JPMorgan’s small business loans instead went to its biggest customers
bloomberg.com
bloomberg.com
This seems ludicrously high for what is effectively clerical work -- checking some boxes, ensuring a company meets various criteria -- and money distribution. I get that smaller orgs are likely harder to check out (less income history, poorer quality financial records), but is the $350,000th dollar really 200 basis points more effort for a bank than the $350,001st?
It's not as if they're being compensated for risk-taking. It's not on the bank balance sheet; this is government money. They're getting 5% just for doling it out. Unreal.
Don't like it?
Vote for someone who wants to change it.
> In general, merchant processors will likely offer you an effective rate somewhere between 2.9% to 3.3%. You can try to negotiate that down, especially if you have high sales volume.
[1] https://fitsmallbusiness.com/credit-card-processing-fees-2/
My point is that, actually, no, they don't really. The visa+MC per transaction fees are actually quite low, unless I'm reading that wrong.
Again, this is a complete sidebar to the actual point, which is that banks are just rent-seeking because they can on these loans.
Separately, its also important to point out that the same preferential treatment occurs with the small banks, its just the range of preferences is lower. Very small businesses with bad credit or those of limited value to the bank as a client probably get sent to the back of the line, further compounded, as noted below, that very small businesses' "book keeping" may be wishful thinking at best. (im not opposed to funds being withheld from businesses with poor records, its just going to be the reality of a lot of those old mom and pop shops.
Yet another rabbit hole- cash heavy businesses that skirt the taxman with off-the-books pay, namely restaurants and bars, are reaping what they've sown.
Of course.
The large institutions are more savvy, have staff they can devote to finding this money, and have more connections to the banks.
The small businesses who actually need this money are run by the owner, and may have an accountant, but certainly don't have someone who can jump through the arbitrary hoops put in place by banks.
Also,
>More than 300,000 customers [. . .] applied for loans through the Paycheck Protection Program[. . .]. About 18,000 were funded, for a 6% success rate.
Are you fucking kidding with this? I feel actually insulted by this number.
And finally:
>The bank is among four lenders now facing accusations in a lawsuit that they prioritized the biggest loans in order to earn higher fees.
Of course. I am upset at myself for hoping anyone in this process would act like a decent human being. I don't know what to do with the anger I'm feeling. Any thoughts on where this energy should go?
Voting, and making sure everyone you know votes too.
The system is broken because at the moment in most districts you just can’t compete against who has the money.
I'm not advocating for "not voting", I'm advocating for not letting yourself getting paralyzed by the idea that you are represented already anyway. You are only represented in the most superficial of ways. Start acting instead. Make JP Morgan feel your anger. Make people see your anger to JP Morgan.
You don't have to keep taking the hits. Acting helps psychologically and emotionally and on the best of days even might change things.
Lots of actions available besides the political process where you can still remain firmly on the right side of the law but cause discomfort to the other party. Don't break the law.
- If you had a JP Morgan account. Cancel it.
- Evaluate if they did something illegal, organise a group and go to court over it.
- If you live close to a JP Morgan office, go there and do something. Try to not attract police, as they have more important things to do, but as a rule, the people that work there should have an unusual day. Something as simple as distributing leaflets can for example be really effective to get the office productivity down, especially when maintained.
- Push politicians (maybe on a local level) to apply pressure where they can.
Overall: Don't be nice and agreeable. Be MOAR: mad, organised, angry and relentless.
1. https://www.axios.com/joe-biden-cabinet-vice-president-picks...
Yeah. We blame people and organizations all the time for things that they were legally permitted to do but were selfish, short-sighted, or stupid.
Frankly, JP Morgan should try to be more like Shake Shack (not that Shake Shack was perfect, but at least they recognized and corrected their error: https://www.nytimes.com/2020/04/20/business/shake-shack-retu...)
By removing from power the corrupt officials who colluded with JPM and other large corporations to steal stimulus money from small businesses?
JPM benefited from corruption of the political process. Corruption is enabled by minority rule. Minority rule is enabled by citizen apathy, like when people start saying that “voting isn’t acting!”.
By voting en masse, we as citizens get to 1) hold corrupt officials accountable, and 2) strengthen the democratic process by making it more representative, and therefore less vulnerable to corruption in the future.
As a side note: in my experience, people who say things like “voting is not acting, you need to do more!” are not reliable voters, and not reliable activists either. On the other hand, the most proactive voters tend to already know what else they can do. Electoral activism leads to broader activism.
TLDR: start by taking voting seriously.
Well, sorry if I take the above personally, but here is another datapoint. I almost literally said the above in the post you quoted. I have voted in every election I legally could do so. I have run as a candidate in a number of elections. I have even organised groups to running for elections. I did broader activism and have organised a number of activist lawsuits. After a run in with the police I had to tune things down a bit for my family.
> Electoral activism leads to broader activism.
It does both, really. It is a rung on the ladder, a lot of activists start there. But it can also have the effect of soaking up a lot energy from existing activists, with very little real consequences. There is a balance. Political activism, civil activism and judicial activism also have a space and can have a better trade-off between energy invested and concrete consequences.
Bluntly, I think that this is a polyannaish idea. The best pop culture representation of how US politics works is the Simpsons one where Kang and Kodos ran for President. The choice presented to the American public is rarely a choice between a corrupt politician and a non-corrupt one. It's much more typically typically down to deciding which corrupt, power-hungry individual spews the platitudes, half-truths and lies that you think sound the nicest.
Yes, we should still vote. But voting is not a panacea. The real province of democracy is grassroots organizing. It's probably never enough, but the US Constitution and 200 years of supreme court decisions around it have (tacitly, if not explicitly) made it so that that's the only piece of real political leverage available to those of us who don't have enough money to purchase actual political influence.
2008? 2012? Can't say that I've heard (m)any corruption allegations against Obama.
2016? I mean, I don't think a single charge of corruption or malfeasance ever turned out to be true for Hillary Clinton, has it?
Unless you mean "corrupt" in the sense of "non-pure" and, yeah, 99.9$ people who have enough money to be politicians are distinctly "non-pure". Now if you want to get the money out of politics, it'll need consistent Democrat gains at every level down to local council for the next 20 years to move SCOTUS left and undo all the dark money idiocies of the Roberts' court.
