CNBC’s Jim Cramer on Tuesday criticized banks for approving small business loans to larger companies that were not meant to benefit from the federal Payroll Protection Program.
“I just want to know who made the bad loans. Somebody did,” Cramer said on “Squawk on the Street,” suggesting the names of the banks who 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 ran out of its initial $349 billion funding allotment in less than two weeks, and public companies like Shake Shack and AutoNation and private companies such as the NBA’s Los Angeles Lakers were found to have received loans through the program.
Those companies and others have said they will return the money after the Treasury Department released new eligibility guidelines for the program. However, some public companies have said they’re keeping the money because they can’t tap the capital markets during the crisis.
Last week, Congress gave the Payroll Protection Program an additional $310 billion infusion of funds.
Treasury Secretary Steven Mnuchin said on “Squawk Box” on Tuesday that borrowers, not the banks, would be held liable if they did not meet the criteria for the program. Mnuchin said that all loans over $2 million would receive a “full audit” before they could be forgiven under the program. He also said it was “outrageous” for the Lakers to have received the money in the first place.
Cramer said he originally liked the PPP, but that he as well as Mnuchin “got had.” Some banks have also been accused of prioritizing larger customers over small businesses.
“I think that banks were complicit. I think banks gave loans to very good customers, maybe because they needed to keep them afloat,” the host of CNBC’s “Mad Money” said.
Cramer, an owner in two restaurants in Brooklyn, said his frustration did not come from his businesses not getting a PPP loan but from larger companies getting them. He said the actions of the banks would turn public sentiment against them, similar to what happened after the financial crisis.
“Once again, people get away with it. And I think that America is sick of that,” Cramer said.