[HN Gopher] Most PPP loans have been forgiven, despite signs of ...
___________________________________________________________________
Most PPP loans have been forgiven, despite signs of possible fraud
Author : gmays
Score : 170 points
Date : 2022-10-13 13:46 UTC (9 hours ago)
(HTM) web link (www.npr.org)
(TXT) w3m dump (www.npr.org)
| treis wrote:
| This article is really misleading. The study they cite says:
|
| >Overall, we find 1.41 million questionable loans representing
| $64.2 billion in capital with our primarfy measures. These
| measures inevitably contain some false positives, which would
| lead to overstatements, and some flagged loans may have been
| legitimately eligible for smaller loans. However, the measures
| also miss many forms of suspicious lending, and sensitivity
| analysis indicates this total is likely substantially
| understated. Slightly lowering the threshold on the high implied
| compensation and considering excess loans in industry-county
| pairs beyond the number of establishments reported by the U.S.
| Census results in a total suspicious lending estimate of $117.3
| billion.
|
| So 64.2 or 117.3 out of 800 billion is suspicious at some level.
| That doesn't mean the entire value of those loans is fraud. Just
| that they were goosed to increase payout. So anywhere from a few
| percent to 15 percent. Which for how large and how fast is
| actually pretty darn good.
|
| The real scandal here is that it was an ill-conceived program.
| The political powers at the time acted like we'd lock down for a
| few weeks and then everything would go back to normal. But that
| was pretty obviously not going to happen. Ultimately PPP had a
| marginal effect on what businesses survived. Most of the ones
| that did would have anyways. PPP was just money directly into
| those owners' pocket.
|
| Even worse, lots of businesses went gang busters during Covid. So
| most of this PPP money went to the winners of the Covid economy
| instead of the losers. It was just one gigantic blunder.
| AtlasBarfed wrote:
| So, just to emphasize, the Government gave out EIGHT HUNDRED
| BILLION DOLLARS to business owners, who are going to be well-
| to-do or better, as "loans", and then just forgave them
| quietly.
|
| Honestly, those people who were being fraudulent actually were
| doing the right thing, because it siphoned money off from this
| egregious example rich people getting money outright and
| redirected it to the "demand" side of the population. And let's
| face it, the larger corporations can simply shuttle around
| accounting to make whatever look legit it needs.
| spookthesunset wrote:
| > The political powers at the time acted like we'd lock down
| for a few weeks and then everything would go back to normal.
|
| I mean we should have. It was quite clear very early on that
| the computer models predicting 4% IFRs were off by almost an
| order of magnitude.
| Retric wrote:
| We hit over 1 million dead after flattening the curve,
| effective treatments, and a huge swath of the most vulnerable
| population getting vaccinated before infection.
|
| Models showing 4% IFRs without drastic measures like
| lockdowns seem fairly accurate to me. Simply letting COVID
| run rampant may have done less economic damage because it's
| vastly less deadly to working age populations, but we would
| have barbarically sacrificed a significant chunk of the
| population for little gain.
| fallingknife wrote:
| If you compare CA vs FL, FL only has a 10% higher age
| adjusted population mortality rate from covid. This
| indicates that some the strictest covid measures in the US
| made little difference vs the laxest. You can point to
| other countries if you want, and you would be right, but
| the type of strict measures that China used to stop the
| virus are not remotely politically possible in the US (and
| thank god they aren't).
|
| source: https://www.bioinformaticscro.com/blog/states-
| ranked-by-age-...
| vkou wrote:
| 'Some of the strictest control measures' is not how I
| would describe life for anyone in, say, the Central
| Valley.
|
| Maybe people in the major coastal cities actually
| followed any of the difficult-to-enforce restrictions
| [1], but I can't say the same for the three quarters of
| America that is rural or suburban.
|
| [1] Obviously, when schools are closed, that's a
| restriction you have no choice in following.
| Retric wrote:
| The US healthcare system moved resources around to
| respond to more critical areas. As such things are less
| independent than you are suggesting.
|
| That said, look at the worst states on that list and you
| will notice a trend. Mississippi, Oklahoma, Tennessee,
| Texas, Kentucky, Alabama aren't the states with extremely
| high density cities like NYC with the highest natural
| transmission rates, they are the states that failed.
| Rebelgecko wrote:
| It's definitely a trend that states with higher rates of
| obesity and hypertension have higher death rates. But
| since those are known comorbidities, not particularly
| surprising.
| Retric wrote:
| Mississippi and WV had obesity rates of 39.5% in 2018,
| yet Mississippi was 476 where WV was 364 so something
| else is going on.
|
| Especially when you consider Delaware's 33.5% obesity in
| 2018 somehow only resulted in 289. Turns out states with
| stronger responses had better results independent of what
| population density and demographics would suggest.
| Rebelgecko wrote:
| I definitely don't think that's the only factor and the
| correlation isn't 1:1 so you can't necessarily cherry
| pick 3 states and say the trend doesn't exist (but if you
| do want to cherry pick states, I'd point out that of the
| states that took a laxer approach to covid, Utah has the
| lowest obesity rate. They also have a much lower
| population-adjusted death rate than states like
| California that took more aggressive measures to flatten
| the curve over 1-2 years)
| fallingknife wrote:
| I'm not convinced that density is a major factor in covid
| mortality as outdoor transmission is minimal, and the
| virus was able to spread effectively throughout the
| population even in low density areas. (I could be
| convinced by good data, but I haven't seen any on this)
|
| Also density measurement is hard. Does Utah count as
| "dense?" If you look at pop density by state it is near
| the bottom, but almost all of that population is crammed
| into a small area near Salt Lake City. Similar situation
| in Nevada.
| Retric wrote:
| Density does correlate to spread, but only across
| relatively small areas of land. Averaging across a state
| as you say can result in misleading results.
|
| https://www.researchgate.net/publication/323722513_Effect
| _of...
| jliptzin wrote:
| You're assuming everyone actually obeyed the restrictions
| which is a pretty funny assumption. It only takes one
| person in a household to go to a gathering that wasn't
| supposed to happen (and there were plenty of those) and
| then come back and get everyone else sick.
|
| In any case that 10% is ~10,000 people saved. For the
| brief period of time when people largely followed the
| restrictions I feel like that is a good ROI. That's 3
| September 11ths, what did we sacrifice trying to avoid
| another one of those?
| fallingknife wrote:
| If we are not willing to enforce the restrictions to the
| point that they will be effective in carrying out their
| intended purpose, then there should be no such
| restrictions.
|
| Three 911's is meaningless to compare because the
| response is so much different. A better comparison would
| be 0.2 bad flu seasons. Because no one ever wore a mask
| during a bad flu season, not to mention any of the
| actually relevant and economically damaging measures
| taken to stop covid.
| rayiner wrote:
| If you look at the absolute carnage at school test scores
| it was not a good ROI. We sacrificed the well being of
| the young for the lives of the old.
| themitigating wrote:
| Should we redirect the money given to medicare and social
| security to families?
| [deleted]
| themitigating wrote:
| States have different density distributions and people
| movement. It's impossible to compare any state to another
| fallingknife wrote:
| If you had asked me in 2019 for a prediction of what
| would happen if there had been a pandemic and one state
| followed CDC advice, and another said "fuck it, we're not
| doing anything," I would have said that the state that
| followed the expert guidance would have a dramatically
| better outcome. The fact that it didn't happen is very
| significant.
|
| If you want to say that actually what CA did was
| effective, and the differences are all based on
| density/movement differences, then then you need to
| provide evidence. You can't just handwave it away by
| pointing to a possible factor.
| themitigating wrote:
| I need to provide evidence that states have different
| densities of population distribution and that covid is
| spread via close contact?
| rayiner wrote:
| > Simply letting COVID run rampant may have done less
| economic damage because it's vastly less deadly to working
| age populations, but we would have barbarically sacrificed
| a significant chunk of the population for little gain
|
| Saved Medicare and SS spending.
| themitigating wrote:
| The people most likely to vote republican while taking
| government handouts use social security and medicare
| xyzzyz wrote:
| After being forced to pay for SS and Medicare for your
| entire working life, it is unreasonable to expect people
| to not use them, even if they believe that SS and
| Medicare should not exist. This is akin to wealthy
| professionals, who vote Democrat and support higher
| taxes, but nevertheless take advantage of all tax
| deductions available to them. Many such cases. There is
| nothing hypocritical here: it is pointless to damage
| yourself by either refusing SS checks or paying more
| taxes than you're legally required, even if you are
| against SS or for higher taxes, because these individual
| actions will do nothing to bring about the policies you
| want.