The solution is not voting directly, although voting is part of the solution.
The solution is to form and fund a political action body, equivalent to the NRA or MADD or NAACP; define its remit broadly enough to cover all important aspects of the problem but narrowly enough it can draw members from across the political spectrum and won't be impossible to satisfy; recruit lots and lots of members; hire some competent lobbyists; issue candidate endorsements at every election and THEN vote.
Opposing corruption isn't only a Silicon Valley concern, but it's always struck me that the Silicon Valley community could have a lot of political power if there was a collective will to grasp it: SV regularly gambles tens of millions of dollars on uncertain returns, and the median SV worker has much more disposable income than the median NRA member.
So how is voting for either party going to help a problem that both parties equally passed?
> So how is voting for either party going to help a problem that both parties equally passed?
I think that's misunderstanding politics. Broad bipartisan support doesn't mean both parties were happy with each and every provision, it means that they found the overall compromise acceptable enough to vote for (given the circumstances).
For instance: IIRC, the Democrats actually wanted to add a permanent, general paid sick-leave benefit to one of these relief bills, but after Republican objections they compromised and settled for a temporary COVID-specific benefit to achieve "broad bipartisan support" for the overall bill. That doesn't mean they changed their position, and if more people had voted for Democrats in the last election, the outcome would have been different.
For every $1 going to a good cause, our politicians add $2 of pork in order to find a “compromise”
That's pretty obviously false unless you consider only 0.17% to 0.6% of federal government spending to be "going to a good cause." [1] [2]
[1] https://www.factcheck.org/2007/12/pork-barrel-spending/: "In 2005, CAGW identified 13,997 projects costing $27.3 billion that met its definition of pork spending; as in 2006, that was about 1.1 percent of total spending."
[2] https://www.cagw.org/reporting/pig-book: "The cost of earmarks in FY 2019 is $15.3 billion..." https://www.thebalance.com/fy-2019-federal-budget-summary-of...: "The budget office estimates the federal government will spend $4.536 trillion in FY 2019." That works out to 0.337% of the federal budget.
For those that claim it was dangerous, take that up with Nancy Pelosi the speaker who has refused calls to allow remote voting and video conferences so congress can work. She has refused this because she doesn’t want committees to do anything and she doesn’t want votes recorded. It makes a mockery of any suggestions of oversight. Your beef really is with her not Massie.
Or do you mean voting in my non-battleground state for US president (D for the past 30 years), or perhaps senator (D for the past 20 years)? What effect, exactly, are we hoping for?
‘Voting for financial policy change‘ is like ‘participating in a moment of silence for those we’ve lost to the pandemic‘. The act is something a reasonable person should do because they are a member of society but it is not a solution to that particular problem.
You can also donate your time and money to battleground campaigns elsewhere in the US if you are a citizen.
There are also plenty of ways to get more people to vote, including in battleground states.
If you care, there are plenty of things you can do.
This behavior will not change because of a single election for a handful of seats 6 months away.
There was talk of a constitutional convention back in 2016 and I think it's time to think about how regular folks can recapture the direction of the nation.
Personally, I don't have any huge problem with that, I think it makes sense to protect workers at both Ruth's Chris Steak House and a local family-run steak shop, and we should fund the program at the levels necessary to do that.
But I keep hearing the word loophole, including from Congress members. It is not that. This was by design, and it wasn't buried in some dense text. It was an unambiguous exemption in a two page rule. [1]
[1] It may not be perfectly clear to the average reader, but it certainly was clear for the rulemakers at Treasury.
"Waiver. The affiliation rules described above are waived for (1) any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a North American Industry Classification System code beginning with 72;"
Businesses with an industry classification code beginning with 72 include all restaurants and hotels.
https://www.sba.gov/document/support--affiliation-rules-payc...
Ruth's Chris isn't in nearly as much danger of going out of business as, say, a 1000 or so single-location restaurants that didn't get the time of day from JP Morgan when they called.
First, the waiver got in due to major lobbying by corporations with cash.
Second, it is not correct to state that is is appropriate for larger employers to take PPP. Here is why: although at first glance it would make sense to support workers via PPP, the sad reality is that these workers have already been laid off. As such, PPP will turn into a loan. A cheap loan at that, which is basically a cheaper source of capital funds that any public co has.
Public co.s can tap the capital market or existing banking relationships to survive.
Small biz cannot tap capital markets and banks are not extending credit at this time.
For larger orgs, cheap PPP subsidized loans are literally taking precedence over life and death funds for small biz.
So institutional investors, PEs, and banks are being bailed out, while mom and pops and their staff are getting destroyed.
Laeger orgs already laid off staff. Mom and pops were hoping for PPP.... to keep staff.
> Many of these special-interest provisions would be impossible for a casual reader of the legislation to identify. For example, on Page 15 of the bill, there is a section with the title “Business Concerns With More Than 1 Physical Location.” It says this change in federal law will apply to companies that fit “a North American Industry Classification System code beginning with 72” — a reference that turns out to mean the hotel and restaurant industry.
https://www.nytimes.com/2020/03/25/us/politics/virus-finepri...
Edit: This NYT article is the only one I've found in a cursory search that mentions it.
There's a reason why the administration fired Glenn Fine on 4/7 who was the inspector that was supposed to oversee the 2T rescue plan. The administration and their cronies are doing a classical "shock doctrine" move to even further concentrate wealth while the opportunity is hot.
Occam's razor suggests that, of course, members of a corrupt and self-interested Federal government would intend for their allies at megacorps to have a safe landing, and they would prioritize their wellbeing over others. They look after the people who pay their bills, of course.
McDonalds isn't a burger and fries company, it is a real estate company. This is because they buy the properties each restaurant is located on and rent them out to small business owners who front the capital and run the operation (with stipulations). You may think there are flaws in this setup (which you could argue, though the exchange is a tested business model and logistics network in exchange for franchise fees) but the point is that small business owners are HEAVILY involved in these chain businesses.
It's the same with something like Dunkin Donuts. Here in MA, the profits from the coffee you buy at one location will go into the pockets of one small business owner while down the street it will go into another.
