Cramer accuses banks of granting small business loans to large corporations

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CNBC Jim cramer Tuesday criticized banks for approving small business loans to large corporations that were not supposed to benefit from the federal paycheck protection program.

“I just want to know who made the bad debts. Someone did,” Cramer said on “Squaw in the street“, suggesting that the names of the banks which facilitated the loans should be made public.

The PPP, approved by Congress last month as part of the $ 2.2 trillion coronavirus rescue package, was intended to help small businesses pay workers during the pandemic. But it used up its initial allocation of $ 349 billion in less than two weeks, and state-owned companies like Shake Shack and AutoNation and private entities such as the Los Angeles Lakers of the NBA have received loans under the program.

These companies and others said they would refund the money after the Treasury Department issued new eligibility guidelines for the program. However, some state-owned enterprises have stated that they keep the money because they cannot exploit the capital markets during the crisis.

Last week, Congress gave the Paycheck Protection Program an additional injection of $ 310 billion.

secretary of the treasury Steven mnuchin said on Tuesday the “Scream Box“that borrowers, not banks, would be held accountable if they did not meet the program’s criteria. Mnuchin said all loans over $ 2 million would receive a”full audit“before they can be forgiven under the program. He also said it was “scandalous” for the Lakers to have received the money in the first place.

Cramer said he originally liked the PPP, but that he and Mnuchin “got screwed.” Some banks have also been accused of favoring large customers over small businesses.

“I think the banks were complicit. I think the banks gave loans to very good customers, maybe because they needed to keep them afloat,” the CNBC host said. “Crazy money” noted.

Cramer, owner of two restaurants in Brooklyn, New York, said his frustration was not that his companies didn’t get PPP loans, but the big companies that did. He said the actions of the banks would turn public sentiment against them, like what happened after the financial crisis.

“Again, people get away with it. And I think America is fed up,” Cramer said.

Correction: The federal small business loan program is called the Paycheck Protection Program. An earlier version incorrectly indicated its name.

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