| themitigating wrote:
| "This is akin to wealthy professionals, who vote Democrat
| and support higher taxes, but nevertheless take advantage
| of all tax deductions available to them"
|
| This counter example doesn't work because democrats
| aren't advocating for these to be changed
| jimbob45 wrote:
| _Simply letting COVID run rampant may have done less
| economic damage because it's vastly less deadly to working
| age populations, but we would have sacrificed a significant
| chunk of the population._
|
| There are also the forgotten fears of mutation and the
| unknown of the disease. PPP was envisioned/passed around
| April 2020. Back then, we knew relatively little of the
| disease and feared it becoming deadlier and more
| transmissible if it were able to evolve. Fortunately, it
| didn't (to the degree we feared) but it very well may have
| if the US had simply let it run loose.
| peyton wrote:
| spookthesunset wrote:
| > Models showing 4% IFRs without drastic measures like
| lockdowns seem fairly accurate to me.
|
| The infection fatality rate is: deaths / anybody who is
| infected. Everybody is gonna get Covid, mitigations or not,
| so the denominator is always going to be the same. IFR is
| independent of mitigations.
|
| The only way the IFR might change is if healthcare systems
| got so overrun that they could no longer give care. This
| _did not happen_ anywhere in the industrialized world. In
| fact all of the temporary field hospitals here in the
| states were closed virtually.
|
| The models showing a 4% IFR were pure fantasy. The IFR for
| a healthy human under like 65 is something less than %0.1.
| If you are a kid, your risks are lower than dying in a
| house fire.
| devmor wrote:
| > The only way the IFR might change is if healthcare
| systems got so overrun that they could no longer give
| care. This did not happen anywhere in the industrialized
| world.
|
| What world do you live in? It certainly isn't mine. One
| of my co-workers passed away in her home after being
| turned away from the ER in part due to no hospitals in
| the area having available ventilators.
| PuppyTailWags wrote:
| > The only way the IFR might change is if healthcare
| systems got so overrun that they could no longer give
| care. This did not happen anywhere in the industrialized
| world. In fact all of the temporary field hospitals here
| in the states were closed virtually.
|
| Are you sure, especially particularly early & also this
| late? My understanding is that several crucial treatments
| were mass-deferred, several places had no beds, the dead
| were literally stacked on trucks, and the medical system
| has been utterly destroyed either from staff falling ill
| or getting so emotionally destroyed that they've quit.
| Wasn't there a mainstream situation a bit ago where a
| nurse literally had to call the fire department because
| of lack of medical staff?
|
| My understanding is that hospitals still haven't
| recovered in terms of staffing.
| mikeyouse wrote:
| Yes, the person you're replying to is clueless. Even with
| all of the lockdowns, distancing, masking, and tons of
| other interventions - hospitals all over were on the
| brink of collapse. I have 3 immediate family members who
| are hospitalists in the US and each of their hospitals
| was in extremely dire straits. 100% bed occupancy, no
| non-emergent surgeries, diverting patients to neighboring
| states.
| nightski wrote:
| Not sure where you are getting your information, even in
| our city of 250k the hospitals were full and turning away
| care.
| slaw wrote:
| Hospitals were close to full before covid and are full
| now. Op is talking about temporary hospitals for covid
| patients which were empty.
|
| https://www.seattletimes.com/seattle-news/health/wa-
| hospital...
| Retric wrote:
| You can't argue about a zero social distancing world
| based on data from countries that implemented social
| distancing. Doing nothing means seeing what IFR rakes
| look like without a healthcare system.
|
| Even with all the existing measures, many areas ran out
| of ICU beds. All those deferred surgeries had an actual
| cost in human lives because you can't simply delay cancer
| treatment without issue. I will say it again, _some
| people with cancer died because of the COVID pandemic
| even without getting infected._
|
| Anything less than what we did would have further
| overburdened the healthcare system. Doing absolutely
| nothing and even less serious cases that responded to
| such basic measures as IV fluids would have killed people
| without a functioning healthcare system.
| GeekyBear wrote:
| > You can't argue about a zero social distancing world
| based on data from countries that implemented social
| distancing.
|
| You can very easily argue that the mitigations we put in
| place were based on the theory that Covid only had a
| droplet based spread, like the flu. The problem is that
| Covid is fully airborne, like measles, so the mitigations
| we put into place were ineffective.
|
| Social distancing is a good example:
|
| A person infected with a virus that has a droplet based
| spread will spray out droplets when they cough or sneeze
| and those droplets will fall to the ground within six
| feet of their emission.
|
| An airborne virus is emitted by people even when they are
| just breathing normally, and can stay suspended in the
| air for hours. An airborne virus will spread throughout
| an enclosed space.
|
| https://www.nature.com/articles/d41586-022-00925-7
| Retric wrote:
| Your argument falls apart when you consider closing down
| movie theaters and schools stops both. The initial
| version of COVID was airborne but didn't spread that fast
| compared to say measles so it didn't take much to bring
| transmission below replacement rate in most areas.
|
| More recent versions are more easily transmissible but
| are dealing with higher levels of immunity due to
| vaccination and prior exposure. When modeling such
| repeated outbreaks people who where at the highest risk
| for transmission due to coming into contact with others
| regularly where also the first to gain immunity from less
| easily transmissible strains.
| GeekyBear wrote:
| Your argument falls apart when you remember that the
| mitigations we put into place were highly effective
| against the Flu, which does have a droplet based spread,
| but were completely ineffective at stopping the spread of
| Covid, which continued to spread like wildfire.
|
| >CDC says seasonal flu cases hit record lows around the
| world
|
| https://www.nbcnews.com/health/cold-and-flu/cdc-says-
| seasona...
|
| > COVID may have pushed a leading seasonal flu strain to
| extinction
|
| https://arstechnica.com/science/2022/09/covid-may-have-
| pushe...
| Retric wrote:
| Being effective for the flu doesn't prevent them from
| being less effective but still critical for COVID.
|
| Multiple COVID trackers shows a response to COVID
| mitigation strategies and their removal well outside of
| seasonal trends. Demonstrating unsurprisingly that
| transmission goes down when people spend less time around
| each other.
| GeekyBear wrote:
| The thing that keeps six feet of social distancing from
| being effective against Covid is that the virus floats in
| the air for hours.
|
| The initial theory on how Covid spreads was just wrong.
|
| Following the science requires that you be capable of
| changing your mind when you have proof that you were
| wrong.
| Retric wrote:
| The science shows mitigation strategies worked, though
| they didn't all work equally well. Here's one literature
| review:
|
| "Public health interventions and non-pharmaceutical
| measurements were effective in decreasing the
| transmission of COVID-19. The included studies showed
| that travel restrictions, borders measures, quarantine of
| travellers arriving from affected countries, city
| lockdown, restrictions of mass gathering, isolation and
| quarantine of confirmed cases and close contacts, social
| distancing measures, compulsory mask wearing, contact
| tracing and testing, school closures and personal
| protective equipment use among health workers were
| effective in mitigating the spread of COVID-19."
| https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8164261/
|
| As to standing six feet apart. It's true that COVID
| didn't need droplets, but it could still make use of
| them. There is a concept of viral load during
| transmission because the human immune system is much more
| effective stopping a single virus from infection someone
| than 10,000 of them. Non specific immune responses don't
| provide lasting immunity but they do prevent the vast
| majority of infection that cross surface barriers from
| having a noticeable impact.
| spookthesunset wrote:
| It's gonna take decades before we can judge if any of
| these mitigations did a single thing. The fact it is even
| debatable says the effect they had was negligible at
| best; definitely not worth their cost to society. If it
| was worth it, it shouldn't require fancy research to
| prove, it should be completely obvious and enormous.
|
| The fact we had plans zero clue if this stuff would work
| at all is reason enough to not do it. We subjected
| billions of people to a uncontrolled experiment. Worse it
| was without consent.
| Retric wrote:
| It's easy to see that they collectively did quite a bit,
| that study I linked has a lot of research behind it but
| even very simplistic models still show huge collective
| benefits.
|
| The hard part is assessing the cost and benefit of each
| of them individually.
| GeekyBear wrote:
| Sorry, but I don't find information published before the
| WHO finally admitted that Covid was airborne to be all
| that convincing.
|
| >As 2021 drew to a close, the highly contagious Omicron
| variant of the pandemic virus was racing around the
| globe, forcing governments to take drastic actions once
| again. The Netherlands ordered most businesses to close
| on 19 December, Ireland set curfews and many countries
| imposed travel bans in the hope of taming the tsunami of
| COVID-19 cases filling hospitals. Amid the wave of
| desperate news around the year-end holidays, one group of
| researchers hailed a development that had seemed as
| though it might never arrive. On 23 December, the World
| Health Organization (WHO) uttered the one word it had
| previously seemed incapable of applying to the virus
| SARS-CoV-2: 'airborne'.
|
| https://www.nature.com/articles/d41586-022-00925-7
|
| Social distancing by six feet cannot by definition be
| effective against a virus that floats in the air for
| hours and completely spreads through any enclosed space.