This is a bit different than that. This exempts restaurants and hotels that are all owned by a single entity, as long as the individual restaurant, or hotel is a subsidiary with fewer than 500 employees.
I actually heard and interesting interview [0] with one of the people in charge of the 2008 bailouts. He said the lessons learned were essentially don't worry about being too aggressive and don't worry about spending time trying to engineer a law that will target exactly who you feel like you should target. The most important thing is speed.
Of course though, given limited resources the 2 are correlated.
Instead of >the biggest issue here is not that some companies that probably shouldn't have received the funds did. It's that a lot that should have didn't. Try >the biggest issue here is that some companies that probably shouldn't have attempted to receive the funds did; causing a lot that should have to not.
There was a clear prioritization screw up in this whole boondoggle.
The point though is: we need to advocate for a systems change.
I'm a little bit playing devil's advocate, but why is it a given that "small business owners" are a special class that the government should take extra pains bailing out?
[0] https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf
;)
again, I agree with you
The only answers here are political: to hold legislators to account for passing laws knowing they have not provided adequate funding and basically running a government-sponsored lottery.
I mean have we not learned anything from the past? Does the administration NOT know that if there are no strict rules and oversight the bigger players have more resources to secure these loans. What a complete failure this program has been.
Second, Shake Shack actually gave back their $10 million. Whether that was due to Trump or just bad press, I haven't looked to see, but it can't hurt.
Finally, if there is one thing that Trump is good at, it is using the podium as a bully pullpit. So yeah, I want him calling out companies to give money back. Even if he's only 1/2 successful, it's a lot better than not doing at all.
Am I frustrated like you? Sure, but legislation like this is always messy. Always.
But I agree that there is plenty of blame.
I still think it was amazing that a relief act got passed so quickly that at least worked somewhat given the disparity in politics these days.
I'd personally direct it towards the realization that the US in these difficult times looks more like a plutocracy than a healthy society (I live here). Socialism for the rich, "capitalism" for everyone else. Thinking of creative ways to convince your fellow citizens that this is nowhere near "the best" a society can offer to its constituents would be a good use of extra anger / energy.
There are 90 thousand government agencies. Local, city, county, state, etc... There are people out there who wants you to think they are all like the DMV or dysfunctional like the Senate and Congress.
Or worse, that the private sector somehow is where the challenge is. Maybe where you can get richer, but look at the department of agriculture or any other major government institution. $150b in budget and 100k employees. You find me a private company with similar size and a mission to feed 380M people.
The US needs a renaissance of the importance and virtue of public service. Our best minds are selling ads or consulting to shave off 0.001% of sub-prime derivatives in nanoseconds.
The government is us, and it’s huge and slow and careful and conservative and complex. But it needs us inside to change.
PS: I got inspired by words from Anand Giridharadas, so bonus points if you recognized any from his interviews.
I'm off on a tangent here...but is it really the responsibility of the department of agriculture to feed 380 million people? What did people do before the creation of the department of agriculture? :-)
Maybe the Department of Agriculture is at least an attempt to help farmers in a less selfish way.
Given that the primary goal of farming is to feed people, why not? USDA was created by President Lincoln and was critical to ensuring food distribution throughout the Great Depression. Which agency is better equipped to handle this responsibility than Ag?
But there are systemic issues that you need to consider to make fulfilling, effective change. The problem is that without good regulation, might will make right and cheaters will prosper.
Elections are decided by a combination of appealing to people by telling them you'll do what they want, by advertising money to get the message out that you're the candidate who matches their interests, and by getting people who will vote for you into the polling place. Recent elections have proven that a candidate who's dishonest, who outspends on advertising, and who manipulates the voting population through voter suppression or gerrymandering can win over an idealistic candidate who's unwilling to engage in those tactics.
Those effects don't come into play so much at the local level, but without addressing that 'elephant in the room' a grassroots effort to change government from the bottom up will spend a lot of energy but hit a ceiling on its effectiveness.
I see no point in trying to grow grass when I know there's a lawnmower effect that will chop it down.
It is much easier than you think. Uncontested races are about half of all elections [0]. Just near me a city election had only 19 people vote in it (covid played a big role though). In front of me right now there is a mail ballot for a local election with half the races being uncontested. Look up what your local elections are like here:
https://www.google.com/search?ei=DnGgXrfZJNa5tQbtpKy4DA&q=ru...
For instance in SF here is the page on how to run for office: https://sfethics.org/compliance/campaigns/candidates/running...
This takes about a lunch break to get through. Please consider it, democracy only works if you do.
[0] https://www.governing.com/topics/elections/gov-uncontested-l... Per the article, there is a LOT of variation here.
I mostly used SF as an example to whet the appetite, as many HNers seem to reside in the Bay Area.
I encourage anyone to look up their local races and consider throwing their hat into the ring.
Governments by their very nature, and democratic ones especially, are supposed to be about charging taxes and redistributing that wealth for the better good. There is this big concept about having a powerful middle class which in turns make the extremely poor or the extremely rich a problem for the system to deal with.
The SBA could have helped all of those businesses directly through a coordinated effort with the IRS. Through the IRS they will know who is effectively a small business doing real work recently. How hard is it to just phone or email people asking for their bank account and fund the small business directly? If 6% of funding was all that was available at least a public raffle would have been a fairer system.
But even this stuff doesn't solve the question of what do you do with people that are out of a job, have a disability, mental issues or in general people that are unable to work like the elderly. Do you just let them die out of starvation out in the streets?
The idea that democracies allocate resources efficiently (as in, "for the greater good") is one that I do not agree with. If a democratic majority conclude that harsh restrictions on immigration is beneficial for them (as they suppress the bargaining power over wages/benefits of those who immigrated illegally anyway), then maintaining these restrictions would be democracy as intended. However, you'd still end up with a significant underclass and thus an inefficient outcome.
I think even a cursory analysis of the state would lead you conclude that governments don't efficiently allocate resources in any meaningful sense, but they do allocate resources very well from those who are disadvantaged by its policy to those who are privileged by it, democratic or not.
Forget immigration, the USA had slavery, which too, went away due to the natural forces of the democracy (and liberty of man). I subscribe to the notion that The US Constitution always had eventual emancipation of the slaves in mind, during the drafting (typical political can kicking).
