Fed report finds 75% of $800 billion Paycheck Protection Program didn’t reach employees.
“A new report by the Federal Reserve Bank of St. Louis revealed that American taxpayers ended up paying $4 for every $1 in wages and benefits that workers received as a result of the Paycheck Protection Program (PPP).
Just the News reports that the study also revealed how the PPP ultimately did not protect jobs that were at risk of disappearing during the pandemic, and that money overwhelmingly went to wealthier households rather than middle- and low-income households.
The study, titled ‘Was the Paycheck Protection Program Effective’, was written by co-authors William Emmons and Drew Dahl. They concluded that, while ‘the PPP was a very large and very timely fiscal-policy intervention, saving about 3 million jobs at its peak in the second quarter of 2020 and distributing $800 billion well within two years of the onset of the COVID-19 crisis’, the program ultimately ‘was poorly targeted, as almost three-quarters of its benefits went to unintended recipients, including business owners, creditors and suppliers, rather than to workers’.
‘Due to differences in the typical incomes of those varied constituencies, it also ended up being quite regressive compared with other major COVID-19 relief programs, as it benefited high-income households much more,’ the report continued.
The report by the St. Louis Fed ultimately found that small business owners spent $3 out of every $4 in PPP loans on paying back suppliers and paying other expenses. Overall, 72 percent of PPP funds went to households with incomes in the top 20 percent, according to the report”. -Eric Lendrum, American Greatness
The government wasted money by giving it out to crooks. Now they spend even more taxpayer money to try to prosecute them.
ALEXANDRIA, Va. –“A McLean man was sentenced today to 33 months in prison for his role in a conspiracy that involved the submission of at least 63 fraudulent loan applications to obtain COVID-19 pandemic relief funds to which he and his co-defendants were not entitled.
According to court documents, between April and December of 2020, Foad ‘David’ Darakhshan, 47, conspired with his girlfriend, Haleh Farshi, 44, of Ashburn, and his brothers and their friends to submit falsified loan applications in order to obtain Paycheck Protection Program (PPP) loans through banks and Economic Injury Disaster Loans (EIDL) through the Small Business Administration. The defendants used multiple shell entities they controlled to apply for PPPs and EIDLs and falsified IRS tax forms submitted to lenders. They engaged in a group WhatsApp chat devoted to executing the fraud scheme, openly discussing falsifying documents and inflating the numbers of employees, company revenues, and payroll figures in order to induce lenders to make the loans.
Altogether, the defendants wrongfully obtained over $3 million in loan proceeds. They submitted at least 63 loan applications, of which 17 were approved, the remainder being denied. Foad Darakhshan received over $1.5 million of the overall proceeds of the scheme. The group used the proceeds to invest in the stock market, fund a home construction project, travel to Cancun, purchase a vehicle, and pay for other personal expenses”. -U.S. Attorney’s Office Eastern District of Virginia
This is an inevitable consequence of the housing crash bailout. Banks were not permitted to fail during the 2008-2009 timeframe which ensured that the next failure was going to be a much more expensive one. It also established the precedent for future government intervention in the face of a perceived, or possibly even fabricated, financial crisis.
This also explains the U.S. Congress’ shameless and slavish attitude toward Wall Street when their supposed constituents, the American public, were vehemently opposed to the Troubled Assets Relief Program (TARP) and the bank bailouts.
Once the government steps in to protect a corporation from financial ruin, the corporation loses the right to control its profits. In effect, that corporation is rendered unable to independently manage itself.
It may truly come as a shock for many people to recognize that the only thing more disastrous than a purely socialist system where both profits and losses are public, is a fascist system where profits are private and losses are public.