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The Fed’s Paycheck Protection Program Gave a Tiny NJ Bank $5.3 Billion – 9 Percent of all the Money It’s Spent Thus Far

Courtesy of Pam Martens

Gilles Gade, Chairman and CEO, Cross River Bank

Gilles Gade, Chairman and CEO, Cross River Bank

The Paycheck Protection Program (PPP) was authorized by Congress under the CARES Act and is being overseen by the Small Business Administration (SBA). The goal of the PPP program is to make 1 percent interest loans to small businesses experiencing hardship from the coronavirus crisis and then forgive the loans if the businesses keep their employees on the payroll.

Even though the loans are guaranteed against losses by the SBA, the Federal Reserve launched its own program, called the Paycheck Protection Program Liquidity Facility, to reimburse lenders who make these loans. So far, the Fed has reimbursed $57 billion of these loans as of June 10, out of total loans approved by the SBA of more than $500 billion.

The odd thing about those Fed reimbursements is that a stunning $5.3 billion in reimbursements, or 9 percent of the $57 reimbursed by the Fed, have gone to a tiny New Jersey bank, Cross River Bank. According to the SBA, as of May 30, there were 5,454 lenders that had made loans in the PPP program. Cross River Bank is just one of those 5,454 lenders and yet it received 9 percent of the Fed’s reimbursements. How does that make any sense?

Wells Fargo has approximately 250,000 employees. According to the Federal Deposit Insurance Corporation (FDIC) it has 5,444 branches in 40 states in the U.S. The FDIC also reports that the bank holds $1.4 trillion in deposits. The bank is 168 years old. According to a statement from Wells Fargo on Monday to CNBC, it has made $10.2 billion in Paycheck Protection Program (PPP) loans. That’s in line with what other large banks have done in the PPP program. The Fed’s transaction data for its PPP reimbursements do not show any PPP reimbursements to Wells Fargo.

According to the FDIC, Cross River Bank has only one branch office and has been around for just 12 years. The $5.3 billion that the Fed has reimbursed to Cross River Bank is more than twice its total assets of $2.5 billion as of March 30. Cross River Bank has made more than 50 percent of the dollar amount that Wells Fargo has made in PPP loans but it has only 250 employees rather than the 250,000 employees working for Wells Fargo to review and process these PPP loans.


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