Big banks that received taxpayer bailouts during the global financial crisis a decade ago are now too slow in helping small businesses seeking assistance through a $349 billion emergency lending program, a high-level Small Business Administration official said in a recorded teleconference obtained by The Washington Post.
Some banks ‘‘that had no problem taking billions of dollars of free money as bailout in 2008 are now the biggest banks that are resistant to helping small businesses,’’ SBA Nevada district director Joseph Amato said in Monday teleconference about the Paycheck Protection Program.
Amato’s comments offer a rare candid glimpse at the frustrations of federal officials working with thousands of banks to ramp up one of the most ambitious economic stimulus programs in American history.
During the teleconference, Amato acknowledged the SBA had struggled to launch the emergency lending program, which is meant to be a lifeline to millions of small business owners during the economic collapse caused by the coronavirus. But big banks had not done enough to help the program and small businesses, he said.
‘‘There is really no risk to the bank,’’ Amato said of the lending program. ‘‘It just comes down to . . . the same banks that literally took billions of dollars with one page from [former Treasury Secretary Henry Paulson] are the ones saying the documentation isn’t clear enough for them.’’
SBA officials did not immediately provide a comment for this story.
The Trump administration has acknowledged minor glitches with the program but has touted it as a success and praised the banking industry’s work.
‘‘I think overall the banks have done a phenomenal job, some of them are further ahead’’ than others, Treasury Secretary Steven Mnuchin said during a CNBC interview Wednesday morning.
The administration has asked Congress for an additional $250 billion to fund the program, which has received unprecedented demand. ‘‘I want to assure all small businesses out there, we will not run out of money. . . . If you don’t get a loan this week, you will get a loan next week or the following week. The money will be there,’’ Mnuchin said.
The Paycheck Protection Program is key to the Trump administration’s efforts to blunt the economic fallout from the coronavirus. But the program, which launched last Friday, has been beset with technical problems and got off to a slow start after the Small Business Administration and Treasury Department didn’t release the final rules until hours before it was set to launch.
Several of country’s largest banks didn’t immediately participate in the program, saying they needed more time to understand how it would operate. And others limited applicants to companies they already had a relationship with, leaving thousands of small businesses scrambling to find a lender.
Bank of America was alone among big banks to begin processing applications last Friday, earning it praise from President Trump. But the bank angered thousands of small business owners by initially only taking applications from customers it was already lending to. By Wednesday, the bank said it had received 250,000 applications from small businesses seeking about $40 billion; it didn’t immediately respond to requests for comment.
Citigroup, meanwhile, still isn’t taking applications.
Demand for the program also quickly overwhelmed some lenders. Wells Fargo never formally began taking applications, but by Monday morning, said so many people had expressed preliminary interest that it had already reached the $10 billion cap it had set for loans under the program.
Senator Marco Rubio, a Florida Republican, said some big banks were putting ‘‘crazy restrictions’’ on who could apply for a loan through the program, he said in a Twitter video last week.