system intolerable.

It feels like we need to add more restrictions against corporates. Restrict
their ability grow via M&A, restrict executive compensation to a multiple of
median income and stop them growing too large. I say this as a capitalist.

------
ksj2114
This fee doesn't seem that unreasonable, but I do think best solution is for
businesses / people to have deposit accounts at the fed

------
brenden2
We live in a world where there are huge rewards for anyone with the right
connections. Banks provide very little value, they are basically a glorified
SQL database at this point. They're not taking any risk, they're not really
creating any economic value, and yet the rewards they receive are enormous.

Watching all this going on makes me feel so disillusioned, and I don't want to
participate in society anymore.

~~~
specialist
I oppose the financialization, not the banking.

------
tmaly
This is all on Congress. They wrote this law that created these incentives for
the banks.

------
carapace
Seems unnecessarily divisive at a time when we need to pull together.

------
ackbar03
Why am I not surprised

------
drawkbox
Anytime needed stimulus goes through banks, don't be surprised if it never
makes it out of said bank or to the intended locations as they are self-
preservation first as expected.

Banks should help the river and get access to the flow, they shouldn't be a
dam that holds back the flow, filtering only for their customers or large
companies masquerading as "small business".

Had policy sent the money directly to companies from the SBA/IRS, customers
then would choose the banks to service that guaranteed government grant/loan
essentially. Much like the FAFSA system for student loans, you get your
amount, then a servicer handles the actual loan but there is literally no risk
to them as it is guaranteed.

Why we sent guaranteed money to be held up in banks and did information and
credit checks, on already known information from the IRS, well we know why, to
pilfer it.

Had they ran it a better way, using the actual market, directly to
businesses/individuals, that is lots of money out there for banks to go get
and the market knows it is out there as well. Markets like knowing hundreds of
billions and trillions are out there to go get. Make them earn the fees if
they must.

Instead, it was a direct transfer from the Fed and treasury to QE that was
pilfered by the usual suspects: hedge funds, market makers, foreign funds,
oligarchs, wealth/value extraction ops, naked short selling, short and distort
and more. The SBA money was pilfered by banks and large companies. The
'stimulus' for the economy, routed around the entire actual economy, never
reaching individuals or true small business.

Companies that received SBA funding many are listed on the public markets. I
doubt most people would call "small business" companies that have IPOed and
been on the market for years. These companies have other access to funds, they
just wanted the 1% loans and took from hundreds and thousands of small
businesses that supply them, subscribe to their services, buy their software,
consume their products, feed them and other services.

Examples of companies that got SBA PPP and other [1]:

\- Drive Shack Inc. (DS) $5,276,742 - Golf company like TopGolf... wow. That
would have funded many, many small businesses.

\- New Age Beverages Corp. (NBEV) $6,868,400 - Revenues 250~ million...

Isn't it safe to say if you have a stock ticker and one of 3812~ companies on
the public markets that you aren't "small business"?

How to fix it...

We need a micro small business emergency stimulus.

\- Less than 50 employees across ALL locations, less than 2-3 million revenues
and sole proprietors.

\- There can be no gaps to allow this to go to the already serviced.

\- Include sole proprietors and really small companies (< 10 employees) with
priority that matches their numbers in the market.

The current "small business" designation is really small to medium to large
businesses. However, sole proprietors are 73% of all small business.

America is mostly small businesses.

SBA/Chamber of Commerce has 30.2 million for companies under 500 people. [2]

Lots are sole proprietors or very small companies with < 5 people.

22 million of the small businesses in the United States are individually
operated, meaning that they have no other employees other than the owner.

99.9% of businesses in the United States are small businesses, owing to the
rather large threshold of 500 employees, or fewer.

Small business is the engine of America.

Small businesses comprise what share of the U.S. economy?

Small businesses make up [3]:

\- 99.7 percent of U.S. employer firms,

\- 64 percent of net new private-sector jobs,

\- 49.2 percent of private-sector employment,

\- 42.9 percent of private-sector payroll,

\- 46 percent of private-sector output,

\- 43 percent of high-tech employment,

\- 98 percent of firms exporting goods,

\- 33 percent of exporting value.

It is time to help the lower/middle, sole-proprietors and small business or
America as we know it is much much different after this.

About 8 trillion in 'stimulus' and QE, at a cost of 20k to every citizen, for
that individuals got $1200 many haven't got yet and small businesses finding
out how small of fish they a really are.

The banks helped the big fish, but the big fish need the small fish to
survive.

Money trickles up and down and all around, but money only trickles where other
money is found.

This market is broken for lower/middle and people or small business. It is
gangbusters for wealth and value extraction ops. How long can this go on?

The stimulus for individuals, families and small business is vaporware, time
for some vaporwave as we fade away into the ether.

Good luck wealth and big business with no one to skim from and no small
business to use as research and development or suppliers.

Maybe it needs to be framed in the way that it is an additional bailout for
their own companies and interests. Most of that money makes it back into
banks, larger companies, wealth, top end etc. If consumers have purchasing
power and small companies buy up their services, supply them, and are where
they make their money broadly, maybe their self-interest will align with the
actual market.

Our policies already downplay the importance of wages, consumer base
purchasing power and just keep piling on the backs of a finite resource. How
long do can the wealth extraction keep happening before there is none left and
stagnation takes over in a big way? Rich people and large companies can only
buy so much, the long tail of small businesses and consumer purchasing power
is America, it is under attack.

Real wages and purchasing power have barely budged in 40 years [4].

Worker share of GDP being on a long dwindle down [5] and velocity of money is
off a cliff [6], that is why we are so stagnant.

Richest 1% of Americans Close to Surpassing Wealth of Middle Class [7]

Money trickles up and down and all around, but money only trickles where other
money is found.

If there isn't purchasing power or demand, that is hard to create. Why are we
widdling it down day by day, year by year, decade by decade?

What happens when The Giving Tree is a stump?

[1] [https://www.wsj.com/articles/these-are-the-public-
companies-...](https://www.wsj.com/articles/these-are-the-public-companies-
that-got-small-business-loans-11587493742)

[2] [https://www.chamberofcommerce.org/small-business-
statistics/](https://www.chamberofcommerce.org/small-business-statistics/)

[3]
[https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf](https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf)
Source: U.S. Census Bureau, SUSB, CPS; International Trade Administration;
Bureau of Labor Statistics, BED; Advocacy-funded research, Small Business GDP:
Update 2002- 2010, www.sba.gov/advocacy/7540/42371.

[4] [https://www.pewresearch.org/fact-tank/2018/08/07/for-most-
us...](https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-
real-wages-have-barely-budged-for-decades/)

[5]
[https://fred.stlouisfed.org/series/W270RE1A156NBEA](https://fred.stlouisfed.org/series/W270RE1A156NBEA)

[6]
[https://fred.stlouisfed.org/series/M2V](https://fred.stlouisfed.org/series/M2V)

[7] [https://www.bloomberg.com/news/articles/2019-11-09/one-
perce...](https://www.bloomberg.com/news/articles/2019-11-09/one-percenters-
close-to-surpassing-wealth-of-u-s-middle-class)