| Retric wrote:
| Again if you follow the science being airborne doesn't
| prevent other methods of transmission. People also got
| COVID from sharing needles, which doesn't mean needle
| exchanges would have been particularly effective but they
| would have stopped a tiny fraction of cases.
|
| Transmission isn't like computer virus which can only be
| spread via one specific method. Close content does
| increase the risk of transmission from a simple density
| function if nothing else.
| GeekyBear wrote:
| > Again if you follow the science being airborne doesn't
| prevent other methods of transmission.
|
| No, if you follow the science you won't claim that social
| distancing can be effective against a virus that isn't
| limited to only spreading six feet before falling to the
| ground.
| Retric wrote:
| Reducing transmission is useful even if you don't stop
| 100% of it.
|
| There are exponential returns on each case blocked
| because that cases doesn't result in new cases. If the
| virus is still spreading exponentially then it's simply
| delaying cases, but 1.01^X is monumentally different than
| 0.99^X even though you blocked 2% of transmissions.
|
| Saying standing six feet apart only blocks X% of cases is
| therefore irrelevant on it's own, it's only relevant in
| the context of overall transmission.
|
| In the end simply delaying COVID until after vaccination
| has saved over 1 million American lives. We could have
| done more, but we could also have done vastly less.
|
| PS: I linked mounds actual peer reviewed science you have
| ignored so it's clear this is just wasting time. But I
| home other people reading this thread may come to
| rational conclusions.
| GeekyBear wrote:
| At this point you sound just like the people still going
| on about how Ivermectin does so do something.
|
| Sorry, but following the science requires the ability to
| admit you're wrong in the face of new evidence.
| keneda7 wrote:
| I don't think people are going to come to the conclusion
| you want. I thought I understood your position at the
| start but by the end I am just scratching my head here.
| You seem to admit covid is airborne yet at the same time
| are adamant 6 feet of social distancing stops covid and
| prevents countries from having a 4% IFR. Yet South Korea
| doesn't seem to have gone past a 2.5% IFR and wiki seems
| to imply they did not lock down and Italy was one of the
| first to lockdown and had the highest IFR? Wouldn't this
| actual data invalidate your claim without lockdowns IFR
| would be 4%?
|
| Wouldn't is just be easer to admit your wrong and that 6
| feet social distancing does not stop covid. You were
| originally told incorrect information by, well everyone,
| and now that you know covid is airborne the 6 feet was
| worthless.
|
| Edit: spelling
| Retric wrote:
| No, I never said any individual measure was critical on
| it's own. Six feet alone as in without masks etc does
| almost nothing. Six feet in combination with many other
| measures can do quite a lot near a tipping point.
|
| Shutting down schools was was huge, but you seem to want
| to talk about 6 feet like that's the only thing that
| happened.
|
| What masks and 6 feet separation had going for them which
| is easy to forget is how cheap they are. Closing schools
| is going to have knock on effects for decades, people
| standing further apart is practically free by comparison.
| brnaftr361 wrote:
| My worry is that we've displaced the casualties to a far
| less visible causal agent. There's a lot of economic
| variables that have been pulled at every level, from the
| individual to the state, to global concerns. And I think
| these are more pernicious and difficult to track than
| would be a disease, but I do expect the impact to,
| overall, be more severe that it otherwise would've been
| without the (perhaps naive) interventionism. That's just
| a hypothesis.
| treis wrote:
| Even if we legally went back to normal that doesn't mean
| consumer demand would have gone back to normal. It was pretty
| clear that it wouldn't have gone back to normal until the
| vaccine was rolled out.
| vkou wrote:
| Ding, ding, ding.
|
| I don't care what the government rules would have been, I
| wouldn't have been travelling/commuting to the office/going
| to the bar at _any_ point in 2020. My employer would not
| have been organizing _any_ in-person conferences.
|
| Which would, without the PPP/unemployment stopgap, would
| have happily put most of the firms in the
| travel/hospitality/conference organization industry out of
| business, due to a _temporary_ disruption.
| Scoundreller wrote:
| So the existing management buys the firm for $1 in a
| liquidation and they come back in a few years.
|
| Sounds more like it was the creditors and investors that
| took on more risk than they could handle and got bailed
| out.
| vkou wrote:
| Liquidating a firm, and then coming back in a few years
| is not like turning a light switch off and on.
|
| It's like leaving a car to rust unattended in a field for
| a decade, and coming back to it. It's not going to be
| running, and it's going to take a mountain of work to get
| it into a running state.
|
| That's precisely why letting all these businesses die
| because of a temporary pandemic disruption is the penny-
| wise, pound-foolish decision.
|
| If you think it's fair for the owner class to have paid
| for PPP, I can get behind that, as I'm all for wealth
| taxes/increasing capital gains taxes/???.
| Scoundreller wrote:
| Usually courts in bankruptcy/liquidation release enough
| funds to maintain value.
|
| Many of these businesses were closed due to covid anyway
| and in barebones maintenance mode, as court would do if
| they felt there was some value left to sell.
|
| Sometimes bankruptcies are nearly invisible to customers
| and all in the background while creditors/investors lose
| their shirts.
| [deleted]
| fasteddie31003 wrote:
| Was it a mistake to drop interest rates to 0 and give out free
| money to business owners during a pandemic? I think monetary and
| fiscal policy overreacted to the pandemic, but we'll never hear
| from anyone in power that it was a mistake. I don't think our
| government leaders have learned anything.
| onlyrealcuzzo wrote:
| > I don't think our government leaders have learned anything.
|
| The next group of politicians will have "learned" from this -
| in the sense that people will have voted them in based on
| whatever random views they had that matched with how the will
| of the people has changed.
|
| I doubt existing politicians ever learn anything. Especially
| when our politicians pride themselves on "not flipping" on
| views. How are you supposed to learn anything if you never
| change your mind?
|
| We don't elect people who learn. We elect people who we think
| are always right (charlatans).
|
| I skeptical the people we elect in next will have any better
| ideas, because I don't think "we" learned anything from this
| either.
| testfoobar wrote:
| It was a massive over reaction and a massive mistake. Inflation
| now is a direct consequence of indiscriminate spending.
| Politicians do not seem to understand basic economics. E.g.
| California's inflation relief checks going out right now.
| paxys wrote:
| California isn't printing money for these checks like the
| federal government did. It is all coming from the budget
| surplus, and is not going to have a meaningful effect on
| inflation.
| testfoobar wrote:
| Not true. If California were to use the surplus to retire
| debt, it would reduce inflationary forces in the economy.
| By distributing the money back out, the State of California
| will contribute to inflation.
| yojo wrote:
| This is correct in hindsight. At the time, a lot of smart
| people were forecasting economic armageddon. Businesses
| screwed up too; big, well financed companies like Airbnb did
| massive layoffs. My superhost acquaintance went on to have
| her best year ever.
|
| None of this excuses the lack of oversight, but the initial
| overreaction may have been rational.
|
| Inflation related stimulus is of course farcical.
| fasteddie31003 wrote:
| I think the overreaction should not be viewed as "rational"
| from a hindsight perspective. Society should learn from its
| mistakes.
| yojo wrote:
| When you have a systemic shock with unknown impact,
| rational can still be ultimately wrong.
|
| If there's a 50% chance of total economic meltdown, and
| you can avert it with a few years of high inflation, that
| might still be the correct decision, even if the doomsday
| scenario doesn't come true.
| namarie wrote:
| Not to mention that we'll never know for sure whether the
| doomsday scenario would have come true or not. So it
| might still have been a good response.
| chatterhead wrote:
| josefresco wrote:
| Anecdotally (of course) of the handful of business owners that I
| know (personally) who received PPP funds, 75% of them didn't need
| the loan and all of them had their loans forgiven. Some of these
| businesses had their best years ever (revenue).
| ChainOfFools wrote:
| As someone whose own consultancy provides services to a couple
| dozen of these small businesses, primarily ones which happened
| to fall under the rubric of "essential services", I noted that
| nearly all of them received outsize PPP awards (on the order of
| half a million and up for 30-ish person companies, which had no
| shortage of income due to being among the aforementioned
| essential businesses). These were almost immediately forgiven.
|
| In most cases the businesses were able to apply twice and get
| two separate awards. I'm not sure what the mechanism was for
| this as our business itself never applied for these loans.
|
| In the aftermath of all of this there has been a distinct
| pattern emerging in which these small business owners have
| developed a kind of amnesia about the money they've received
| from these loans and have assigned the upward balance sheet
| inflection to their own "hard work" commitment and demonstrated
| acumen in negotiating the covid crisis.
|
| I suppose this isn't exactly untrue, but there is no
| internalized recognition that this success was a one-time
| phenomenon due to a one-time windfall from the government.
