By Stacy Cowley in The New York Times, Oct 1, 2020
Loath to be seen profiting from the economic disaster caused by the coronavirus, the nation’s biggest banks were quick to pledge that they would donate to charity any money earned from helping deliver the government’s signature small-business relief plan.
That promise may be something of a mirage.
The banks that were the largest lenders under the Paycheck Protection Program, handing out government-backed loans and collecting a fee from taxpayers for their trouble, now say their expenses were so high that they expect to make next to nothing on the loans.
At JPMorgan Chase, the chief financial officer, Jennifer Piepszak, said on a quarterly earnings call in July that profit from the program “will be near zero.” Her counterpart at Bank of America, Paul M. Donofrio, said he did not expect much profit, “if any.”
The $525 billion program handed banks at least $13 billion in fees, according to a New York Times analysis of data from the Small Business Administration. The agency, which managed the program, has not released detailed fee information, and few banks have disclosed how much they took in. Their true profits won’t be known until the loans, which will be forgiven if borrowers meet certain criteria, are all paid off or resolved.