Members of Congress took small-business loans — and the full extent is unknown
• Jun 16, 2020
At least four members of Congress have reaped benefits in some way from the half-trillion-dollar small-business loan program they helped create.
And no one knows how many more there could be.
It’s a bipartisan group of lawmakers who have acknowledged close ties to companies that have received loans from the program — businesses that are either run by their families or employ their spouse as a senior executive.
Republicans on the list include Rep. Roger Williams of Texas, a wealthy businessman who owns auto dealerships, body shops and car washes, and Rep. Vicky Hartzler of Missouri, whose family owns multiple farms and equipment suppliers across the Midwest. The Democrats count Rep. Susie Lee of Nevada, whose husband is CEO of a regional casino developer, and Rep. Debbie Mucarsel Powell of Florida, whose husband is an executive at a restaurant chain that has since returned the loan.
And there are almost certainly more, according to aides and lawmakers. But only the Small Business Administration and Treasury Department have that information, and the Trump administration is refusing to provide any details. That leaves it entirely up to business owners — including elected officials — to decide whether to come forward about a loan, which can be as large as $10 million.
Democrats have tried to pry free the list of recipients. But their push in the House to require disclosure of at least some companies was blocked on the floor late last month by Republicans — including Williams and Hartzler, who voted against the bill. Lee and Powell joined all Democrats in supporting it. All four lawmakers have previously voted in favor of the small-business program.
“This is the largest distributor of taxpayer money in human history, and we need to ensure taxpayers know where it’s going,” the author of that bill, Rep. Dean Phillips, said in an interview. The Minnesota Democrat added that his bill “was not written to expose members of Congress, because frankly I expected members of Congress to be forthright and transparent to begin with.”
Each of the lawmakers who received PPP loans, either directly for their business or indirectly through a spouse, say the loans were acquired through proper channels and part of a desire to help keep Americans employed.
Spokespeople for Williams and Hartzler declined to say how much money was provided under the loans to the privately held companies lawmakers own. Full House Resorts, of which Lee's husband is the president and CEO, received $5.6 million, according to Securities and Exchange Commission filings. Fiesta Restaurant Group, which employs Mucarsel Powell's husband as an executive, received $15 million before returning it in full.
A spokesperson for Mucarsel Powell said her husband played no role in applying for the PPP loan and did not financially benefit from the aid; amid the recession, he took a pay cut from his employer.
While it is not illegal for lawmakers to apply for or accept the money, it has raised new questions about lawmakers’ potential conflicts of interest as they craft the next coronavirus rescue package as well as the administration’s fierce secrecy of the $670 billion program. The program already faced intense scrutiny over charges it was helping the well-connected after reports revealed that large corporations were among the first to be awarded loans, while the smallest businesses were stuck in line.
Now it’s being dogged by growing transparency complaints, with Treasury and SBA refusing to disclose recipients after officials initially said data would become public through Freedom of Information Act requests. POLITICO has sought the information under FOIA.
Both Democrats and Republicans have vowed there will be robust oversight of Congress’ spending on coronavirus relief, including its signature loan program. But Treasury Secretary Steven Mnuchin has so far refused to disclose the recipients of those loans, though he indicated Monday he was planning talks with lawmakers seeking details on the loans.
“Among other steps, the Administration should release the names of all PPP borrowers,” a group of senior Democrats wrote in a letter to Mnuchin on Monday.
Much of the scrutiny surrounding lawmakers taking PPP loans has centered on Williams, one of the wealthiest members of Congress with a net worth of over $27 million in 2018. He received a PPP loan for an undisclosed amount for his Roger Williams Chrysler Dodge Jeep dealership in Weatherford, Texas. The same dealership employs his wife, according to his most recent financial disclosure form.
“If you’re a multimillionaire taking taxpayer money in the middle of the biggest unemployment since the Great Depression, get ready to explain that decision to the American people,” said Rep. Katie Porter (D-Calif.) as she introduced new transparency legislation last month and called out Williams by name in a news release.
Williams was one of 146 Republicans to oppose Phillips’ bill to require the SBA to disclose loans over $2 million. Another one of those Republicans was Hartzler, whose family also received PPP loans for multiple businesses.
Aides to both Republicans said their respective loans were under the $2 million threshold that would have required disclosure under the bill but would not provide more details. A spokesman for Hartzler also declined to say which of her businesses had received the loans.
"The public statement from April is the only information we have at the moment surrounding PPP,” Hartzler spokesman Danny Jativa said.
