The program, which has received broad, non-partisan support, first came into effect in March 2020 to keep workers in their jobs. The PPP enabled banks to provide government-backed loans that could be granted if companies kept their payrolls. Banks receive fees for their role. The program was closed to new applicants at the end of May.
In her June letter to the SBA, Warren referred to a class action lawsuit by American Video Duplicating Inc. against Citigroup, Wells Fargo, Bank of America and other lenders alleging “banks have systematically failed to pay to agents of borrowers – in most cases they are accountants – their share of the program administration fees averages $ 22,000 for the agents. ”A Bank of America spokesman stated that all litigation on the matter, including this lawsuit, has ended and referred to the December legislation that resulted in the settlement of many PPP disputes. The other banks mentioned did not immediately respond to requests for comment on the lawsuit.
Warren cited initial SBA rules that so-called brokerage fees were paid by the lender, followed by later rules that shifted responsibility to borrowers.
Warren requested data on how many loan applications were submitted with the assistance of an agent and information on why the SBA changed its guidelines – in addition to agent payments.
The Ratliff CPA Firm filed a lawsuit on behalf of the SBA in July 2020 against First-Citizens Bank & Trust Company, Intuit Inc. and Intuit Financing Inc., Pinnacle Bank and Truist Bank, with the stated purpose of “Damages and civil penalties, resulting from a plan to report the actual filing of bogus claims to the Small Business Administration. ”A Truist spokesman made no comment and said the bank was not discussing any pending litigation. The other defendants did not immediately respond to requests for comment.
The Justice Department declined to join the lawsuit in March.
Dick Harpootlian, co-advisor to the Ratliff CPA Firm, said he made a presentation on the lawsuit in June prior to Warren’s letter at both Warren’s office and the SBA.
The focus of his presentation was the changing language surrounding PPP as banks were originally supposed to pay their agents but this later created confusion and was changed into law in December 2020 to say that the borrowers should pay the agents.
“And here’s the thing,” said Harpootlian, “nobody’s going to put it on the bill … and again, who’s being screwed? These small companies that provided services in a very difficult time. ”
Harpootlian said if there was any chance someone was paying attention to the suit, he knew it would be Warren, so his team decided to introduce her. “Be it overdraft fees or consumer protection from the banks, she was a champion,” he said.
Regarding how much was not paid, Harpootlian estimated in his presentation that on Aug. 8, 2020, “given the fact that many large banks have refused to pay and the volume of lawsuits filed, it is reasonable to assume that Exceeds 100 USD “. Million.”
Marc Caputo contributed to this report.