Over time, the choices that affect an underclass are more lenient, as the underclasses vote in their own interest. Short term, there can always be less efficient redistribution outcomes, which does not contradict the mid term effect.
The long term effect is that Democracies are subject to the tyranny of the majority or the pareto curve via coordinated propaganda toward an extensive uneducated/politically-ineffectual population. The USA is no different, but is still very young.
> I think even a cursory analysis of the state would lead you conclude that governments don't efficiently allocate resources in any meaningful sens
A cursory analysis shows that US Govt entitlements are the largest part of the US Budget year over year, since Social Security was introduced (at least). What you mean by efficient is a sticking point, but the majority of the budget goes to supporting the people. That seems to fit.
https://www.nationalpriorities.org/budget-basics/federal-bud...
https://www.cbpp.org/research/federal-budget/policy-basics-w...
This argument doesn't check out for me. There is no guarantee the underclass wins any of the votes they make. The leniency we see towards the "lower classes" is a result of actual struggle by the underclass themselves, in ways typically unrelated to electoralism. If they're not a majority then there's no guarantee "voting in their self-interest" results in any favorable outcomes for them.
In order for democracy to work in this manner, every interest must be evenly distributed, and every overlapping group of interests must also be evenly distributed. This just isn't demonstrated in reality.
> via coordinated propaganda toward an extensive uneducated/politically-ineffectual population
I greatly dislike this idea that propaganda is what makes people vote the way they do. A much simpler explanation is that people have overlapping and contradictory interests that change over time, and their vote reflects this interest. A xenophobic voter may recognize immigration as a net gain for "the economy", but still be willing to take that hit to not live among those of other cultures.
> A cursory analysis shows that US Govt entitlements are the largest part of the US Budget year over year, since Social Security was introduced (at least). What you mean by efficient is a sticking point, but the majority of the budget goes to supporting the people. That seems to fit.
Even if the government spent 100% of its budget "supporting people", this support can still be:
1. Tilted towards more influential voting blocs. 2. Highly discriminatory and exclusionary (thinking of blocs like undocumented immigrants here). 3. Ultimately a raw deal, because we're still supporting a parasitic capitalist class and only getting back cents on the dollar compared to what they make off of us.
The situation you're describing here is one in which the government breaks our legs, then hands us crutches as compensation (which conveniently happen to be manufactured by the corporation lucky enough to get the contract).
The loan conditions and availability is tied to the magnitude of loss the business is experiencing, Then, the business' ability to repay must also be appraised. That's the bread-and-butter business for banks. The IRS has been gutted over the last decades, and I doubt they have the manpower and information needed.
The major problem was that banks didn't really have any incentives to do this work: to make them care about accuracy, you want them to share in any potential losses. But the potential for losses obviously scares them away. You need some fee structure, and there might only be a narrow sweet spot where everyone's interests align.
The second possible improvement would seem to be tighter rules on the sort of business that should preferentially receive help. Small retail and service businesses would seem to be both popular and possibly most effective in terms of jobs/money. At the other end of the spectrum, a single-proprietor business owning and running a dozen apartment buildings with maybe one or two clerical workers should just go bust––the owner loses out but the buildings aren't going to go away,
Moving higher up in the government to have any position of power means that you necessarily 'played' the game and most likely are restrained by the powerful interests who help you along the way.
Aside from any type of revolution or catastrophe (none I which I personally advocate), I can't see how you can make deep and lasting changes in the current system of entrenched interests.
This is my opinion from observation. I am not an expert.
Quite willing to read opposing views.
Go check in countries with large public services and let me know what virtues they display...
Spoiler: you're gonna be disappointed.
If anything, I have advocated for a culture where the smartest people want to join the public service and help others instead of becoming a product manager for a button on a corner of a stupid app that doesn’t care at all what anyone of us do there as long as we interact with ads.
If you’re going to try to be a smart ass, I also have some spoilers for you, drop the attack mode and get better at text comprehension.
> The US needs a renaissance of the importance and virtue of public service.
"importance and virtue of public service".
Unless you consider there is such a thing as public service without government, and that your "virtue" here, used along "renaissance" and "importance" doesn't suggest it needs to be more virtuous, I'd argue it's you who needs to be better at explanation.
Now, on a more important note, if your vision of the private sector is reduced to people working on online ads, I suggest you look beyond the software industry and consider smart people working in very important industries, in research, energy, medicine, finance, millions of people making our lives possible in ways than no public servant will ever be able to even just dream about.
So if anything imo, we don't need more public servants, aren't there enough people telling us how to live our lives? If renaissance we need, is on the importance and virtue of a good day's work as a way to better ourselves and society.
Isn't this just the human manifestation of the CAP theorem? Bureaucracy is a democratically managed database.
Anyways. All that to say, it seems valid to work on the system and within. You list local, city, county etc, and to the detriment of the system those are global write locks.
> The government is us, and it’s huge and slow and careful and conservative and complex. But it needs us inside to change.
I'd like you to consider the government is slow and huge not because of any bad will or conspiracy, but it exists that way due to technical limitations of human organization and achieving consensus.
Our government is Encyclopedia Britannica and we're expecting Wikipedia levels of quality and availability. The underlying organizational structure simply cannot support our expectations. I believe a more participatory form of democracy would be for us not to vote for editors, but a protocol that allows agreeable edits to be socially accepted and contentious edits to be ignored.
Join the pact:
I solemnly swear to stand by those who fight corruption. Should they go too far, I will not fail to recognize the heroism in their intent. As they are expunged from social consciousness, I will not forget. I will not let their sacrifices be completely in vain.
To be fair, in most industries, arbitrary hoops are the result of government regulation. Yes, they might have been implemented by staff at the banks, but oftentimes at the behest of regulators.
In every business I've worked on, every single friction point I've seen us add has been due to regulations, often in patchwork form since they would differ from jurisdiction to jurisdiction. The product managers then are tasked with trying to mitigate the added friction.
