Coronavirus Loans: The Big and the Small of It

Not only does the stay-at-home regimen brought about by the Covid-19 crisis keep people from their jobs and their studies, but being stuck in the house for days and weeks at a time with no end in sight can drive even the happiest of families cuckoo.

Yet, mass quarantine has its own slim silver lining as well.

Crime has declined noticeably in recent weeks. New York Police Department statistics show that major felonies were down 17% between March 16 and March 22, compared with the same period last year. Between April 13 and 19, robbery was down 56%; assault was down 41%, and grand larceny was down 51%.

If the cloud of contagion is everywhere, so is the silver lining. Across the U.S., statistics are similar. A USAToday analysis of crime data from 53 law enforcement agencies in two dozen states found that rates of theft, residential burglary and drunken driving have fallen dramatically during this period of quarantine.

The police admit that the big downturn in arrests is, in part, a deliberate policy — a desire to avoid putting people in jails, where coronavirus could spread. But there is no question that criminals simply have fewer opportunities to prey on victims in public places when those places are empty.

The murder rate, too, appears to be on the wane, notably in places where it is traditionally quite high, as in Mexico, Honduras, Colombia and El Salvador (“only” two killings a day there, versus 20 to 30 in recent years) and Peru, where crime overall plummeted 84% in March, according to TIME Magazine.

Unfortunately, however, some types of predation, in which criminals can stay at home and victimize other stay-at-homes, are impervious to pandemics. Thus, the FBI reports a decided uptick in crime online during the health crisis.

FBI Assistant Director Matt Gorham told the Associated Press it has received more than 3,600 complaints about coronavirus scams.

The Federal Trade Commission advises people to be on their guard: Don’t respond to texts, emails or calls about checks from the government. Ignore online offers for vaccinations and home test kits. Beware of appeals for donations to fight coronavirus.

The federal government has to be on its guard too.

An AP investigation found that the Paycheck Protection Program, newly created to help save small businesses from financial ruin during the economic shutdown, has been exploited by large businesses to get federal monies they are not eligible to receive.

A significant slice of the $349 billion PPC fund for emergency loans (with more to come) has gone to “at least 75 companies that were publicly traded, and some had market values well over $100 million.” A quarter of those firms had disclosed to their investors financial problems well before the coronavirus outbreak. At issue is approximately $300 million in low-interest, taxpayer-backed loans.

Perhaps the most egregious offender is the $1.6-billion Shake Shack chain, which somehow received a maximum $10 million loan, which in turn raised a furor when it became known last Friday. Company executives have since promised to return the money, saying they have found other sources of capital. Serendipity.

In California, several major banks have been sued for giving priority in processing PPC loans to large borrowers, violating the first-come-first-served policy set by the Small Business Administration, which has charge of the PPC fund. The incentive? Heftier loan origination fees for those banks.

While these undeserving biggies take advantage of the PPC fund, most small business owners and their workers have yet to receive anything. Some 70% of the country’s 30 million small businesses have applied, but only 550,000 loans have been approved, according to the Wall Street Journal.

It’s an unfortunate fact of life that in times of crisis there are always those who take advantage of the suffering and vulnerabilities of others. Including, in this case, the government’s laudable effort to reach those in desperate need.

Then, too, the rapidity with which the Trump administration sought to roll out the PPC led inevitably to mistakes.

The sheer volume of applications – Bank of America told Forbes it was getting several thousand an hour! – must be overwhelming for even the most competent and well-intentioned officials. As Chuck Mausbach, CEO of Minnesota’s Frandsen Financial, put it, they just “didn’t have the time to think of all the nuances” of running such a huge operation.

Certainly, any loans that were received improperly should be returned. As President Donald Trump said at a press briefing on Monday, “We’ll look at individual things and some people will have to return it if we think it’s inappropriate.”

However, it should be kept in mind that most of the money has gone to qualified recipients. There’s nothing bogus about the PPC.

On Tuesday afternoon, the Senate passed a $484-billion aid package, of which $321 billion will be channeled to the Paycheck Protection Program. The House is expected to pass the measure on Thursday.

That means more help to come for those who really need it, and a chance as well for the government to learn from its mistakes and better manage the applications.

And that’s a silver lining too!