U.S. Treasury Department Asking Public Companies to Return PPP Loans
Perhaps the world is turning just a bit.
After years of complaining about regulations and how oppressive they are, people have started to see they have some value.
Case in point the Washington Post is carrying a story right now about how difficult it is for the U.S. Treasury Department (which should have known better) to claw back any of the money intended for Small Business and provided instead to some big businesses under the PPP program created by the CARES ACT. “Ambiguity in the rules” is apparently the problem. The Treasury Department asked public companies that received loans under the PPP to return the money last Thursday.
They asked, I guess that’s nice. A lobbyist for such companies was quoted as calling this “post-hoc rulemaking” which it might be, if it involved rules. Asking for the money back is not the same as being able to demand it based on the rules which should have clearly spelled out who was eligible for a PPP loan in the first place. So now if Treasury wants the money back it’s a lot more difficult to get and frankly it’s a lot harder to blame any companies.
Public companies, thanks to securities laws and rules which still do exist despite the best efforts of some anti-regulation nuts, had to report obtaining these loans. Then the Treasury Department found out they had given the money out and then after that claimed it is ”unlikely” the companies which manifestly did qualify or because the rules were so ambiguous managed to get the money were “unlikely to qualify” for PPP money. Treasury, in the absence of Rules would have a lot of difficulty proving anyone who got the money did not qualify for it. So they have asked to get it back.
The PPP money was supposed to keep employees on the payroll and it’s a good thing if it does that. Most of us are happy if the PPP money is used for that purpose no matter what company got the money. Still there was a time when $350 billion of taxpayer funds was considered something worth enacting regulations to protect. That’s only the first tranche of this money too. There’s more PPP money on the second round and billions more in CARES Act money in other programs. Trillions more actually.
Maybe just maybe, people will learn from this. You can’t just hand out money without any idea of what it is for, and then expect to be able to claw, ask or otherwise get any of it back, without rules. If you want to have any condition on sending out the money, make that clear, and the False Claims Act or the IRS whistleblower law or the SEC whistleblower program may apply and help enforce what should be enforced.
Otherwise, I’d prefer if the Treasury just said we are handing out this money and we hope it does some good, but we have little to no control over where it is going. This may even be a time when people could support some such government spending. However, ambiguity in rules is a big problem if you want to have any responsible way of controlling what happens to any government funds. Perhaps on the next round of CARES Act legislation, people will recognize the need for some level of regulation over these funds.