If you don’t understand this just look deeper at the bailout and how they voted for it when they could’ve changed it. It contains all kinds of loot for those interests and things that are easy to say no to. It was drafted by the Republicans who control the Senate and the Democrats who control the house could’ve stripped out the controversial parts like the Mnuchin slush fund and passed the uncontroversial parts like the paycheck protection program. They could’ve stripped out the $170 billion real estate tax break. Etc. and passed those in the house that they control. Then forced the Republicans to go on the record as refusing to pass paycheck protection unless they get a slush fund and billionaire tax break. That’s politics. But they didn’t because the powers in the Democrat party wanted those things too. Which is also why they didn’t do an on the record vote for it.
Another simple recent example is to look at the funding in the Democrat primary. Over $1 billion was spent in a panic against a social democrat who wants people to have health care. It’s an incredible figure. That wasn’t money from people that was money from the extremely wealthy and corporate interests.
The solutions are:
1. Abolish the senate. It’s wholly undemocratic. This is the hardest but in time it may be whittled down to more of a ceremonial function like in most other countries that have two chambers. Meanwhile implement instant run off voting for Senators.
2. Implement STV with multi member districts for the House so that we have more proportional representation and voting for other outsider candidates becomes feasible.
3. Increase the size of the house to 650 members to improve representation.
4. Solve the money in politics problem. Perhaps public financing of elections is right. Perhaps tighter controls of campaign financing are possible and other anti corruption measures to prevent lobbyists passing money to officials.
5. Instant run off for election of the president.
Two organizations that you may find good places to start are:
PS: I will also add you do need to let your feelings be known to your representative. Call your local representative to express it. More people should do this because it can have an impact and tells them that people are watching. (We all like to complain about our representatives but how many of us ever express our issues to them?)
And at some point later there may be more protests and demonstrations after what has happened. Be prepared to join them. Big change has always required this.
Voting.
Can't vote for the people who will support these agendas? Vote for the ones who are closer to them. Vote for the ones who are closer to supporting wide enfranchisement, transparency, and access. Vote for the ones who are more interested in good governance than good kickbacks.
It will take time. It will probably take more time than either you or I have. But it's much, much more likely to actually result in achieving the goals you want than any strategy that says "We need to change how our government works! Don't bother to vote, though, that never changed anything!"
I mean, it's still not impossible that revolution will happen, I suppose. We haven't seen the end of the pandemic and whatever changes come out of it, so a lot more is still up in the air than usual. But it's extremely unlikely that the outcome of a revolution would look like what you're suggesting (mainly because while I can certainly see the logic behind all your proposals, aside from #4, they're not particularly widely talked about, and it takes time to spread ideas like that).
Good question. What are you working on? Can you channel your negativity into a positive starting today - however small?
Bigger picture/longer term: can you re-calibrate your time, energy, and emotions into a 'be the change' model?
It can be done deliberately!
https://thezvi.wordpress.com/2019/12/31/does-big-business-ha...
Once recognized as emergent phenomenon we can stop getting emotional about it and learn to build more resilient systems that scale to the next level
I hear you that you were hoping these big institutions would do what was best for people and the country in a time like this and they didn't deliver on that.
If helpful, this is how I thought of it. If the fees are higher on bigger loans, and the company's goal is to make money, this was the right decision for them. These banks are as successful as they are because they are the best at optimizing for the goals the system we've created has set. Maybe in a special case like this, they could've chosen to go against this incentive. But that would probably be worse in the long term. The real problem at hand is that the incentives we've set aren't the ones that we want anymore. We know it needs to be fixed, but it's really hard because our economy is this tightly coupled web. No one really knows what will happen if we start changing incentives. So we've decided not to change much yet. In a way, if banks had gone against their incentives in this moment of acute need, it really would've been a lie. A red herring that might make us delay changing the incentives even longer.
I guess the way I'm holding this is without righteousness. There's no single individuals in these banks that are the evil ones to blame. We've just created a system of incentives that ensures whoever is making certain decisions will keep making the ones that are made. It doesn't matter who, they'll always be made. It's like darwinism. So let's really spend time thinking about what change we want to make that would reward people for making the choices we want to see.
Except, when they aren't. Wells Fargo got completely eclipsed by a much smaller regional bank. Per the LA Times:
"Small businesses that rushed in vain to tap $349 billion in emergency U.S. loans to survive the coronavirus crisis are facing a harsh reality: Some of the nation’s top banks lagged behind relatively tiny rivals in handling applications.
As banking giants tried to automate the process, hundreds of employees at Texas lender Cullen/Frost Bankers Inc. volunteered to fill out forms manually, working late into the night in homes to set up $3 billion in loans. That contrasts with Wells Fargo & Co., which arranged only about $120 million by the time the program was depleted this week, according to people briefed on its progress."
From: https://www.latimes.com/business/story/2020-04-18/small-busi...
For example, a restaurant chain with less 500 workers per location qualified as a small business. Is there any restaurant in the world that has 500 workers in one location? Even if there was would that be “bigger” than a chain with, say, 50 locations with 50 employees each?
It is strange to expect a business to anticipate that the funds would run out and factor that in to determining whether it would be “fair” to apply if you qualified.
Not saying that restaurants have that many, just that it can be deceptive how many employees a store has.
But yeah, any business that is open ~18hr/day and has to keep thousands of square feet of shelved stocked throughout that time is gonna have to have a lot of people.
Your 50x50 example is also not relevant as there is a loan cap.
The Congress, the Fed and the Treasury are coordinating a bail-out of large companies, banks, landlords and Wall Street. Paying money to citizens is only so they can pay their rent and mortgages (to ... you guessed). Buying corporate bonds bails out companies and their executives, but also relieves the credit lines and Revolvers that have been draining the banks. So companies are now raising more bonds to sell to the Fed, to pay back the Revolvers - just as thy sold bonds to buy back stock and reward execs since 2008.
It's all corrupt crony capitalism. If you add a bit of civil asset forfeiture, abolition of constitutional rights (esp. at borders), the surveillance state, privacy-trampling intelligence agencies, militarization of law enforcement, protectionism and a smattering of xenophobia, you get fascism.
In other words, they were focused on transferring their slop loans to the government.
They relented after a couple of days, but of course, small depository customers had already been handicapped.
https://www.bloomberg.com/opinion/articles/2020-04-20/there-...
https://www.bloomberg.com/news/articles/2020-04-17/giant-u-s...