|
| Another anecdote somewhat unrelated is that the number of
| family-run (i.e. father and son/s) trades businesses in my
| local suburb all seem to have decided they need brand new work
| trucks at the same time. These vehicles are uniformly the upper
| end luxury trim levels of the line, lifted and stanced to
| absurdly aggressive proportions, and show no signs of being put
| to any of the actual work for which they would be utterly
| impractical anyway. The number of rear window stickers with
| Sparta helmets or some sort of depiction of an automatic weapon
| suggests the PPP loans may end up having inadvertently helped
| equip and arm a future informal militia.
| ted_bunny wrote:
| The PPP was an upward wealth distribution. It might look like
| a technocratic accident, but things always, always, always
| shake out this way.
|
| On a similar note, the ~$2000 of assistance most Americans
| got went straight to landlords. This crisis was fully
| exploited by people who knew exactly what they were doing.
| robswc wrote:
| Who is "they" ?
|
| https://www.federalpay.org/paycheck-protection-
| program/top-l...
|
| Seems the loans were capped at $10 million? Maybe I'm
| missing something...
|
| But it seems any "they" that is able to manufacture an
| "accident" of this scale would see $10 million on a good
| market day.
|
| I'm not at all saying there wasn't abuse but I don't see
| any conspiracy when incompetence or laziness makes much
| more sense.
| meetingthrower wrote:
| I'm in PE and have looked at probably 500 deals this year. All
| received PPP, and in virtually all cases it has dropped
| straight to the bottom line as a dividend to the owner. (I
| don't do any restaurant / hospitality businesses, and focus on
| businesses that would have been open in pandemic.)
|
| Biggest wealth transfer to owners of small(ish) businesses
| ever!!!
| icedchai wrote:
| My uncle's business got a half million dollar PPP loan with
| millions in profits and over 15 million in the bank. It was
| distributed as employee bonuses. You wonder why there's
| inflation.
| giarc wrote:
| There was probably a lot of "I'm going to get mine" attitude,
| but I also suspect many took the loans in anticipation of
| needing them. Remember, very smart people said the economy was
| going to get destroyed so it would be prudent for businesses to
| prepare. If you didn't need the loan, but were told to prepare
| for the worst, why wouldn't you get the loan?
| meroes wrote:
| Same. Someone I know claimed he/the owners received $5 million
| for a single restaurant location over the pandemic. The owners
| didn't "need it" unless you count not being less wealthy by
| pumping in their own money a need.
|
| But hey, that's the system and they chose to play it. Maybe a
| requirement to post on the physical business how much pandemic
| money they've got would be an easy middle ground.
|
| I'm glad he told me though so I can I understand what really
| keeps businesses going.
| boole1854 wrote:
| Since we're sharing anecdotes...
|
| Anecdotally of the handful of business owners that I know
| personally who received PPP funds (3 businesses total), all
| needed the loan, used it to maintain payroll, and all of them
| had their loans forgiven.
| thwayunion wrote:
| You're both right. I know of 10 cases in my social circle.
|
| Two were small tech companies (not startups) that pivoted to
| WFH services in 2020, had their best years ever, and then
| returned to their normal work portfolio in 2022. Good years.
|
| Five were restaurants I frequent. Two of those went out of
| business, two used PPP to pay salaries then laid folks off,
| and one had a fantastic year because they already had
| eds+meds+tech clientelle, were in a fairly good pandemic-
| weathering of the city (lots of SFHs and huge parks), and
| executed extremely well on the "delivery but we'll keep the
| social third place vibe going with various virtual events"
| model.
|
| One is a auto dealership (well, a manager at an auto
| dealership). Basically used the PPP to pay salespeople
| salaries for a few months and by the time the first summer
| came around it was back to business as usual.
|
| The rest were various other small businesses for whom PPP was
| basically purely supplemental income.
|
| The only one I'm _really_ sour about is a tradesman who did a
| bunch of under the table cash work (unreported so a 30% boost
| already) + got PPP + got enhanced unemployment. Almost two
| straight years of tax fraud. Bought a $300K boat and bunch of
| other toys this year.
|
| All were forgiven.
| vkou wrote:
| > All were forgiven.
|
| Snitch on the tradesman, and you'll get 30% of whatever he
| stole if he's convicted.
| vkou wrote:
| Since we're sharing anecdotes, anecdotally, the only business
| owner I know personally who received PPP funds (My wife's
| employer) needed the loan, kept everyone on the payroll,
| paying them to do nothing, until PPP funds ran out, and once
| that happened, laid off half the staff.
|
| He then continued running the business at a loss, paying out
| of his own pocket for the next year and only _now_ has
| returned to something resembling profitability.
|
| Why was the business operating at a loss? Because of the
| social changes brought about by COVID, it took over a year
| after the mandates were lifted for his customers to return to
| the status quo.
| Scoundreller wrote:
| > He then continued running the business at a loss, paying
| out of his own pocket for the next year
|
| The year-by-year outlook of profit vs loss is arbitrary.
|
| How did the decade by decade history look? Any losses?
|
| Why not look at businesses second by second? Sometimes
| you'll lose in 1 second what will take thousands of seconds
| in profit to make up.
|
| Largely corps distribute their profits to protect past
| earnings against future losses, but risk short-term
| insolvency which should be at their own risk.
|
| Likely they funded the ongoing survival of business because
| walking away from its equity value would have resulted in
| greater losses.
| stvswn wrote:
| Fraud aside, which is a problem, the "forgiveness" of the loans
| was the plan all along so it's not as if businesses were expected
| to pay them back.
|
| The program was really a bailout so businesses could maintain
| their payrolls when everything was shutdown. Instead of writing
| the checks directly, the government decided to frame it as a loan
| that would be forgiven if businesses stayed in business and spent
| it on their payrolls. This was a good strategy for the
| government, because it would have been pretty tough to enforce
| otherwise.
|
| So the loan forgiveness was by _design_ and the point of the
| program was to keep businesses alive when the governments
| themselves were (for perhaps good reason) making it impossible
| for them to operate. It's not really "forgiveness" in the sense
| of, say, the college loan forgiveness program.
| caseysoftware wrote:
| > _So the loan forgiveness was by _design_ and the point of the
| program was to keep businesses alive when the governments
| themselves were (for perhaps good reason) making it impossible
| for them to operate. It 's not really "forgiveness" in the
| sense of, say, the college loan forgiveness program._
|
| I think this is a key point.
|
| The PPP "loans" effectively became a payout to mitigate the
| chance & success of businesses suing the government en mass for
| the shutdown orders.
|
| When you sue an entity civilly, you have to show damages. The
| PPP "loans" countered those damages (and often more) which
| means the threshold for a successful lawsuit just got WAY
| higher.
| brightball wrote:
| Exactly.
|
| You kept people employed and on their employers insurance,
| benefits, etc. You let businesses try to remain as operational
| as possible during the shut down.
|
| The alternative was going to be mass layoffs, unemployment and
| medicaid/aca applications.
|
| The people who keep harping on PPP seem to forget everything
| else that was done in the same time period.
| nrmitchi wrote:
| There's a difference between people complaining about PPP as
| a concept (which I don't think many are?) and complaining
| about PPP abuse, funds being given to companies that were not
| impacted by shut downs, straight up fraud, and people taking
| PPP money and buying lambos.
| tastyfreeze wrote:
| There was another alternative of not forcing businesses to
| shut down in the first place.
| hirvi74 wrote:
| From what I have gathered, 1.06 million Americans have died
| from Covid. Are you implying that more people should have
| been sacrificed to keep businesses profiting?
| nrmitchi wrote:
| Obviously. Grandparents should having been willing to
| sacrifice themselves for the sake of the economy
|
| /s
| testfoobar wrote:
| Indiscriminate programs like PPP were a direct contributor to the
| inflation we see today.
| 1MachineElf wrote:
| As was the indiscriminate shutdowns of US businesses during the
| pandemic - the PPP raison d'etre.
| some_random wrote:
| It's been interesting seeing people freak out about the stimulus
| checks and student debt forgiveness and just... forget about PPP.
| I don't get it.
| phpisthebest wrote:
| Then you are in a political bubble being spoon-feed reactionary
| commentary, because there are all kinds of outrage over PPP
| fraud and abuse
| thomasjudge wrote:
| $2.3 Trillion Trump tax cuts
| onlyrealcuzzo wrote:
| People get pissed off when their neighbor gets something and
| they don't.
|
| They aren't even usually aware when the rich guy in the other
| neighborhood got a handout.
| johncessna wrote:
| Getting forgiveness on loans that you chose to take for a
| school you couldn't afford otherwise is different than getting
| money from the government after local governments forcibly shut
| your business down.
| xfsdfdsfd wrote:
| It was bipartisan. Both parties voted for it. The student debt
| forgiveness is not bipartisan and even controversial within the
| Democratic Party.
