Hundreds of community banks across America are bypassing big banks on Wall Street to fuel the economic rescue of the nation’s economy, steering more than $4 billion in loans to small businesses across the country.
A senior Treasury Department official confirmed to Breitbart News on Friday afternoon that more than $4 billion has been given out in loans to small businesses, mostly through smaller community banks, on Friday alone.
Friday is the first day of the Paycheck Protection Program (PPP), a $350 billion program that is providing forgivable loans to small businesses nationwide during the coronavirus crisis gripping the country. The loans, which will be forgiven by the federal government should the businesses keep their payrolls intact, come as part of the broader $2.2 trillion economic rescue package known as the phase three bill that Congress passed and President Donald Trump signed last week.
The numbers earlier on Friday suggested that community banks would be leading the way in getting this capital into the hands of small businesses—the senior Treasury Department official told Breitbart News on Friday morning this was a “Main Street rescue” not a “Wall Street bailout”—and that trend has held throughout the end of the day Friday.
“Big love to community banks, who are getting it done!” the senior Treasury Department official said later on Friday.
As of 6:00 p.m. Eastern Time on Friday afternoon, a total of 978 banks nationwide had disbursed nearly 13,000 loans worth over $4 billion.
That same trend line was in place earlier on Friday, as in the morning around 11:00 a.m,. 245 banks had disbursed 1,926 loans worth more than $750 million. But now, throughout the day, it’s been clear that community and local and regional lenders have stepped up to fill the void left behind behind the receding bigger national Wall Street-connected banks—in other words, communities are helping their own while the elites are abandoning a big part of the small business community.
“When the unprecedented PPP loan program for America’s small businesses went live in the early morning hours of April 3, the community banks were the ones ready to go,” the senior Treasury Department official told Breitbart News on Friday morning. “Unlike the big banks that are coming online later in the day, the community banks were up and running and ready to serve their small businesses. America’s community banks are the real heroes.”
With the notable exception of Bank of America, for most of Friday other big lenders and bankers like JP Morgan Chase, Wells Fargo, Capital One, and Citigroup did not have capacity up and running to begin applications for loans through the PPP. The Chase website crashed earlier in the day, and the others did not even launch efforts to distribute the loans yet. That void those bigger banks have left has opened a vacuum into the which the community lenders and bankers have stepped to fill, which is a sea change in the power structure in the financial universe—something similar to what happened during the Global Financial Crisis (GFC) in 2008.
“This is the same dynamic we witnessed during the GFC,” Sheila Bair, the former chair of the Federal Deposit Insurance Commission (FDIC), told Breitbart News. “The smaller, better capitalized community and regional banks stepped up and expanded their lending. The big ones retreated.”
Alfredo Ortiz, the president of the Job Creators Network—a key small business group that has released a video explaining how the PPP program works—also told Breitbart News that what the president and Treasury Secretary Steven Mnuchin have structured here, allowing small businesses to work around big banks and instead work with their local community banks is “smart.”
“That’s what’s so smart about this relief package,” Ortiz said in an email. “The implementation by the Trump Treasury is bypassing government bureaucracy and letting small businesses deal with the people they trust. Community banks are playing a key role in this relief because they will play a huge role in the recovery. The goal now is to get as much of this cash into the hands of America’s job creators as fast as possible.”
Trump himself, during a meeting with energy executives at the White House on Friday, praised the small community banks nationwide—as well as Bank of America—for stepping up. He tweeted about them later on Friday as well:
Mnuchin, who structured this rollout after negotiating the deal’s passage through Congress, has been similarly active on social media promoting the first day of the program:
What’s more, this shift away from the powerful national banks on Wall Street to empowering local community banks nationwide could have major big-picture political ramifications as well. Trump, in other words, has helped the GOP become the party of “Main Street,” while the Democrats and the left are saddled with the baggage of Wall Street.
“This is the kind of thing Elizabeth Warren dreams of, but Trump is actually doing it,” a left-wing progressive populist who works with many top Democrats told Breitbart News.
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