Long story short, part of the issue is that big banks have large complex regulatory and compliance schemes as a result of 2008. They are then unable to process SBA apps because of the low amount of government guidance, so smaller banks with smaller compliance teams were able to process more. This would also mean that smaller businesses would probably have a hard time getting all of their paperwork right vs bigger companies with dedicated legal and accounting teams. Also, banks will then prioritize existing customers, especially ones with loans, because most of the KYC and due diligence has been done already.
Part of the answer is that as an unintended consequence of previous compliance corrections, larger banks are just more unwilling to make loans under unclear guide lines, which obviously there will be if the government rolls out a program in a 1-2 weeks.
The program has been a bit of a mess, but it seems to be broadly functioning as intended, aside from the running out of money part.
I was involved in two business applications, both for very modest sums of money, five figures in both cases, and while it was a little stressful and so on with all the news, and difficulty getting updates from the banks, both were successful and it was not particularly complicated to do.
One loan came from a giant top 5 bank, one from a niche bank, and in neither case was there any special access or connections of any kind. Just regular old open up a small business account by walking into a branch stuff, and applying as an absolute nobody.
So it was possible.
And this whole thing about the chain restaurants, while a little frustrating maybe, is still something squarely within the lines of the law as written. The law was supposed to support paychecks, not companies, and it's pretty obvious restaurant workers are heavily affected. Maybe they shouldn't have modified the chain rules, but they did.
I agree there probably should have been a restriction on larger companies, like publicly traded ones, but somehow this idea has taken over that this is where all the money went. They wrote over a million loans, and as far as I can tell from actual data driven journalism the vast majority of them went to businesses that basically fit into the goals of the program.
Yet, everyone's talking about Shake Shack for some reason.
I feel like this is just another brand of the usual idiocy around means testing in public policy, which inevitably just adds complexity and drags the whole system down.
The PPP program strikes me as one of the most useful parts of all the bailout efforts and it should be praised and expanded for the most part. If you're mad about big business focus on what the Fed is doing with junk bonds and private equity debt. That shit is where the fucking crime is going on.
Imagine if the government lost 74c of every $1 paid in Medicare to billing fraud? Would that be a good program?
Source: https://www.washingtonpost.com/business/2020/04/20/white-hou...
"The vast majority of these loans — 74 percent of them — were for under $150,000"
But whatever the figure the analogy is still nonsensical. The program was designed for the companies it was designed for. The plain language letter of the law explains who was supposed to get it.
The better analogy for what you're saying was "Imagine if the government send 26 cents of every $1 to people that were plainly eligible for Medicare, but who I don't think should have been" which is another thing entirely. There's no allegations of fraud here.
And as someone with direct first hand experience of being involved with tiny businesses for whom this program was an utter lifesaver, I start out naturally skeptical of this narrative.
The problem with the program has been that it wasn't funded enough. And that it was a mess at first and banks were bad a communication about it.
But frankly I think we should be expanding and extending the program, not pretending it's something that it plainly is not.
“The vast majority of these loans — 74 percent of them — were for under $150,000, demonstrating the accessibility of this program to even the smallest of small businesses,” Mnuchin said. He told CNN on Sunday that an additional $300 billion “should be sufficient to reach almost everybody.”
The narrative in this article and most of the discussion is that it was a failure and we shouldn't have done it. I disagree.
Also follow up on your application now, the program was just funded again. Get the money, keep your payroll up and help your team keep their jobs. That's what it's for, and if you finished your application the program is likely to help you very shortly.
I am reading the narrative very differently. You think people are saying there shouldn't have been any bill like this? People are saying that the bill has failed to help small businesses. Which is just a fact.
But I think "the bill has failed to help small businesses" is not accurate at all. It has failed to help enough small businesses.
I literally have no idea how you could be friends with other small biz owners and not realize that this program is an utter failure.
Editing to add source: https://vermontbiz.com/news/2020/april/20/nfib-80-percent-pp...
The narrative I've seen in all the press is that's it's a failure because it all went to Shake Shack and others who didn't deserve it which I think is a confusing distortion of what's actually going on here.
Three of them were with Chase. Those three all applied immediately upon Chase opening up the application process. The loans were "processed" in descending order in terms of the amount asked for, NOT in the order in which they were submitted. None of the requests was over $200,000. All three were still "in process" when the money ran out, over a week after the applications were entered. Those three clients are stuck, hoping that their applications will be funded when the additional funding is approved.
The two that I assisted with that were not with chase were with a local credit union. Both were submitted only a day before the money ran out and both were approved and have been funded.
Something clearly went wrong at Chase.
Who Can Apply
The following entities affected by Coronavirus (COVID-19) may be eligible:
* Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
* Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
* Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
* Sole proprietors, independent contractors, and self-employed persons
My business for now banks with BB&T (now Truist), and we were never even given a form to apply through, as they were releasing it in waves. I ended up applying via PayPal but it was already too late. BBT issued $10B in loans, but they don't say to how many, just that over 100k people tried to request them in first 48 hours. I'll be moving my banking away from this regional bank after this.
So $10.4MM is actually the maximum loan you can get - and the vast majority are far less than that.
Last Updated: April 22, 2020 10:30 a.m. ET
Message from Jennifer Roberts, CEO of Chase Business Banking It appears Congress will approve additional funding for the Paycheck Protection Program, which is encouraging news for thousands more of our small businesses.
We’ll begin submitting applications as soon as the SBA gives the green light. We never stopped working our large application queue because we know how important this money is for your business.
We’ve decided not to take any new applications now. We’ll keep monitoring the funding availability and may consider taking new applicants in the future.
I wish we could help every business through this program, but funds could run out again quickly and we have preexisting applications in our queue. We will continue to process and submit applications until funds are exhausted.
Sincerely, Jennifer Roberts
I mean, our business was literally refreshing the page every 30 minutes last weekend for the application to go live, and I have to imagine that every business that needed the money was doing the same thing.
Any blame for who received the loans and who did not falls solely and absolutely on Congress, which has absconded all responsibility by going out of session.
When money is printed
those who get it first
acquire hard assets
hence bid-up asset prices
and so capture most real value.
When money is printed
those closest to the trough
get most of the cash.This the obvious result of letting banks be the middle-men to every attempt at helping people, and refusing to regulate companies because that would "stifle innovation".
