Rubio Admits Payroll Protection Program Needs Fixing

After last week criticizing news reports that revealed huge corporations were benefiting from the $350 billion program, the senator who helped create it today conceded changes need to be made.

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When news reports last week first revealed big corporations were consuming tens of millions of dollars from a program he helped conceive to help small businesses, Sen. Marco Rubio criticized the reporting as inaccurate.

He inaccurately said millions of businesses were being helped (in fact, 1.66 million loans were approved) and correctly noted nearly 75% of the loans went to the smallest of businesses -- those with payrolls of up to around $720,000 a year.

But what he didn't say is that 45% of the $342 billion given to the businesses under the Payroll Protection Act was consumed by just 4% of the loans -- made to the largest corporations or their subsidiaries, who obtained loans of more than $1 million each.

After public outrage grew as news organizations, including the NBC 6 Investigators, revealed that imbalance, Rubio Monday changed his tone.

He now acknowledged the "unintended consequences" of the legislation he helped create, conceded that a "fix" was necessary, and admitted Congress "erred on the side of expediency because we felt this was an emergency situation."

By Monday afternoon, he was threatening companies with subpoenas amid what he called "multiple reports of companies abusing the program... Now is not the time for our nation's companies to profit at others' expense."

He cited the "anxiety" caused by the factual reporting disclosing large publicly traded corporations gobbled up large chunks of the money while, he noted , "so many smaller companies (were) locked out."

The $350 billion program was exhausted in less than two weeks and Congress is now poised to approve another $300 billion or more to replenish it.

Lobbyists prevailed on Congress to exempt large corporations from the 500-employee limit usually used to define a small business, if they employed fewer than 500 people per location.

Ruth's Hospitality Group, the Florida-based company behind the Ruth's Chris Steak House brand, last year had 5,700 employees, $468 million in income and $42 million in profits.

It obtained two maximum $10 million loans through separate subsidiaries.

The law says a company may not receive more than one loan, but that provision does not say whether the same company can use more than one subsidiary to obtain separate loans, as Ruth's did. Calls to Ruth's headquarters have not been answered or returned.

That $20 million in loans to Ruth's is equal to the sum of the amounts loaned to 100 Florida businesses, on average.

No money will have to be repaid if the companies getting loans use at least 75% of them to pay employees for eight weeks.

Rubio again: "I think unfortunately there probably is a couple companies that qualified for this and entities that qualified for this who were not what we intended and that’s a certification issue that I hope is going to be tightened up by new regulations."

Shake Shack, another huge restaurant chain that got a $10 million loan, is returning the money.

"Our understanding is that by giving it back it will go back into the pot and our hope (is) it goes to those most in need," Shake Shack CEO Randy Garutti told CNBC on Monday.

Rubio said his intentions were good, even if the execution of the program was flawed.

"When you do something like that, you’re always going to have things that happen that you didn’t intend and things you couldn’t foresee. And our job is to make it faster and simpler and to fix it."

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