Mister Secretary, Los Angeles Lakers, Cnbc discussed on Squawk Pod
I'm CNBC producer. Katie Kramer Today on our podcast Treasury Secretary Steven Mnuchin on the paycheck protection program that was intended for small businesses but his inadvertently extended relief too much bigger players. I never expected in a million years that the Los Angeles Lakers which. I'm a big fan of the team but I'm not a big fan of the fact that they took four point six million dollar loan. I think that's outrageous and I'm glad they've returned it. The Coronavirus Task Force member explains how federal stimulus efforts are working and not working. How the government will review large loans before granting forgiveness and how this crisis is unlike ones that came before but businesses had nothing to do with this. This was not bad business. Decisions like in the financial crisis is not over levered real estate. The Treasury Secretary says this time around government crisis response should also be different class. Brown University President Christina Paxson on getting back to school this fall students are still learning. It may not be under ideal circumstances but during this pandemic nobody is working under ideal circumstances. It's Tuesday April. Twenty eight twenty twenty squad. Pod Begins Right now. Good morning everybody. Welcome to Squawk box here on CNBC. I'm becky quick along with Joe. Kernan Andrew Ross Sorkin the paycheck protection program or the PC resumed yesterday with a new influx of three hundred ten billion dollars from the federal government. That is intended for small businesses for more on this right. Now let's welcome Treasury Secretary Steven Mnuchin and Mister Secretary. Thank you for joining us today. Good morning it's good to be with you. It's good to talk to you. You know I was hoping we can start with a little bit of a dive into how you see this program. What's happened there has been a lot of outrage out? There as people found out that some big companies had applied things. Ruth's Chris Steak House shake shack autonation. Some of their car dealers getting money in this program and there have been some reports in the media about big banks putting those big customers first in line ahead. It's small businesses. I know that you've come out and said that this is really intended for small businesses. That don't have access to the public markets. But I just wondered if you've had a change in your thinking on how this should be used as as this whole situation evolved as the markets kinda firmed up a bit or if this was something that you thought from the very Gecko and you think some of these big companies. Big Banks are are in the wrong and we're bad actors in this situation. What how did this evolve? Let me first say I. I really think the program has been an incredible success. It's impacted over thirty million workers so far and by the time we get through this funding. I think it will have impacted over sixty million workers which as I've said before is about half the private workforce supporting small businesses that was always the president in Congress's intention and that's what we're delivering on. I think it is. It is unfortunate that there's a small number of companies that have created a lot of publicity that took loans. I think it was inappropriate for most of these companies. Take the loans It was clear. There was a certification We don't think they ever should have been allowed to we put out an Faq clarifying the certification in saying that if they paid back the loans in two weeks so that we could reprocess that money they would have no liability otherwise they would have liability. And I I must say I'm encouraged by the number of people that have paid them back. I never expected in a million years that the Los Angeles Lakers which. I'm a big fan of the team but I'm not a big fan of the fact that they took a four point six million dollar loan. I think that's outrageous and I'm glad they've returned it or they would have had liability and let me just say I'm GonNa be putting out an announcement this morning that for any loan over two million dollars the SBA will be doing a full review of that loan before. There is loan forgiveness so we will make sure that what was the intent for tax payers is fulfilled here but let me say again the program overwhelming success a million of the loan so far or for companies under ten people. What do you think the impact has been in terms of trying to keep people employed have? Have there been people who have gone and had to file for employment or do you think that this program has saved a lot of people from actually having to do that has kept them in their workplace. I think it saved a lot of people and I think for those people that are on unemployment. It's going to bring a lot of people back matter of fact we're having a small business event at the White House today. Where unlike the Lakers stories? We're going to hear some stories of great small businesses who this really saved their business and I can tell you you know the number of emails I get from people who send on the stories of a legitimate small business that was about to close their doors that is either keeping their people on her rehiring. People were businesses that had to close their doors because the no fault of their own. The city shutdown business is going to bring back those people so as we reopened these companies will have the liquidity to pay. Their workers occurs to me that not every part of the country is dealing with this equally. There are a lot of states that closed down later than others and they're obviously others that are opening up quite a bit earlier. Are Any of these funds going to be directed to the areas that are most hard hit to try and make sure that the businesses that maybe have been forced to close a couple of months already and could continue to see Along closure would would those businesses be prioritized? What we're absolutely working on that and and we want to make sure that this money is getting to where it should be and let me say. I'm I'm highly encouraged that the average loan size is coming down. Matter of fact the average loan size in the backlog was less than a hundred thousand I'm also encouraged. Were on a call every day where we have over a hundred. Cdfi's that are making loans. We think we're going to increase that to four hundred so particularly in communities that have been hardest hit that we make sure that they get that money and we're going to do what we need to do to make sure that everybody is treated fairly in this program. Mister Secretary what you tell people who say. Look some of these big companies. Maybe should or shouldn't have tried to get this money. But do you blame the banks. The banks that issued these loans to then given the rules that you at spelled out or were the rules themselves not clear enough. The rules were very clear but let me also say the certification was a certification by the borrower. And one of the things we did is we wanted to make it very easy. The banks were really middlemen here and the banks were were not required to do the diligence. I really felt the borrowers who made these certifications. Now there were some banks early on who put things up on their website and prioritize their customers. We immediately told them that was wrong. They took it down so you know I wanted to be very clear. It's the borrowers who who have criminal liability if if they made the certification and it's not true and as I said we're GonNa do a full audit of every loan over two million dollars. This was a program designed for small businesses. It was not a program that was designed for public companies that had liquidity again. The certification was very clear in saying that if people had other sources of liquidity. They could not take this loan. Mister Secretary what do you say about those larger companies that maybe were turning those loans but the true effective it is that they're gonNA continue to furlough employees to the degree that this is an employment for all program shake shack is not necessarily going to now put people back on the on the payrolls whereas had they had access to some of these loans if you felt that they were a properly eligible despite whatever liquidity think they might have they may decide as a business decision not to bring people back whereas a lot of the smaller companies who would have access to this would bring people back knowing that they'd get the loan ultimately forgiven and we keep people in their jobs again? Let me just be clear. The purpose of this program was not social welfare for big business. The purpose of this program was to help small business. That's as small business program and it was meant for small businesses that didn't have liquidity. Now there are a lot.