Warren warns Biden administration about PPP fees

The program, which has enjoyed wide bipartisan support, was first adopted in March 2020 to keep workers attached to their jobs. The PPP allowed banks to issue government-guaranteed loans that could be canceled if companies maintained their payrolls. Banks charge fees for their role. The program was closed to new applicants at the end of May.

In his June letter to the SBA, Warren referred to a class action lawsuit filed by American Video Duplicating Inc. against Citigroup, Wells Fargo, Bank of America and other lenders who alleged “banks have systematically failed to pay borrowers’ agents – in most cases accountants – their share of the processing fees set under the program, agents stiffeners an average of $ 22,000. A Bank of America spokesperson noted that all litigation on the matter, including this lawsuit, was over, citing the December legislation that led to the resolution of many PPP disputes. The other banks mentioned did not immediately respond to requests for comment on the lawsuit.

Warren cited the original SBA rules that the so-called agent fees would be paid by the lender, followed by later rules that transferred responsibility to the borrowers.

Warren asked for data on the number of loan applications submitted with the help of an agent and information on why the SBA changed its guidelines – in addition to payments made to agents.

Ratliff CPA Firm filed a lawsuit in July 2020, on behalf of the SBA, against First-Citizens Bank & Trust Company, Intuit Inc. and Intuit Financing Inc., Pinnacle Bank and Truist Bank, for the stated purpose “to recover damages and interest penalties resulting from a program to submit the actual submission of false payment claims to the Small Business Administration. A spokesperson for Truist did not comment, saying the bank was not discussing the pending litigation. The other defendants did not immediately respond to requests for comment.

The Justice Department declined to join the prosecution in March.

Dick Harpootlian, co-counsel to Ratliff CPA, said he gave a presentation on the lawsuit to Warren’s office and the SBA in June, ahead of Warren’s letter.

His presentation focused on the change in language surrounding PPP, as banks were originally supposed to pay their agents, but this later caused confusion and was amended by law in December 2020. say borrowers had to pay agents.

“And here’s the problem,” Harpootlian said, “no one will take credit for putting this on the bill… and again, who gets screwed? These small businesses that have provided service in a very difficult time.

Harpootlian said that if there was a chance anyone was paying attention to the suit, he knew it would be Warren, which is why his team decided to present it to him. “Whether it’s overdraft fees or any consumer protection from the banks, she’s been a champion,” he said.

In terms of the unpaid amount, Harpootlian in its presentation estimated that as of August 8, 2020, “given that many large banks have refused to pay and given the volume of lawsuits filed, it seems reasonable to assume that it exceeds 100 $ million. ”

Marc Caputo contributed to this report.

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