~~~
i_haz_rabies
Can someone who downvoted this explain why you did so?

~~~
tedunangst
It's a duplicate of this comment:
[https://news.ycombinator.com/item?id=22946155](https://news.ycombinator.com/item?id=22946155)

~~~
drawkbox
They are both my comments and both are similar but different, lots more info
in this one. I used parts of the other because it is the same topic.

------
exabrial
Side Note: NPR's journalism of late has been refreshingly non-political.

Every article on CNN right now for me is a click bait headline with some weird
mention of Trump like it's some sort of requirement to get it to go to press.

~~~
Spellman
I thought that's the norm for NPR?

~~~
clairity
npr has never been apolitical and has gotten more political over time, through
editorial choices like what stories they pursue/ignore, what angles they take,
what guests they invite, the amount of airtime given to stories/guests, etc.

they were overtly pro-clinton and anti-trump (as was i) during the 2016
election cycle, and lamented the election results for weeks afterwards. you
see it with this election cycle and the covid coverage too.

------
ss7pro
Problem with the banks (and many other huger corporations in US ie: airlines)
is that during prosperity all the profits are going to narrow set of people
(board and investors) but during the crisis there's always bailout using
taxpayers money to save them. It essentially means that profits stay with the
wealthy while losses are being spread across the poor. This is no longer
capitalism but communism where they ruling party (boards and investors) are
getting richer without the risk.

~~~
volak
The best analogy I use for logical errors such as this is -

If you have a dependent - ie a child - whom you are a primary source of care.
Should you qualify for a bigger helping hand than say, the 25 year old with no
children?

If you agree - then now imagine you have 500 dependents. Or in the case of
some corps 500,000.

You have half a million dependents who rely on you every other week for a
paycheck.

Do you qualify for a larger helping hand than the 25 year old who lives alone?

~~~
ss7pro
I'm not saying bailout is wrong, but taxpayers should be handsomely rewarded
for those bailouts (at least 20% APR) as those bailout companies were making a
lot of money on taxpayers and never shared any profits with them (they even
avoid paying taxes though various financial means).

~~~
volak
Agreed - which is why I strongly support the administration demanding equity
in the companies that are receiving money.

And I only support money given as loans which must be paid back. Any kind of
grant money must be exclusively used for payroll or other qualifying operating
expenses.

The current stimulus is not perfect but its pretty good and FAR better than
2008