| ryandrake wrote:
| It's also interesting that politicians want to means-check
| every penny that goes to the general public, including the
| stimulus and debt forgiveness but also welfare, food stamps,
| medicaid, and so on. It's imperative that nobody is taking
| advantage of the system! But when it comes to PPP and other
| handouts to corporations, suddenly they have no way to means-
| check or figure out in some other way whether the recipient
| actually needs it.
| ProfessorLayton wrote:
| Interestingly this is missing an important piece of context
| that led to PPP in the first place: A novel worldwide
| pandemic that was/is killing a lot of people and _forced
| businesses to close_ -- causing an _immediate and brutal_
| financial emergency for small businesses in particular.
|
| Small businesses account for roughly 60% of all jobs in the
| U.S.
|
| Yes, adding processes to reduce fraud would've been helpful
| in reducing waste, but how do you suppose that should've
| happened? What kind of infrastructure do we have to means
| test that many businesses? Could it have happened within a
| typical pay period or two? How were workers/businesses
| supposed to eat and pay bills until then?
| [deleted]
| anon291 wrote:
| To be clear... I support stimulus checks and PPP, but not
| student loan forgiveness.
|
| I do believe that those whose educations wer disrupted by the
| pandemic should be compensated by having their loans forgiven.
|
| This has to do with government mandates causing monetary harm.
| hirvi74 wrote:
| It's also interesting how many politicians who received PPP
| loans are against student debt forgiveness too.
| houstonn wrote:
| It is interesting how stimulus checks and PPP aren't treated
| the same way. However, debt forgiveness is not the same. The
| government did not compel students into debt. They did compel
| businesses to close and people to lose their income.
| gumby wrote:
| This shuldn't be a surprise: they were always grants _de facto_.
| They were simply implemented by wedging them into an existing
| program which was a loan program.
|
| If anything is surprising it's that less than 100% weren't
| forgiven. As for fraud, well, the feds know how to prosecute it
| whether it was for a loan or a grant.
| jesuspiece wrote:
| But student loan forgiveness is the problem, sure
| fwipsy wrote:
| Anyone else seeing massive memory usage (multiple gigabytes) in
| Firefox under Ubuntu on opening this page?
| [deleted]
| victor106 wrote:
| PPP is one of the biggest frauds in modern America.
|
| How could the US government allow this to happen is beyond me.
|
| https://youtu.be/LhhoQbzupug
| axus wrote:
| I've been really surprised that this hasn't been a political
| issue. These loans were a good deal larger than the student loans
| that've been forgiven, and a dream come true to anyone who's ever
| made money from fraud.
| newaccount2021 wrote:
| MisterBastahrd wrote:
| It's sort of interesting. Just the mental gamesmanship aspect
| of the entire thing.
|
| There are people who will swear up and down that welfare is the
| root of all evil. That bootstrap pulling is necessary, that
| there's opportunity for everyone regardless of their situation,
| and that all you need is hard work and dedication to succeed in
| the US. They will wring their hands about the federal deficit
| and will howl about the size of the national debt. Just look at
| the student loan forgiveness issue.
|
| But if you dangle a $6K per head loan in front of them, with no
| consequences whatsoever, every one of these same people will
| take and say "what did you expect me to do? I've got a business
| to run." Because for the vast majority of them, complaining
| about welfare was never about their taxes, or even considering
| the plight of the individuals who need the money.
|
| It's about the thing that they complain the "woke" masses of
| doing.
|
| It's virtue signaling. It was never about the money. It was
| about self-justification.
| prottog wrote:
| Is your point that people are hypocrites by complaining about
| welfare and turning around and taking welfare for themselves
| when it's offered with no strings attached? I suppose the
| hypocrisy is true, but it also doesn't come with a lot of
| weight. It'd be like pointing out that the people who post
| "no human being is illegal" signs on their lawns don't
| actually take in refugees or vagrants in their homes.
|
| I don't know about welfare being the root of all evil, but
| there are valid discussions to be had on that topic from
| people arguing in good faith, and I think it's perfectly
| justified for someone to feel that their taxes are too high
| or that welfare benefits provide too much.
| readams wrote:
| PPP loans were always supposed to be forgiven from the
| beginning. Nobody would have taken the loans otherwise. It was
| not really a loan it was a payroll subsidy to keep the economy
| from collapsing.
|
| Also, this was actually authorized by Congress and not declared
| by fiat in an enormous executive overreach.
| leshow wrote:
| If anything it's a good case of why "trickle down" economic
| policies don't work very well. Many businesses who got the
| loans still fired employees, the cost of each job saved was
| high.
| robswc wrote:
| >Many businesses who got the loans still fired employees,
| the cost of each job saved was high.
|
| Which businesses? We're also looking with hindsight bias.
| There's no way to see what would have happened if
| businesses weren't bailed out.
| Scoundreller wrote:
| Yeah, just write every human a cheque and let the
| businesses that are already teetering on bankruptcy without
| anyone willing to rescue them go bankrupt.
| leshow wrote:
| Pretty flimsy strawman you've constructed there.
| Scoundreller wrote:
| We're arguing for the same thing.
| efficax wrote:
| giving away money to business owners is always OK by the lights
| of people in power, since business owners help make the people
| in power rich. giving money to loser normies who can't pay
| their student loans? what's in it for them?
| dmix wrote:
| This is a cute theory but in reality it's far more likely to
| be usual government malaise, laziness, and disregard for long
| term consequences than some organized secret push by
| millionaires with pull in the government.
| colpabar wrote:
| Yeah, anyone who thinks wealthy people have any pull in the
| united states government and use it to make themselves more
| wealthy must be some crazy alt right conspiracy theorist.
| Probably a white nationalist too. We all know everyone in
| the government is just dumb and all the trillions of
| dollars they waste is just because they make mistakes in
| excel and stuff.
| prottog wrote:
| Sure, one should always ask "Cui bono?", but it's equally
| important to also examine the incentive structures at
| play which drive the leviathan that is the government. At
| its core, the trillions of dollars of wasteful spending
| happens because politicians are rewarded for spending
| money and punished for asking where that money comes from
| or how effective the spending actually was, many years
| later.
|
| A good example is the Covid lockdowns that benefited the
| likes of Amazon or Home Depot at the expense of Main
| Street businesses. Cui bono? Certainly the wealthy class
| did. But did they collude and whisper into the ears of
| the halls of power in federal, state, and local levels
| (which all played roles in lockdowns) to make sure that
| people were forced to lock down harder and longer? No --
| it's just the incentive structure. Politicians and
| bureaucrats had the choice between being rewarded for
| taking "decisive action" against the spread of the virus
| or pilloried for doing nothing, even if in hindsight it
| appears that we would have been better off doing nothing.
|
| Stuff like this is precisely why conservatives argue for
| limited government and more delegation of powers to lower
| levels of government. It's much easier for a wealthy
| person to have pull on a single US senator to make
| themselves more wealthy, than for that same person to
| have pull on twenty different state senators, or five
| hundred different city councilors.
| pirate787 wrote:
| PPP fraud is a feature, not a bug.
| Clent wrote:
| Political memory is so fleeting. The bill was stripped of any
| oversight by the allies of business.
| houstonn wrote:
| People are so used to watching billions of dollars go missing
| or wasted that it has become background noise.
| Aunche wrote:
| I don't like PPP forgiveness, but at least it was voted on by
| Congress. Also, student loan forgiveness is literally fueling
| the problem that it's trying to solve. It will increase the
| willingness to pay of people of college, so colleges will
| increase tuition. Unlike businesses that reinvest their money
| to expand, colleges reinvest their money to chase prestige, so
| they have no incentive to keep prices constant.
| NovemberWhiskey wrote:
| It's not a political issue because both parties were in favor
| of it.
| prottog wrote:
| I'm entirely unhappy about the whole PPP situation, but I think
| the reason why it's taken up less space in public debates is
| because ostensibly it was to compensate businesses for being
| forced to close. Student loans had no equivalent government
| mandate to have people take them on.
|
| I would prefer the counterfactual where nobody was forced to
| close (any longer than maybe the first couple of weeks) and
| therefore nobody got helicopter money; but since that isn't
| what happened, the next best thing would be aggressive
| prosecution of fraud. One can dream.
| PopAlongKid wrote:
| PPP loans went to "job creators", always a favorite
| politically-protected class.
|
| >it was to compensate businesses for being forced to close
|
| More specifically, it was to "protect paychecks", to keep
| workers on the payroll who otherwise would have been let go.
| Sometimes, but not always, one of those workers was the
| business owner. In theory it was a pass-through benefit aimed
| at workers, but the employers not only had the loans
| forgiven, but also got a tax deduction for spending the
| government's money, and even sweeter in some cases, got
| increased tax basis in their business for the loan money they
| never repaid.
| indymike wrote:
| Before I hit the unpopular opinion part, yes, PPP and EIDL
| had a lot of fraudulent applications that were approved.
