
Anger mounts after corporations tap small-business relief funds - spking
https://thehill.com/policy/finance/493759-anger-mounts-after-corporations-tap-small-business-relief-funds
======
w0utert
We have the same discussion here in the Netherlands now, one of the poster
childs of the (entirely rightful) public anger being Booking.com.

Companies like this have been raking in billions of revenue and profit until
very, very recently, but instead of using even a tiny proportion of it for
contingency planning they decided to take on more debt and buy back their own
shares to boost their stock price instead, to 'reward' their shareholders. And
at the same time they used every loophole imaginable to evade taxes,
effectively contributing next to nothing to tax revenue to be used for the
public cause.

Now things went sour and within 1 month they are already out of money and
cannot continue paying their employees, so they are begging to be bailed out
with money that was intended to save small businesses that were forced to
close by the government. They made $15 billion of profit last year alone,
which would be enough to pay their ~17.5K employees for years to come, but
decided to throw it at all their shareholders. The hotels and BnB's that use
their platform will go down because the government aid is limited, but
Booking.com needs to be saved...

Privatize the profits, socialize the losses, always the same thing. It's
frankly quite disgusting and I have no sympathy for these companies at all.

~~~
toasterlovin
FWIW, a really good (in my opinion) reason to return profits to the owners via
dividends or buybacks is that management can often not be trusted to act
responsibly when they have access to a huge pile of unused cash. And I think
it's worth keeping in mind that many of the owners are normal people and/or
normal people's pension programs.

~~~
yohannparis
Why do you invest in a company if you do not trust it to manage itself?
Otherwise, it is not investing, but speculation that stock value will rise to
sell for a profit.

~~~
toasterlovin
Why are balance of powers necessary in politics? Why not just elect a
president or PM that we can trust not to abuse their power?

------
nimbius
So ive got a few questions about this legislation now that its in effect...

>Businesses rushed to apply for the loans, which the government said would be
forgiven...

 _Forgiven?_ Then its not a loan anymore is it? Its a bailout. Was the
intention to give a handout of cash to small businesses free of charge?

>Democrats have since called for rules that would ensure smaller, community
banks, particularly those that service minority and underbanked populations,
have a leg up in the lending process.

I mean, the program ran out of money a week ago. What exactly are we
legislating? these are businesses that are likely already shuttered after
waiting five weeks to be told they either dont qualify or the money sacks
empty.

This isnt something you get a do-over on. Rubio doesnt seem to care that
Hilton is a nine billion dollar multinational corporation that could afford to
keep the lights on in every hotel they franchise for the next year, easily,
without federal aid. They could give away old hotels as makeshift hospitals.
Hilton is the thirty-sixth largest company in the USA and the fact that they
qualified for something called a small business relief fund can only be
attributed to a completely detached legislature if you're being amicable and
giving the current legislation a fair chance to be anything but corrupt but
frankly thats hard to do when the presidents friends are getting kickbacks
from this program.

[https://www.npr.org/2020/04/20/839455480/company-with-
ties-t...](https://www.npr.org/2020/04/20/839455480/company-with-ties-to-
trump-receives-millions-from-small-business-loan-program)

What Rubio has basically managed to do is wipe out coffee houses, machine
shops, shoe repair businesses, daycares and nail salons in every north
american city. Its pretty transparent that this funding was never intended to
make it to taco trucks and barbers.

~~~
linuxftw
> Forgiven? Then its not a loan anymore is it? Its a bailout. Was the
> intention to give a handout of cash to small businesses free of charge?

Yes, it's handing out free money to some and not others based on basically
nothing. What's worse, the banks are collecting a cool 1% whether someone pays
back the loan or not. 300B in loans is 3B to the banks, 0 risk.

> Its pretty transparent that this funding was never intended to make it to
> taco trucks and barbers.

Sadly, I don't think the congress people are that smart. They probably
actually thought this program would work in some useful capacity.

~~~
_curious_
"Yes, it's handing out free money to some and not others based on basically
nothing."

It's not based on "basically nothing" \- at least from the banks perspective
as originators in this case - it's based on which corporate accounts are
deemed to be of greatest financial value to them. They can, will, did pick and
choose loan beneficiaries in their portfolio based on how it will benefit them
- nothing less. This means that business customers with big debts to the bank
were a priority. It's absolutely a bailout of the banks in a difference
scheme, albeit a bit more blatantly nepotistic than we're used to seeing so
far.

And yes, they get a point in services for treating themselves too...

All that said, your gist is correct in that it's basically free money
benefiting some at the expense of others which is why personally, morally, I
am not in favor of corporate welfare under any circumstances - impossible to
do so "fairly".

~~~
linuxftw
Great points about bank favoritism. I assumed (possibly wrongly) that the
loans were being handed out on a first-come, first-served basis, but as you
indicate, banks are most likely fast-tracking applications that benefit their
largest debtors the most.

It seems all bailouts are bank bailouts, and all bank bailouts are CDO
bailouts.

------
save_ferris
I think the anger here is justified, but part of me is also thinking: does
this really surprise anyone? All of these companies are doing everything they
can to stay afloat, including some really distasteful things like this.

Do we really expect companies to start acting morally when the economy is
tanking? They exist to make money, which isn’t inherently immoral, don’t get
me wrong.

But if you’re hitting $100M annual revenue, chances are that you’ve done
something at some point that exists in an ethical gray area, because the end
goal is making money, not being morally responsible.

Reminds me of that piece on Gresham’s law from earlier today.

~~~
WalterBright
I don't see any evidence whatsoever that being unethical has anything to do
with the size of the company.