"Innovation" in a bank usually means finding a new way to suck more money out of other sectors while staying just far enough on the right side of the law that the profits outpace the fines. The financial services we need, for the most part, already exist.
You think people were clamoring for "overdraft protection" that doesn't tell them they've overdrawn their account, gives them the money, and then charges them $35? FSAs where any unused funds are kept by the bank and/or your employer? Housing loans that the bank knows you can't pay off, so the bank gets to take your house and get a government bailout? Would that we should stifle such innovation.
https://bench.co/blog/operations/paycheck-protection-program...
I have no affiliation with them, just think they have a great collection of articles on the PPP, EIDL and the other SBA COVID programs. There's so much SPAM content out there it's tough to tell what is legit and what is not.
The SBA.gov site has limited information on the programs, there are more criteria that the lenders are applying to make sure they are covered. Many people would not have realized that they were eligible for the programs based on the news stories and government sites.
I wonder if we would have been better off just sending every American a check and calling it a day. Rather than supporting companies who indirectly support workers, you just support workers directly (sure... make a few case-by-case exceptions for "cannot fail" businesses).
Services, sure, you need a water supply (say). But if the water business fails then someone will snap up the assets, maybe the state, and the service won't fail. So? Pension companies and banks that the C-suite stole from??
If you let a manufacturing company fail, someone will buy the contracts from them. Will they buy the plant with its union workers and environmental liabilities? Probably not.
So a lot of it is less that they cannot fail, but there are major societal downsides to letting it happen.
So we're just subsidizing loser industries forever?
The time & handover issues involved with that would probably cause a lot of issues and service interruptions for people.
You probably don't want that - as that will cause knock on effects like unrest, reduced santiary conditions, etc.
And specifically during this pandemic, if your water fails, that means more trips to the store to buy bottled water. Which means more chance for spreading the virus.
Sure you need established systems but most developed countries should have such systems in place.
Whereas before you were making $100,000/month profit, now you are losing $150,000/month. Now, let's say you run out of money to pay your employees and can't raise more.
If you shut down, the city can't have water. If you stay open, your costs and employees can't get paid. If you close down and your creditors take over you, they'll have the same issue. So what do you do? I'd argue a government bailout in this case is necessary. There's a whole other question of how punitive the bailout should be. Does the government lend you money, take partial ownership or take full ownership outright? But I think most people agree that something needs to get done.
If there is something I’m missing or not taking into consideration, please let me know. Thanks
In any case, the fact they are on the hook for it is not the point. There are lots of firms who want to be on the hook but can't get the loan they need.
These were for small businesses like restaurants, hotels, etc. But most of the money is gobble by big business.
Personally, its time to change the defination of the small business.
So the point is that it's actually not a loan, for the people who got the money, it's almost certainly just free money. Which is why people are outraged that the money overwhelmingly went to the well-connected large businesses who had the most resources to weather the storm, and the money ran out for real small businesses.
For example, many if not most restaurant chains are franchises. The Potbelly location near you isn't owned by the Potbelly corporation; it's a small business that has a franchise agreement with Potbelly corporation.
If Potbelly corporation, as a large corporation, got one of these loans, and then used the money to help their franchises, who have a much better chance of getting the help through their large corporate partner than as individual small businesses applying for these loans, I would not have a problem with that. And for all we know from this article (or, for that matter, from any other reporting on this issue that I have seen), that could be happening with the money the large corporations are getting.
Or, OTOH, if all these large corporations that do franchising are getting these loans, and then are not using the money to help their franchises, I would have even more of a problem with that than I would with large corporations that don't do franchising taking the money.
But from all the reporting I've seen on this issue, I don't know which it is--there could be no problem at all, or an even worse problem than the reporters are alleging. But the news organizations are all so stuck on pushing a "big corporations bad" narrative (which, given that they are themselves big corporations, takes a lot of chutzpah to begin with) that they can't even be bothered to ask the obvious follow-up questions that would help to figure out whether there actually is a problem, and if so, how bad it is.
And news organizations wonder why the public doesn't listen to them any more.
Banks should help the river and get access to the flow, they shouldn't be a dam that holds back the flow, filtering only for their customers or large companies masquerading as "small business".
Had policy sent the money directly to companies from the SBA/IRS, customers then would choose the banks to service that guaranteed government grant/loan essentially. Much like the FAFSA system for student loans, you get your amount, then a servicer handles the actual loan but there is literally no risk to them as it is guaranteed.
Why we sent guaranteed money to be held up in banks and did information and credit checks, on already known information from the IRS, well we know why, to pilfer it.
Had they ran it a better way, using the actual market, directly to businesses/individuals, that is lots of money out there for banks to go get and the market knows it is out there as well.
Instead, it was a direct transfer from the Fed and treasury to QE that was pilfered by the usual suspects: hedge funds, market makers, foreign funds, oligarchs, wealth/value extraction ops, naked short selling, short and distort and more. The SBA money was pilfered by banks and large companies. The 'stimulus' for the economy, routed around the entire actual economy, never reaching individuals or true small business.
Companies that received SBA funding many are listed on the public markets. I doubt most people would call "small business" companies that have IPOed and been on the market for years. These companies have other access to funds, they just wanted the 1% loans and took from hundreds and thousands of small businesses that supply them, subscribe to their services, buy their software, consume their products, feed them and other services.
Examples of companies that got SBA PPP and other [1]:
- Drive Shack Inc. (DS) $5,276,742 - Golf company like TopGolf... wow. That would have funded many, many small businesses.
- New Age Beverages Corp. (NBEV) $6,868,400 - Revenues 250~ million...
Isn't it safe to say if you have a stock ticker and one of 3812~ companies on the public markets that you aren't "small business"?
How to fix it...
We need a micro small business emergency stimulus.
- Less than 50 employees across ALL locations, less than 2-3 million revenues and sole proprietors.
- There can be no gaps to allow this to go to the already serviced.
- Include sole proprietors and really small companies (< 10 employees) with priority that matches their numbers in the market.
The current "small business" designation is really small to medium to large businesses. However, sole proprietors are 73% of all small business.
America is mostly small businesses.