| That said, I'll share a little of what I learned because my
| company survived losing 85% of our revenue in 2020 because
| of EIDL and PPP. I and my other cofounders took huge pay
| cuts to get through 2020 and 2021, and without PPP we would
| have been out of business, and 12 employees would have lost
| their livelihoods.
|
| > PPP loans went to "job creators", always a favorite
| politically-protected class.
|
| Both PPP and EIDL were to businesses. Not to individuals.
|
| PPP was not a loan program. It was a grant. EIDL was a
| loan, and that was the program that had forgiveness. Being
| awarded PPP money required that you disclose payroll data
| before, during and after, and if you failed to meet terms,
| it would be converted to a loan. EIDL worked differently,
| if you met forgiveness, a percentage of your loan would be
| forgiven (I seem to recall 60% being the cap, but I could
| be wrong). In PPP there were caps on the amount a business
| owner could claim for their own compensation as a worker in
| the business.
|
| > got increased tax basis in their business for the loan
| money they never repaid.
|
| PPP was not a loan, it was a grant to cover payroll and
| unavoidable (i.e. rent) expenses during the initial
| lockdown. The IRS initially wanted to tax that (and for
| small businesses, that is at the personal rate of the
| owner) grant amount, which would have blunted the effect of
| PPP by 25-30%. The Trump adminstration stepped in and told
| the IRS to stand down, and changed the rules to prevent
| that. The purpose of PPP was really to ensure that
| businesses did not shut down permanently. The fact is that
| most small business only have sufficient cash to handle
| about 90 days of payroll and rent. Keeping the businesses
| alive would enable a faster rebound, because there was a
| study that estimated it would take eight years to re-grow
| that sector if those businesses were forced to shut down.
| adrr wrote:
| What percentage of PPP loans went to businesses that
| negative revenue impacts due to covid? PPP program was
| poorly structured, forgiveness should have been based on
| revenue impacts to the company which can be easily
| measured by using previous tax payments.
|
| We chose not take a PPP loan because our industry saw
| record growth during Covid and it wasn't morally right to
| take advantage of a program meant for struggling
| businesses. Our competitors received money even though
| they also had record revenue growth. We were punished for
| doing the right thing because that capital could been
| have been used to invest in the business.
| indymike wrote:
| > We were punished for doing the right thing because that
| capital could been have been used to invest in the
| business.
|
| PPP had two goals: prevent business closures and layoffs,
| and stimulate the business economy (companies were
| cutting spending too). Yes, the capital could have been
| used to invest in the business, hire more people, etc,
| which all stimulate economic activity.
| meetingthrower wrote:
| Right, caps on owner "compensation", but profits go
| directly to owner at end of year as a dividend. Or as
| sibling mentions, as an incremental investment in the
| business.
|
| This was absolutely a lifesaver for some businesses
| (hospitality industry, small biz retail.) But for the
| other parts of the economy which kept working, it was
| absolutely free money.
| indymike wrote:
| > but profits go directly to owner at end of year as a
| dividend
|
| That is not always the case. Sometimes there is no profit
| to pay a dividend with. In a bad year, like 2020, that is
| usually the case.
|
| > But for the other parts of the economy which kept
| working, it was absolutely free money.
|
| Maybe, but I really think the image presented in a lot of
| articles like this is PPP was just 100% fat cats getting
| an extra serving of caviar. It was estimated at the time
| PPP went into effect that we were at risk of losing 71%
| of the small business economy, and that it would take
| eight years for the sector to recover... which would have
| been devastating to GDP, taxes and so on. The truth is
| probably between 0 and 71%, and the recovery time could
| have been less. I suspect PPP will be studied in the
| future as a starting point for dealing with other massive
| natural disasters that disrupt the national economy.
| GartzenDeHaes wrote:
| Politicians are not stupid and they are not incompetent. These
| laws were very effective at their intended purpose of helping
| political cronies steal the money. Whether it's emergency flu
| fighting F35's or programs for the homeless that do not help the
| homeless, these results are intentional.
| [deleted]
| shagymoe wrote:
| This is straight up theft.
| ranprieur wrote:
| Stop using the word "forgiven". Borrowing money is not morally
| wrong. A better word is "canceled".
| ontehuontuheou wrote:
| ck2 wrote:
| Crowdsource finding individual fraudsters with a bounty per
| successful prosecution.
|
| Is there a statute-of-limitation on prosecution?
| Proven wrote:
| bryanlarsen wrote:
| AFAICT, there's nothing stopping the government from charging
| recipients with fraud even after the loan is forgiven.
| PopAlongKid wrote:
| IRS advises that improperly forgiven Paycheck Protection
| Program loans are taxable
|
| https://www.irs.gov/newsroom/irs-advises-that-improperly-for...
| peteradio wrote:
| Taxable? At 110%?
| dugmartin wrote:
| They will just wait five years and the combined penalty and
| fees will be 200%.
| dsfyu404ed wrote:
| >AFAICT, there's nothing stopping the government from charging
| recipients with fraud even after the loan is forgiven.
|
| Nothing except that peaky thing called political reality that
| tends to get in the way of every ham-fisted enforcement action
| that the pro-jackboot subset of any given democracy is calling
| for at any particular minute.
|
| Remember back when they tried hiring more IRS agents? The left
| made memes about government turning the screws on the poors
| once again. The right made memes about shooting feds. It was
| very clear that few on either side of the isle supports that
| kind of stuff right now.
|
| Political reality precludes making even a suggestion of doing
| that prior to November 9th or thereabouts. The PPP fraud is a
| dead bloated deer in the middle of the political road at 3pm on
| a Friday. And 2/2 employees of the animal control department
| are hoping the weekend guy can deal with it if the coyotes
| don't get to it first.
|
| And frankly, I kind agree. It's water under the bridge at this
| point and while the fraud was predicted it did mostly get
| dumped into the economy as intended and there's no way to know
| we didn't avert a worse crisis by doing that, fraud and all.
| bombcar wrote:
| This is what people forget. The mills of the gods grind slowly,
| but they grind exceeding fine - the government will slowly
| gather data and eventually charge some of the most egregious
| examples of fraud.
|
| Sadly, this usually is the people who tried a fraud for the
| first time instead of those who are experts at repeated frauds.
| Nobody follows the letter of the law like someone violating the
| spirit.
| kotlin2 wrote:
| That just seems so unlikely. There were so many PPP loans
| (over 10 million forgiven). The government can't possibly go
| through even a small percentage of the fraudulent loans with
| enough rigor to build a compelling case of fraud. We'll be
| lucky if they reach 1000 cases of fraud.
| bombcar wrote:
| Much of it will be people reporting fraud:
| https://www.sba.gov/about-sba/oversight-advocacy/office-
| insp...
|
| I agree that they may hit a few thousands at most, and much
| of the "fraud" is unprovable (e.g., companies that would
| have survived without a PPP loan but got one anyway, etc).
| megaman821 wrote:
| Weren't the terms of the loan; Is your business being
| negatively affected by COVID? Will you maintain your
| payroll if you get this money? Under the lenient terms of
| the loan, I don't see many real business having to worry
| about fraud.
| BWStearns wrote:
| When I was in college in DC during the financial crisis, friends
| and I were at a bar and some guy comes in and pays the whole
| bar's tabs. Shouted "TARP MONEY!" and leaves. Pretty sure that
| guy was doing some fraud, but he was nice enough to share so I
| guess that's something.
|
| It's hard to make a program like that quick enough to be
| effective without allowing fraud so I get the free for all style
| distribution. But especially with programs like TARP/PPP where
| the recipients are generally _already wealthy_ and the payments
| are relatively large, I'd like to see some after-the-fact
| scrutiny where people who commit fraud are punished, otherwise it
| reinforces the impression that money buys impunity.
| jedberg wrote:
| My guess is that person was against TARP and was trying to make
| a political statement, since you couldn't really spend TARP
| money like that.
| HWR_14 wrote:
| > t especially with programs like TARP/PPP where the recipients
| are generally _already wealthy_ and the payments are relatively
| large, I'd like to see some after-the-fact scrutiny
|
| Or, here me out, we stop giving rich people money regardless. I
| can see a program that protects businesses in 2020 since they
| were shut down, but think we could have had a better program
| than the PPP. I don't understand why we didn't just let
| companies in 2008 go bankrupt. Can someone explain it to me?
| pwinnski wrote:
| Referring to "TARP/PPP" is misleading, IMO.
|
| TARP disbursed $440 billion in exchange for assets, and
| received back $443 billion to return those assets[0]. It made a
| small profit for taxpayers.
|
| PPP is... not that.
|
| 0. https://www.thebalancemoney.com/tarp-bailout-program-3305895
| BWStearns wrote:
| I didn't mean to over-imply the similarities. I was mostly
| pointing out that large scale interventions rightfully
| sacrifice oversight for speed/impact, but that it'd be nice
| to see more after the fact accountability.
