Santander Among Banks under Scrutiny for Paycheck Protection Program Lending
Santander Bank, whose US business is headquartered in Boston, has recently come under fire for mishandling the federal Paycheck Protection Program (PPP) loans meant to help small businesses be able to keep paying workers during the COVID-19 pandemic. According to the Boston Business Journal, Santander took so long to handle applications that some businesses never even got to apply before funds ran out.
New reporting suggests the delays were a result of bank processes that favored serving wealthy clients first.
Last week, the Boston Globe reported that Massachusetts Attorney General Maura Healey sent letters to Santander, Bank of America, TD Bank and Wells Fargo “after her office fielded numerous complaints alleging an unfair process that favored big customers.” Santander and other banks were also the subjects of New York Times coverage of “two-tiered systems” that “prioritized the applications of their wealthiest clients before turning to other loan seekers.” The NYT wrote:
Nadeige Choplet, who owns a ceramics studio and gallery in Brooklyn, discovered that Santander had a separate system for some clients only after she informed a business banker there that she was closing the account she’d had for 15 years. Ms. Choplet told the banker she was planning to move her money to another bank, where she thought she might actually have a shot at applying for aid.
For two weeks, she had been calling and making in-person visits to her local Santander branch and speaking with employees, including the branch manager, who knew her well, she said. All of them told her that Santander was not yet ready to take applications. That changed after Ms. Choplet emailed her banker to say she was leaving.
“All of a sudden the door opened,” she said. Her banker told her she had escalated Ms. Choplet’s file and that the bank would take her application manually. Ms. Choplet said she called the branch manager who had earlier told her repeatedly that no applications were being accepted and asked him if he had known they could be done by hand, in person. He said yes.
“I was speaking directly to someone looking into my eyes and telling me, ‘We’re not ready,’” she said. “He lied.”
Why a two-tiered system? One answer is offered by lawsuits filed in California, which contend that the PPP’s fee structure encouraged big-money favoritism by making it more profitable for banks to pay out larger loans first and leave small clients waiting.
These allegations come on the heels of other reports of big corporations capturing PPP funds, including restaurant chains like Ruth’s Chris Steak House and Potbelly cashing in on the low-interest loans. (Public outcry moved Shake Shack to return its $10 million loan.) Although the PPP loans were meant for businesses and nonprofits with fewer than 500 employees, the restaurant and hotel industries had successfully lobbied to allow separate subsidiaries and locations to apply as individual businesses.
In the face of these demands, the original funding was exhausted in only 14 days. Last week, the US legislature passed a new relief package, with another $320 billion in funding for the PPP, including $60 billion earmarked for disbursal through community banks and small credit unions. But this round, too, is likely to run out fast. It looks like big corporations aren’t just elbowing small businesses to the back of the line – they’re pushing some of them out entirely.
And some big banks are helping them. Shouldn’t federal policymakers have anticipated this? Santander’s track record in Massachusetts, for one, suggests it is less interested in the fair distribution of public funds than in securing tax breaks for itself and wealthy individuals.
- In Massachusetts, Santander is part of the Massachusetts Taxpayer Foundation, one of the business associations that sued to prevent the popular Fair Share Amendment that would have raised revenues for education and transportation by increasing the tax rate on income above $1 million.
- Santander is also one of the billionaire corporations that has recently pushed a bill to expand the Single Sales Factor (SSF) Tax Break. History shows that expansion of SSF would not create jobs, but instead line the pockets of giant corporations, depriving Massachusetts of tens of millions in revenue that could be used for COVID-19 response and supporting each other at this time of crisis.
Special access and extravagant tax cuts for corporations and the wealthy are one of the reasons the US is so unprepared to respond equitably and effectively to the economic ravages of COVID-19 in the first place. The federal response to the pandemic, which lets big corporations benefit at the expense of ordinary people, only continues a trend that has lasted for decades. Today, our nation is beset by high inequality and a weakened safety net, the outcome of decades of policy that have prioritized corporate profits over the wellbeing of the public. During a pandemic, this is made evident by plummeting health insurance coverage, our deep digital divide, and low wages and benefits for so many workers who for the first time are being recognized as essential. It is clear that some of us are struggling far more than others, despite the widespread slogan that we’re “all in this together.”
But putting big corporations first isn’t the only choice. There are plenty of models that can prioritize our most vulnerable residents over the richest. Some national governments have covered the majority of all workers’ salaries to ensure a mass return to work when the pandemic winds down. Locally, the Massachusetts COVID-19 Response Alliance is urging a people-centered approach to relief and, eventually, recovery. And progressives in the US legislature are fighting for a more equitable set of measures at the federal level.
Drawing on these initiatives, and putting our people power to work, we can shape a COVID-19 response that invests in communities instead of bailing out corporations.
To tell the Joint Committee on Revenue NOT to advance the Santander-backed corporate tax break, click here.