SBA/Chamber of Commerce has 30.2 million for companies under 500 people. [2]
Lots are sole proprietors or very small companies with < 5 people.
22 million of the small businesses in the United States are individually operated, meaning that they have no other employees other than the owner.
99.9% of businesses in the United States are small businesses, owing to the rather large threshold of 500 employees, or fewer.
Small business is the engine of America.
Small businesses comprise what share of the U.S. economy?
Small businesses make up [3]:
- 99.7 percent of U.S. employer firms,
- 64 percent of net new private-sector jobs,
- 49.2 percent of private-sector employment,
- 42.9 percent of private-sector payroll,
- 46 percent of private-sector output,
- 43 percent of high-tech employment,
- 98 percent of firms exporting goods,
- 33 percent of exporting value.
It is time to help the lower/middle, sole-proprietors and small business or America as we know it is much much different after this.
About 8 trillion in 'stimulus' and QE, at a cost of 20k to every citizen, for that individuals got $1200 many haven't got yet and small businesses finding out how small of fish they a really are.
The banks helped the big fish, but the big fish need the small fish to survive.
Money trickles up and down and all around, but money only trickles where other money is found.
This market is broken for lower/middle and people or small business. It is gangbusters for wealth and value extraction ops. How long can this go on?
The stimulus for individuals, families and small business is vaporware, time for some vaporwave as we fade away into the ether.
Good luck wealth and big business with no one to skim from and no small business to use as research and development or suppliers.
[1] https://www.wsj.com/articles/these-are-the-public-companies-...
[2] https://www.chamberofcommerce.org/small-business-statistics/
[3] https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf Source: U.S. Census Bureau, SUSB, CPS; International Trade Administration; Bureau of Labor Statistics, BED; Advocacy-funded research, Small Business GDP: Update 2002- 2010, www.sba.gov/advocacy/7540/42371.
If consumers have purchasing power and small companies buy up their services, supply them, and are where they make their money broadly, maybe their self-interest will align with the actual market.
Our policies already downplay the importance of wages, consumer base purchasing power and just keep piling on the backs of a finite resource. How long do can the wealth extraction keep happening before there is none left and stagnation takes over in a big way? Rich people and large companies can only buy so much, the long tail of small businesses and consumer purchasing power is America, it is under attack.
Real wages and purchasing power have barely budged in 40 years [1].
Worker share of GDP being on a long dwindle down [2] and velocity of money is off a cliff [3], that is why we are so stagnant.
Richest 1% of Americans Close to Surpassing Wealth of Middle Class [4]
Money trickles up and down and all around, but money only trickles where other money is found.
If there isn't purchasing power or demand, that is hard to create. Why are we widdling it down day by day, year by year, decade by decade?
What happens when The Giving Tree is a stump?
[1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
[2] https://fred.stlouisfed.org/series/W270RE1A156NBEA
[3] https://fred.stlouisfed.org/series/M2V
[4] https://www.bloomberg.com/news/articles/2019-11-09/one-perce...
$500 billion was set up for corporate bailouts.
$350 billion for small business.
Large companies took both.
America is mostly small business, money should have gone directly to them via SBA/IRS and then they get to pick the bank to service it like the FAFSA student loan system. There should never have been banks needing to process these, all the information is already known. It was a filter to make sure big business got it.
Many larger companies just wanted the 1% loan that has to be paid back in 2 years. They have access to other funding and have more assets for leverage in those dealings. Small businesses, true small business now, do not have that access to capital.
The PPP for instance 75% needed to go to payroll, so larger companies free up other money, and use the PPP for payroll while continuing to roll. 25% can be used for non payroll but other needed expenses. It was a sham.
The rules also hit small business harder on payback, the amount that turns into a grant is based on retained employees, so with a smaller headcount, less people leaving causes a bigger hit for small business. It should have had a revenue component to that.
Fact: companies on the public markets are not "small business", zero would be classified that way in any other metric.
If you truly think most of the money is going to go to individuals in the end I have a 'bailout' to sell you.
That was what explicitly written in the bill, so you'd have to blame Congress, if anyone. It's not like TopGolf is big enough to buy out politicians.
> money should have gone directly to them via SBA/IRS
The SBA had 3293 employees in 2015. They don't have the capacity to process all the applications either.
> The PPP for instance 75% needed to go to payroll, so larger companies free up other money
These companies are shut down at the moment. They don't have other money. If they did, I'm interested to see proof that they're just messing with accounting.
America for some reason now trusts politicians and bankers, it isn't working out.
We need to go back to not showing our cards on politics, who you vote for used to be secret and in invasion of privacy to know. Why do people put themselves in tribes and lose out on leverage? I can't tell you, it makes no sense.
I'd like us to go back to not saying who you vote for, being tough on bankers and politicians, and carry a big FDR/Teddy Roosevelt anti-trust sword to chop them down.
The market/economy is a garden, the struggling plants need help and the overgrowth needs to be harvested and trimmed back.
> The SBA had 3293 employees in 2015. They don't have the capacity to process all the applications either.
You glossed over the IRS which has the data on what people/companies pay. They know more than the banks.
IRS is used in FAFSA and it works great for getting student loans approved, then you select the servicer. Same should have happened here for the banks/small business. Once approved you go select your bank (servicer) that gets fess on free guaranteed money for the bank.
There are 30 million small businesses, 22 sole proprietors, and most are < 10 employees. There was nothing for these people, zero leverage, zero help. They make up 99% of America. America truly is a small business long tail.
> These companies are shut down at the moment. They don't have other money. If they did, I'm interested to see proof that they're just messing with accounting.
The point is they used this for a cheaper loan. They had access to other capital and assets for leverage, small businesses do not.
The companies that are on the public markets, many of them are, have direct access to more capital.
Let's say they say, "there must be some mistake here - let's use our own authority to do what we think is right". Would that not just expose them to lawsuits and other issues?
1. https://www.axios.com/joe-biden-cabinet-vice-president-picks...
You misunderstand. Tax cuts are not something built to help the little guy which just happens to be abused by the big guy too; they are gravy for the big guy that is justified by throwing a bone to the small guy too.
Here is a case of the banking industry/WallStreet selling out the American citizens. Congress won't hold them accountable, because congress sells out American citizens.