| varelse wrote:
| jandrese wrote:
| The problem of course is that the review process is an enormous
| problem and there just aren't that many people in charge of
| reviewing them. I think a lot of people who are tuned into
| grifting the government saw it as a huge opportunity.
| ItsMonkk wrote:
| It appears that we are heading into a recession as we speak.
|
| What are law makers doing right now to prepare for the possible
| effects of this recession? What are we doing to predict which
| parts of the financial system will collapse? What are we doing
| to prepare if CO-VID mutates into a deadly strain? We've known
| for 30 years that the climate will change, have we done
| anything to prepare for the consequences of that?
|
| Why must we always need to react and pass TARP or PPP within a
| week time-frame or the entire economy crumbles?
| polski-g wrote:
| We entered a recession at the start of this quarter.
| ac29 wrote:
| A recession hasn't been declared yet (though may be in the
| future, retroactively including parts of this year).
| Laypersons often define it as 2 quarters of negative GDP
| growth, which has happened, but that is not the official
| definition in the US. The actual definition is more
| complex, and includes things like unemployment levels,
| which are at generational lows.
| seti0Cha wrote:
| This argument always goes the same way, yet for some
| reason I don't think I've seen it all the way to the end.
| Let supply the next part:
|
| The notion of an "official" definition, and that it must
| be "declared" were introduced when the prior definition
| indicated a recession and the powers that be either did
| not want to admit there was one, or did not think this
| one should really qualify.
|
| Ok, that's part 3. Somebody supply part 4.
| polski-g wrote:
| > Laypersons often define it as 2 quarters of negative
| GDP growth
|
| No. No they do not. The official definition is 2 quarters
| -- the layperson defines it to be whatever they feel
| like.
| jlmorton wrote:
| This argument over the binary question of whether we are,
| or not, in a recession is so strange.
|
| If we are, it's the strangest recession I've ever
| encountered, with sky-high, record levels of job openings,
| rising wages, lots of robust job growth, expanding
| manufacturing, rising prices, product shortages, etc.
|
| There are a lot of headwinds, and the business cycle indeed
| seems to have turned down. Based on rising rates, reduced
| credit, and an increasing trend of layoffs, I bet we are
| indeed heading into a recession.
|
| But it sure does not feel like it currently.
| jjtheblunt wrote:
| > We've known for 30 years that the climate will change
|
| to your point, archaeologists have been scuba diving to
| sunken coastal Greek and Roman era cities all around
| Mediterranean coasts for decades too, sunken from sea level
| rising may meters over the last couple thousand years.
|
| Just another interesting datapoint straight from National
| Geographic magazines as a kid, before politicians really
| grabbed hold of global warming.
| ncmncm wrote:
| Sea level rise finished ~8000 ya.
|
| The sunken urban areas explored lately are mostly
| subsidence, e.g. Heraklion off Egypt.
|
| That said, there is a great deal of underwater urban stuff
| off India not accounted for by subsidence. And a million
| square miles off southeast Asia still unexplored, that
| might or might not be urban. That would be any from before
| 8kya.
| Wyoming23 wrote:
| That's not a "interesting datapoint" that's an unrelated
| anecdote.
|
| That's the climate change denialism equivalent of "my
| grandma smoked her whole life and didn't get lung cancer,
| so these scientists don't know what they're talking about".
| phpisthebest wrote:
| It would not call it denialism I would call it taking a
| different view that we can or should attempt to stop
| climate change
|
| There are 3 groups
|
| 1. People that think we should stop at nothing, including
| resetting the global economy, to stop climate change
|
| 2. People that think Humanity can and will adapt to the
| changing environment and that is the best course
|
| 3. People that think nothing is changing, and everything
| is fine
| Wyoming23 wrote:
| Number 1 is a strawman, written to paint people as
| extremists.
|
| Number 2 is naive and glib. Of course "humanity will
| adapt", but that adaptation will be in the form of
| horrific suffering for billions and lower quality of life
| for everyone in the future.
| freedomben wrote:
| That only leaves group 3 then for your personal opinion
| :-D
|
| On a serious note, how would you categorize yourself?
| i.e. what 4th group would you add?
| Wyoming23 wrote:
| That we should be treating climate crisis with the
| urgency and severity that it warrants and taking
| immediate action.
|
| Create a flat carbon tax to make all products and
| transportation reflect their true cost rather than
| letting people profit by poisoning the commons. Remove
| the artificial barriers to nuclear that make it cost
| prohibitive to start a new plant. Allocate more resources
| to re-training fossil fuel industry laborers into new
| careers. Allocate more resources into finding technology
| to make lower carbon cement, steel and fertilizer.
|
| We don't need to radically alter the existing economy or
| society. We need to make some minor tweaks so align
| economic incentives, stop letting people freeload off of
| polluting activities and allocate tax dollars to programs
| that are more beneficial.
| phpisthebest wrote:
| Number 2 is the only realistic plan, and all other plans
| I have seen simply moves up the "horrific suffering for
| billions" and/or "lower quality of life for everyone" in
| a "rich" nation (and often further limited to the US
| being the only nation that needs to pay)
| s1artibartfast wrote:
| I think you missed the most important group:
|
| 4. People that think climate change is real, and
| investments to mitigate damages should be weighed on a
| cost/benefit basis.
|
| That is to say, for a given change, how much will it hurt
| people to mitigate it now vs later, given the time value
| of money and exponential development.
|
| People in #1 and #2 dogmatically believe the answer
| always falls into act now or act later.
|
| Luckily, most governments end up taking some sort of a
| middle road between these extremes.
| ncmncm wrote:
| Meaning, of course, tragically.
| s1artibartfast wrote:
| Im not actually sure of your meaning.
| ncmncm wrote:
| Climate catastrophe is imminent, and governments dragging
| their feet are directly responsible. It is very far from
| clear that civilization collapse will be averted.
| phpisthebest wrote:
| So then you are in group 1.... Clearly.
|
| Most people disagree
| ncmncm wrote:
| No, because almost everything that could be done about
| averting climate catastrophe would be massively good for
| the economy and global prosperity, immediately. It could
| be uncomfortable for owners of coal mines and oil supply
| chain companies.
|
| You telegraph your sympathies.
|
| Global civilization collapse followed by billions
| starving and thermonuclear war will not end up good for
| anybody. But with some luck you could die first,
| something foot-draggers seem to count on. Why should they
| risk any hint of (expected) discomfort for benefits they
| would not anyway live to see? What have their
| grandchildren ever done for them?
| phpisthebest wrote:
| >>because almost everything that could be done about
| averting climate catastrophe would be massively good for
| the economy and global prosperity, immediately
|
| ROFL.... nothing is further from the truth, the cost of
| "green" energy is massively regressive for people in
| "rich" nations like the US. Hell just the cost of
| replacing gas cars with EV's would be HUGE on most
| people, and EV can not replace every type of vehicle (see
| people that have to tow anything)
|
| That is not getting into the huge problem for norther
| climates where sure Heat pumps have come a long way but
| still are not as good as a NatGas for extreme cold
| climate
|
| There are countless other technological problems that
| will make daily expenses of people massively more costly
| than they are with traditional energy.
| HWR_14 wrote:
| Where is the reasonable methods to stop climate change.
| Things like limits on carbon emissions and coal power
| plants. Or is anything that costs anyone a single dollar
| "resetting the global economy"
| jjtheblunt wrote:
| I'm not sure where you're getting that, as I'm not
| denying climate change at all.
|
| I just thought the longer term cycles not man made are
| interesting.
| jjtheblunt wrote:
| Note : i'm not arguing for denying climate change.
|
| I just saw an interesting article about long term cycles
| that predate the industrial era.
| CrazyStat wrote:
| > But especially with programs like TARP/PPP where the
| recipients are generally _already wealthy_ and the payments are
| relatively large, I'd like to see some after-the-fact scrutiny
| where people who commit fraud are punished, otherwise it
| reinforces the impression that money buys impunity.
|
| This is happening, it's just slow. For example [1].
|
| [1] https://www.justice.gov/opa/pr/california-man-sentenced-
| over...
| NovemberWhiskey wrote:
| TARP is nothing like PPP though; the vast majority of TARP
| bailout money was basically in the form of asset purchases
| (equity stakes in banks, finance firms and insurance
| companies), loan guarantees and finally outright loans to large
| companies in the auto-industry.
|
| Although there was an expectation that some of the asset
| purchases might turn out to be valueless, or that loans not be
| repaid; there was no concept of loan-forgiveness baked into the
| bailout. Indeed, basically of the TARP money was repaid in
| full.
|
| PPP's definition of success, on the other hand, was that jobs
| would be preserved, resulting in the forgiveness of the loans.
