Rep. Clyburn Says U.S. Failed to Stop Fraud in COVID-19 Loan Program
The United States failed to take basic steps at the start of the coronavirus pandemic to prevent fraud in a federal aid program intended to help small businesses, draining funds and making people more vulnerable to theft. identity, said the chairman of a House panel examining the payments. tuesday.
Democratic Representative James Clyburn has blamed the Trump administration for problems with the COVID-19 economic disaster loan program, overseen by the US Small Business Administration, amid revelations that up to 20% of the money – tens of billions of dollars – may have been attributed to fraudsters.
Clyburn said the Biden administration implemented measures to identify potential fraud and ordered loan officers to process indicia of fraud before approving loans, while Congress invested in preventing fraud. fraud and liability.
Republican Rep. Steve Scalise, the House’s No. 2 Republican, said the Trump administration and Congress worked together at the start of the pandemic, when uncertainty was rampant and much of the economy was blocked, to bring “much needed relief as quickly as possible”. we could help save as many jobs as possible” and prevent the economy from collapsing.
Scalise said Democrats were undermining successes, and he asked why the chairs of the House coronavirus panel, Clyburn, weren’t reviewing the enhanced unemployment insurance program that was plagued by “gross fraud and unprecedented” and is a “main contributor” to high inflation rates.
“I hope that in our oversight of pandemic programs, my fellow Democrats will be able to recognize the difference between what was necessary to save the economy during an unprecedented pandemic and the promotion of a bias-inducing partisan agenda. inflation,” he said.
The SBA’s Office of Inspector General estimated that at least $80 billion distributed from the $400 billion EIDL program may have been fraudulent, much of it in scams using stolen identities. Separately, select subcommittee staff released a report on Tuesday that found some 1.6 million loan applications may have been approved but not assessed.
Subcommittee staff found that these loans were approved in batches of up to 500 applications at a time. Applications were allowed to go through even if they had certain red flags for fraud — such as international customer locations or phone numbers not associated with the business or owner — as long as there weren’t too many of them. The process meant that although the software analyzed applications, they were not even opened by officials before they were allowed to obtain funding.
The subcommittee hearing also touched on broader fraud issues with the flood of pandemic aid from several federal government programs for states, local governments, businesses and the unemployed. The total $5 trillion in aid, delivered in a series of bills signed by Presidents Donald Trump and Joe Biden, has come with many complications.
Fraud has overwhelmed federally funded and state-administered enhanced unemployment insurance programs. There was so much aid to governments that many struggled to find a way to spend it all within the original regulations. And there have been questions about whether the Paycheck Protection Program to keep employees on the job was worth it.
The Secret Service said in December that nearly $100 billion had been stolen from COVID-19 relief programs, basing that estimate on its cases and data from the Labor Department and the Small Business Administration. The White House played down the estimate, saying it was based on old reports.
The government’s Pandemic Response Accountability Committee says inspectors general from various federal agencies have at least 1,150 ongoing investigations into fraud of the various aid funds. Officials say it could take years to sort out all the issues.
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