Phillips’ transparency legislation initially would have published the names of all businesses that received a loan, though he agreed to create a $2 million threshold for disclosure as part of an agreement with some of his GOP colleagues. But the bill, which won the support of 38 Republicans, fell just a handful of votes short on the floor, stunning Phillips and other Democrats who had expected it to pass under a fast-track procedure reserved for popular bills.
“To this very day, I do not quite understand what happened,” Phillips said.
Conservative opposition to the bill, however, had been mounting in the week leading up to the floor vote, with Republicans increasingly worried that the measure would essentially “name and shame” businesses who receive PPP loans.
Rep. French Hill (R-Ark.) — who serves on the Congressional Oversight Commission established by the coronavirus relief law and says PPP loans should be disclosed under existing SBA policy — said in an interview that he believed the bill was “redundant” and that “this whole PPP program is already burdened with tremendous paperwork” requirements.
Meanwhile, Mnuchin and some businesses have expressed concern that disclosing the borrowers could reveal confidential information about their payroll.
Phillips said he has begun talks with top Democrats to bring the bill to the floor again — this time, under a simple majority where it would easily pass. The freshman Democrat said he is also open to changes to safeguard payroll data in order to win over more Republicans, as long as it still requires disclosure.
“My simple, but very strong belief is that taxpayer dollars — when distributed by Congress and the executive branch of our government — should be transparent and subject to accountability,” Phillips said. “Plain and simple.”
Nevada Rep. Lee has also faced scrutiny for her personal connections to the program.
The freshman Democrat was hit with an ethics complaint from a right-leaning watchdog group on Friday after reports that she personally lobbied SBA to help casinos — like Full House Resorts, which her husband runs — access PPP loans. SBA eventually did make the change, and the business that employs Dan Lee received millions of dollars through the program, as first reported by the Daily Beast, as did many other struggling Nevada casinos.
Lee’s office said she had no knowledge of the loans and had no influence over the application. And her spokesman noted that her advocacy for the PPP gaming fix was part of a bipartisan push by the Nevada delegation.
“In terms of transparency, the Congresswoman does believe that loan recipients should be publicly disclosed, which is why she voted in favor of the TRUTH Act," a Lee spokesman said in a statement, referring to the Phillips bill.
Mucarsel Powell, the fourth lawmaker known to have ties to the program, also faced criticism after a publicly traded company that employs her husband as an executive received $15 million in PPP loans. But the company, Fiesta Restaurant Group, later returned the money after public outcry nationwide over large companies accessing aid intended for small businesses.
"Congresswoman Mucarsel-Powell has called for full transparency of which corporations have gotten PPP loans," a spokesperson said, singling out Republicans for "blocking our calls for transparency.”
It’s not illegal, or even uncommon, for members of Congress to be involved in policy decisions that sometimes overlap with their own financial interests. But it becomes a conflict of interest if members use their position of influence to enhance their own standing.
And mixing the two is politically perilous. Sen. Kelly Loeffler (R-Ga.) faces a tough campaign because of stock trades she made during the pandemic even though the FBI has since dropped its probe. Sen. Richard Burr (R-N.C.) was forced to step down, at least temporarily, from his chairmanship of the Intelligence Committee for stock trades.
Some transparency groups, as well as some lawmakers, have pointed out that Congress created no disclosure rules for its own members when it comes to the sprawling PPP program, unlike some other sections of the $2 trillion relief bill.
For example, the House’s Office of General Counsel sent a letter to all members in May asking them to self-identify if they or close family members have financial ties to companies that might benefit from a separate Federal Reserve liquidity program.
The same does not exist for PPP.
The push for greater disclosures has been bipartisan in the Senate: Small Business Chairman Marco Rubio (R-Fla.), the lead architect of the PPP, earlier this month asked the administration in a joint letter with Sen. Ben Cardin (D-Md.) to adhere to SBA disclosure practices and release the names and other details of PPP borrowers. In April, Rubio said Congress was prepared to force the administration to disclose loan recipients and “the bottom line is we're going to know one way or the other who got this money.”
Williams did write a lengthy statement on May 5, announcing that one of his companies received a loan, but it was published four days after it was first reported by the Dallas Morning News. Hartzler released her statement on April 29, one day after it was reported by the Columbia (Mo.) Tribune.
“Like every other company who accepted a small-business loan, our business qualified under law and regulation, and today over 100 of our employees are grateful that we did,” Williams wrote in a note to constituents published on his website.
You can read the full article by Sarah Ferris, Melanie Zanona and Zachary Warmbrodt here.