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IPFS News Link • Federal Reserve

Federal Reserve report: 75% of $800 billion PPP didn't reach workers

•, By Bob Unruh

A new report from two officers of the Federal Reserve has concluded that the vast majority of the billions of dollars spent for the Paycheck Protection Program, instituted to help save jobs when officials shut down America's economy over the COVID-19 pandemic, went astray.

The report comes from William R. Emmons, lead economist in the Supervision Division at the Federal Reserve Bank of St. Louis, and Drew Dahl, an economist at the bank.

The program, involving hundreds of billions of dollars, "was poorly targeted, as almost three-quarters of its benefits went to unintended recipients, including business owners, creditors and suppliers, rather than to workers," they wrote. "Due to differences in the typical incomes of those varied constituencies, it also ended up being quite regressive compared with other major COVID-19 relief programs, as it benefited high-income households much more."

They advised that the program, to provide relief to small businesses, was set up fast and wound up most operations in two years.

But they found "only about one quarter of PPP funds supported jobs that otherwise would have disappeared." Further, "PPP's benefits flowed disproportionately to wealthier households rather than to the rank-and-file workers that its funds were intended to reach."

The report explained, "Established as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act—which was signed by President Donald Trump on March 27, 2020—the PPP began to distribute forgivable loans to small businesses on April 3, just three weeks after a national emergency was declared in the United States. This was a remarkably timely response to the crisis. More than 90% of the nearly $800 billion of PPP loans were forgiven by June 20, 2022, making the program largely temporary as well."