| Scoundreller wrote:
| > Indeed, basically of the TARP money was repaid in full.
|
| Sorta. If you invested money at the bottom of the market in
| late 08/early 2009 and only broke even several years later,
| you must have set half the money on fire (edit: or embezzled
| it).
| NovemberWhiskey wrote:
| TARP required the banks involved to issue preferred stock
| for purchase by the Treasury; this prices more like bonds
| than equities due to the fixed dividend.
| Scoundreller wrote:
| Did they pay like $10 or less on each $25 par value or
| something? Or did they buy at par at like a 10-12% or so
| rate and duh, the banks redeemed them for par?
|
| Still sounds like gov took the downside risk while
| shielding themselves from the upside.
| NovemberWhiskey wrote:
| It was sold and par and redeemed at par.
|
| Actually it's a bit more complicated, because the
| preferred stock was also issued with 10 year warrants to
| buy common stock with an exercise price based on the
| company stock at the time of issuance. The warrants could
| be repurchased at fair market value, or they would end up
| being auctioned by the Treasury.
|
| So the Treasury did also have upside participation. e.g.
| Morgan Stanley repurchased its warrants for $950M vs. its
| $10B preferred stock sale.
|
| The preferred stock also came with all kinds of covenants
| that related to government policy objectives (capping of
| common stock dividends, initial limitations on redemption
| absent a successful raising of equity, executive
| compensation restrictions) which really frustrate the
| notion of "pricing" this.
|
| The point still remains; the premise of TARP was "the
| only way the government loses the entire pot is if the
| program fails disastrously and the entire financial
| sector fails" whereas the premise of PPP was "the desired
| outcome is that all the loans are forgiven and the
| government loses the whole pot".
| alistairSH wrote:
| _t 's hard to make a program like that quick enough to be
| effective without allowing fraud..._
|
| Wasn't that the reasoning behind structuring PPP as loans? Get
| the money out as a loan, then forgive/not-forgive later after
| the borrower submits paperwork proving the funds were used
| appropriately.
|
| It appears that second phase isn't happening - the government
| is just forgiving everything.
| panarky wrote:
| I don't know if that was ever stated as the rationale, but
| many people inferred that it was.
|
| It's a defensive inference, to defend our belief that
| authorities wouldn't attempt to solve a crisis by just
| transferring a trillion dollars from lower rungs on the
| economic latter directly to higher rungs on the ladder.
|
| We want to believe that the distribution of wealth is caused
| by individual behavior, that every person deserves their
| station in life however opulent or impoverished. We want to
| ignore the systems of power and privilege that exploit the
| low to further enrich the high.
|
| But PPP strips away even the veneer of fairness and lays bare
| the brutal mechanics of wealth distribution based on power
| instead of contribution or merit.
|
| Perhaps the reason PPP was structured as loans instead of
| grants was to maintain that fig leaf of fairness, to allow us
| to continue to defend the indefensible.
| Wyoming23 wrote:
| Do "we" believe any of that?
|
| Everything you're suggesting here is just standard left-
| wing political worldview wrapped in a narrative device of
| "we believe <the system works>, but really it doesn't".
|
| Also, ignoring fraud, wouldn't the flow of capital for PPP
| be primarily to the lower rungs, not from them? The money
| was to keep paying hourly wage employees in factories and
| retail while the business was shut down, right?
|
| Maybe I'm mistaken about how the program worked, but I
| thought it was essentially the government stepping in to
| provide funds for payroll.
| Loughla wrote:
| >Also, ignoring fraud, wouldn't the flow of capital for
| PPP be primarily to the lower rungs, not from them? The
| money was to keep paying hourly wage employees in
| factories and retail while the business was shut down,
| right?
|
| That's sort of the entire narrative here, though. In
| theory, you are correct. BUT - the "loans" being forgiven
| across the board is, essentially, removing the step where
| businesses prove that the money was used for what it was
| supposed to be used for. So, absent concrete proof, it is
| easy to speculate that this was just another wealth
| transfer to the top.
|
| Will we ever know? Probably not. But it's one more thing
| to throw onto the outrage bonfire for every side. It
| gives the left something to talk about (look at the
| wealth transfer to the rich). It give the right something
| to talk about (look at this gross overspend by the
| government). It gives the middle something to talk about
| (look at how smart we are knowing that this would
| happen).
|
| And it's all political theater.
|
| These are my opinions.
|
| Edit: that being said, look at the comments in this
| thread for literal arguments that are examples of every
| single point in that last paragraph.
| panarky wrote:
| That's a great example of the power of Orwellian naming.
| Only 25% of "Paycheck Protection" funds "trickled down"
| to workers, while 75% was hoarded by owners.
|
| If the objective is to get cash into the pockets of
| workers, you can just give it to them directly, and
| they'll get 100% of it.
|
| The only possible rationale for implementing a Rube
| Goldberg system like PPP is if you intend for the vast
| majority of the funds to get siphoned off by the wealthy
| long before it makes it down to workers.
| vkou wrote:
| > If the objective is to get cash into the pockets of
| workers, you can just give it to them directly, and
| they'll get 100% of it.
|
| That objective was achieved by opening up the
| unemployment taps.
|
| The objective of PPP was to prevent the destruction of
| half the businesses in the economy, which would have had
| knock-on-effects that would have taken years and decades
| to fully unravel.
|
| Think of the bullwhip effect in supply chains that
| everyone's been bitching about for the past two years.
| Now, multiply it times ten, because half the participants
| in the economy _collapsed_ , and their replacements have
| not gotten their shit together yet, and won't for another
| five years.
|
| Businesses collapsing, and ~identical businesses re-
| opening next year destroys massive amounts of value. The
| value was in the human knowledge, connections, contracts,
| and relationships between them and their
| suppliers/customers. You lose _all_ of that. PPP was a
| stop-gap measure to reduce the # of these losses.
| MarkMarine wrote:
| I think you're thinking of this in a binary sense, like
| we can either pay the business owners and they will
| <maybe> pay their employees and then it will be forgiven
| OR we let those people lose their job and go on
| unemployment. Those aren't the only options, but even if
| they were, in the semi industry it was fairly common for
| the whole company I worked for to shut down for a week or
| two if the semi economy isn't cranking. We all went on
| unemployment or took vacation, and came back to our jobs
| when the company opened again.
|
| But, unemployment isn't the only thing we can use,
| because it does have strings. We expect you to be looking
| for another job every week, and proving it. The social
| security system is setup to distribute money to every
| American with a social security number, in a far more
| streamlined system. There are also nice systems in place
| that limit the amount you get from social security in the
| case that you're earning more than a limit. I think
| social security being extended to all Americans, letting
| them stay "at" their job even if it was shut down, and
| setting a floor for income at this time which would make
| sure the business owners were also able to buy their
| basic essentials, but not Lamborghinis, would have been
| the right move. I understand this would require something
| to help businesses with rent while they were unable to
| operate. A national rent holiday to cover the emergency
| of the pandemic would be one idea, or bailing out the
| banks that were effected.
|
| The way this was implemented isn't the only way it could
| be implemented is all I'm saying, lots of countries did
| it other ways, and they didn't collapse in on themselves
| at the end of covid. The PPP program is not the only
| solution to keeping workers connected to their jobs, but
| it sure did create a lot of opportunities for fraud.
| There are podcasts that took hundreds of thousands of
| dollars of PPP money. A podcast.
| vkou wrote:
| Sure, there are other solutions, and you've given
| examples of decent ones (rent holidays, mortgage
| jubilees, etc), and in a better world, we would have
| undertaken them.
|
| We don't live in a better world, finance has a
| stranglehold on our politics, and PPP was a better
| alternative than no-PPP. There's much to criticise it,
| and I don't think it was the best among all possible
| options, but I do think it was vastly better than nothing
| (Or just paying people through UI, while their employers
| fold).
| buttercraft wrote:
| Unless it changed, PPP loan forgiveness required that you
| spend something like 80% on payroll.
| mring33621 wrote:
| 'required'
| aqme28 wrote:
| You're commenting on a thread about widespread fraud in
| the program.
| buttercraft wrote:
| Yes, and I was responding to the parent's claims about
| the rationale behind the program.
| gumby wrote:
| An existing program through the SBA was used as it was the
| fastest way to get cash out the door. That program happened
| to be a loan program, so they were structured that way with
| an almost automatic forgiveness.
|
| Think of it as an API adaptor.
| Scoundreller wrote:
| I think the "loan" structure was to allow the corps to defer
| the revenue.
|
| It let them flush themselves with cash while claim a loss on
| paper and reduce/reverse their taxes that year.
| panarky wrote:
| PPP payments are not "revenue" and they're not taxable
| income. Owners and shareholders can dividend this cash to
| themselves while still claiming operating losses.
| [deleted]
___________________________________________________________________
(page generated 2022-10-13 23:02 UTC)