The GAO pointed out that while the SBA and the Treasury have promised to review all PPP loans of more than $2 million and potentially others, it had not provided adequate details as of June 15 on how that will be done. The administration’s initial reluctance to release the names of recipients and loan amounts has become a flashpoint among lawmakers who have criticized a lack of oversight of the loan program.
The PPP was designed to get money to small businesses quickly through lenders relying largely on certifications by borrowers. But it was also plagued by late guidance that changed multiple times -- especially the rules on how loans can become grants -- increasing the likelihood that borrowers might misuse loan proceeds or not have their loans forgiven as they expect, the report said.
“Because of the number of loans approved, the speed with which they were processed, and the limited safeguards, there is a significant risk that some fraudulent or inflated applications were approved,” the report said. “In addition, the lack of clear guidance has increased the likelihood that borrowers may misuse loan proceeds or be surprised they do not qualify for full loan forgiveness.”
Unemployment Insurance And Fraud
There’s likely to be billions of dollars in unemployment insurance fraud this fiscal year as unemployment claims have surged to more than 42 million, up from 5.1 million last year when there was $2.7 billion worth of fraudulent payments, the report said.
Improper payments are likely to occur when individuals return to work, but still continue to collect jobless benefits. Lack of communication between employers and state unemployment agencies about PPP loans could also increase the potential for workers to double-dip on benefits.
The issue is becoming the centerpiece of the debate surrounding the next stimulus bill that lawmakers will debate in July. The CARES Act expanded benefits to an additional $600 per week, something that Republicans are pushing to wind down, while Democrats say the benefit should remain until the unemployment rate drops.
HHS Hasn’t Spent Much On A Vaccine
The Department of Health and Human Services has spent only $18 million of the nearly $5.5 billion allocated for vaccine and therapeutics. The GAO said it plans to continue to watch federal efforts to accelerate and coordinate vaccine testing and development.
Anthony Fauci, the National Institute of Allergy and Infectious Disease director, told a congressional panel this week that he was “cautiously optimistic” that a vaccine could be available by the end of the year. There are several vaccine candidates nearing readiness for trials, including one by the biotech firm Moderna Inc., that is expected to be tested on 30,000 people starting in July, Fauci said.
Pandemic Air Travel Could Drastically Change
The GAO is urging Congress to mandate that the Department of Transportation create a plan for passenger and cargo airlines to prevent the spread of disease from abroad -- after department officials said it wasn’t their job.
The report said that the DOT wanted to pass the responsibility to Health and Human Services and the Department of Homeland Security, but the GAO said transportation officials should take the lead.
“The United States will not be prepared to minimize and quickly respond to future communicable disease events and garner international cooperation in addressing pandemics without such a plan,” according to the report.
This article was provided by Bloomberg News.