~~~
save_ferris
Simple question: do you consider tax evasion unethical?

I’m not arguing that every mid to large size company is guilty either, but we
can’t ignore how common certain activities are in the market, things like
share buybacks, the legal cases around corporate personhood, offshore tax
havens, etc.

Name a top tech company that doesn’t have an office in Ireland for taxation
purposes. Joe’s tire shop down the street probably doesn’t, but I’d be willing
to bet that a pretty significant percentage of the Fortune 500 do. Facebook,
Apple, Google, Dell, Amazon, and many others do. They’ve created business
structures that allow them to funnel money around the globe and avoid paying
taxes on it. Is that illegal? Obviously not. Is it the right thing to do,
especially as we live in a time where millions are out of work and starting to
go hungry? Corporations that have expatriated billions in earnings on work
done in the US are now asking for billions in bailouts, is that ethical?
Again, mom and pop shops don’t have the influence to do this, but the Fortune
500 do.

~~~
mercutio2
You are describing tax avoidance, not evasion.

~~~
save_ferris
That’s fair, but the main point still stands. Is tax avoidance ethical? I’d
say no, but I’m sure many would disagree.

~~~
greedo
So when you file your taxes, you don't claim any exemptions I assume?

------
mjberg01
Odd that more aren't discussing the incentives for banks to secure the funding
for their clients who have debt on the books with the banks.

e.g. take two companies who both applied at the same time and each is doing
$1M in revenue. However, company A has $250k in debt with the bank whereas
company B does not.

Now all of a sudden the banks give the cash to the company with the debt
because they know if they fail they will have to eat that on their balance
sheet. They are incentivized to distribute the $ in a priority that fits them
not on a 'first come first serve' basis which is the fair approach.

~~~
AbrahamParangi
This would also explain why Bank of America initially required an existing
credit account. It makes sense that they would want to bail out their own bad
debt with PPP money.

~~~
Paradigma11
I do not think that this criticism is fair. Banks asked but were not allowed
to relax their legal KYC criterias.

Existing customers already fullfill these so they can be served while the
others are processed. And ofcourse the whole system is completely swamped.

That being said i don't doubt that banks would have acted like this anyway.

~~~
AbrahamParangi
Hanlon's razor is usually true but assuming the opposite is usually wise.

------
anticsapp
The whole system is rigged. It always has been. And I don't mean the last
twenty years. Want to invade Germania? You better know a great banker. Want to
be the first on the block to buy a couple of these new things called printing
presses? Better know a well-connected banker.

~~~
m463
Want to unblock your online video? Want to fix a bad online review?

------
mgleason_3
Greedy bastards. Apparently the law says companies with fewer than 500
employees are eligible - that's 500 employees per location!

No wonder the money ran out.

~~~
barbegal
Its not 500 employees per location [1], it is 500 employees total but there
are exceptions for restaurants, hotels and franchises.

[1] [https://home.treasury.gov/system/files/136/PPP--Fact-
Sheet.p...](https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf)

------
olliej
How many of these companies even report the bulk of their revenue in the US?

Future bailouts should include specific provisions disallowing applications by
companies that have less than (say) 2/3rds of their global (including
subsidiaries) profit in the US (or whichever country they apply for aid from).
Denmark, etc have this correct - you don't get to ask for government support
from countries you avoid paying taxes to.

------
PeterStuer
Typical

Create crisis through destroying government by a thousand cuts.

Resort to greasy palms Pork Barrel Politics under the umbrella of "hey, at
least I'm doing something in this crisis".

When called out say "see, I told you government doesn't work"

------
anm89
This always confuses me when people are mad at the businesses. You are mad
that a company, a legal entity which exists for the sole purpose of making
money, which has a legal obligation to its shareholders to try to produce
returns, is taking an opportunity to get free money?

I mean, be mad I guess, but surely don't be surprised. This is the least
surprising, most rational behavior ever.

Maybe we should get mad at the politicians who are creating the legislation
that hands it to them.

------
richycaat
Still hard to believe. Just pray it's a live and let live. Get rid of the
bullies and manipulators.move forward always.

------
jsilence
Simply give the money to the people, not to the businesses.

------
dbancajas
why not limit SBA to companies with <10M yearly revenue?

------
jessaustin
This is a convenient sideshow. PPP is a pittance compared to the >$4B the Fed
will be distributing to favored wealthy cronies. No one believes in
"capitalism" anymore. In a system of free enterprise, we'd be happy to see
businesses fail while the state supported humans in need. Instead, we have the
opposite: humans are forced to suffer while corporations are bailed out with
their money.

~~~
akoncius
that's the issue - politicians keep saying that USA is free market, capitalist
country but it's not. it is socialist capitalism with inversed relationship as
you mentioned. it's time to start naming things as they are in reality

~~~
jessaustin
It's not just politicians, as evidenced by the legions of HN status quo
defenders eager to downvote this sort of message.

------
adelHBN
Well, in the O.C. people are out on the beach... and social distancing is not
as strictly observed as one would expect.

------
edoceo
Yes, Wells Fargo didn't even open proper application until the same day the
SBA said they were out of money. Here's hoping I'll be part of another class
action against them.

~~~
beart
The only reason I can imagine staying with Wells Fargo is to keep a few bucks
in an account to be part of the yearly class actions.

~~~
dboreham
Another reason is that I can write a heck of a lot of code in the time it
would take for me to change my business to use another bank.

~~~
nulbyte
I'm not sure I understand this. Can you not continue writing code while moving
to another bank? Did itnfor a no profit last year. Wasn't as difficult as I
thought it would be.

