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U.S. starts forgiving pandemic loans amid criticism, uncertainty By Reuters

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© Reuters. FILE PHOTO: U.S. President Trump hosts coronavirus response event at the White House in Washington

By Koh Gui Qing

NEW YORK (Reuters) – As the U.S. government this month begins allowing small businesses to not repay their loans from a $525 billion pandemic relief plan, shifting the cost to American taxpayers, the process and the agency overseeing it have come under blunt criticism by the Congressional watchdog agency.

The loan forgiveness process has drawn complaints from the Government Accountability Office (GAO) that the Small Business Administration has been plagued by a lack of transparency and, also, failed to demonstrate sufficient ability in the program to prevent fraud and abuse.

Last month, the Department of Justice said that it had charged 57 defendants for attempting to steal more than $175 million from the Paycheck Protection Program (PPP).

A Small Business Administration (SBA) spokesperson said on Tuesday that the initial loan payoffs, in which the government sends money to banks to forgive loans taken by small businesses under the PPP, started last Friday.

“What was clear to us with PPP…is that the controls were very weak,” said William Shear, a director of Financial Markets and Community Investment at GAO, a non-partisan watchdog that works for the U.S. Congress. The GAO has issued two lengthy reports since June that were critical of the efficacy of the PPP and other U.S. government responses to the pandemic.

The SBA, which oversees the Paycheck Protection Program and has defended its performance while stressing the challenges of overseeing hundreds of billions of dollars in loans in a short space of time, said it is working with the GAO.

“I reject the sudden claim that SBA is not cooperating with GAO or that we are dragging our feet in responding,” Jovita Carranza, the Administrator of the SBA, said in a statement.

The Department of Treasury, which is working with the SBA on the loan forgiveness process, did not respond to a request for comment.

Introduced in April to help companies weather the economic shutdown brought on by COVID-19, the PPP in four months was responsible for 5.21 million loans ranging from less than $50,000 each to more than $5 million. The rules stipulated that businesses with limited financing options could seek a loan that would later be fully forgiven. The loans would ultimately be paid by taxpayer money, not the businesses that received them from banks, if at least 60 percent was spent on payroll – with the rest going to meeting expenses such as rent, interest on mortgage or utilities.

Tensions between the GAO and the SBA were aired this month at a hearing organized by the U.S. House Small Business Committee, which examines policies for small businesses for the U.S. House of Representatives.

Shear, the GAO official, told Congresswoman Nydia Velazquez that there were “obstructions” when his office tried to get details on PPP loans and other pandemic programs from the SBA. The information was needed, he said, to evaluate how well the SBA was managing the program.

Velazquez, who chairs the committee, said she had called the SBA to expedite the agency’s response. “Probably the obstruction coming out of the SBA is because they knew they did not take or implement the kind of controls to prevent fraud and abuse,” Velazquez said at the hearing.

According to a report published in September by the GAO, plans to safeguard the loan forgiveness process remained incomplete. For instance, the GAO said, banks that issued the loans are the initial deciders of how much of a loan should be forgiven.

But it is unclear to what extent they are responsible for verifying the information provided on applications versus relying on borrowers’ versions of their finances.

Also unclear is the extent to which the SBA intends to review the banks’ decisions, the report said, noting it is a conflict of interest for banks to be heavily involved in loan forgiveness since it is in their interest for loans to be forgiven.

Furthermore, oversight plans to scrutinise loans worth $2 million or less for fraud – which the GAO had recommended in June that the SBA develop – were still being finalized, according to GAO’s September report.

William Manger, an associate administrator at the Office of Capital Access at the SBA, told another hearing organized last month by the Small Business Committee, that the agency was working with the U.S. Department of Treasury and its contractors to finalise a way to review and forgive loans.

“We just want to make sure that whatever we do, we are being responsible to the taxpayer,” he said. “These are taxpayer dollars that we will be paying out.”





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Netflix misses estimates for paid subscriber additions By Reuters

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© Reuters. FILE PHOTO: The Netflix logo is seen on their office in Hollywood, Los Angeles

(Reuters) – Netflix Inc (O:) on Tuesday missed expectations for paid subscriber additions in the third quarter, hit by rising streaming competition and the return of live sports to television.

The company said it added 2.2 million paid subscribers globally during the quarter ended Sept. 30, compared with analysts’ estimates for 3.4 million, according to IBES data from Refinitiv.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Dow Jumps on Cyclicals Boost as Pelosi Touts Stimulus Deal Optimism By Investing.com

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© Reuters

By Yasin Ebrahim

Investing.com – The Dow rose Tuesday as economy-linked cyclical stocks climbed after House Speaker Nancy Pelosi touted optimism over getting a deal on stimulus, though said differences on key issues remain ahead of today’s deadline.

The rose 0.92%, or 159 points. The was up 1.07%, while the added 1.01%.

Pelosi suggested progress had been made with the White House on recent stimulus talks and she was hopeful a deal could be brokered by the end of the day. The house speaker conceded, however, that state and local money along with business liability remained sticking points.

Both renewed talks at 3PM ET today, after negotiations a day earlier helped chip away at differences.

The remarks firmed up expectations a deal could be in the offing after White House economic advisor Larry Kudlow signaled uncertainty.

Stocks tied to the economy like industrials, materials and financials racked up gains intraday.

Financials got a boost from rising banking stocks, with Goldman Sachs (NYSE:) in the spotlight, up more than 2%, after the latter was reported to have reached a deal with the U.S. Department of Justice to pay over $2 billion for its role in the 1MDB scandal.

JPMorgan Chase (NYSE:) and Wells Fargo (NYSE:) were up more than 1%, while Citigroup (NYSE:) added more than 2%.

In tech, meanwhile, further signs of a government crackdown on the monopoly power of large cap tech did little to dent investor sentiment on the sector.

The U.S. government filed an antitrust lawsuit against Google on allegations it had violated competition law to preserve its monopoly over internet searches and online advertising.

Google-parent Alphabet (NASDAQ: rose more than 2%, while Facebook (NASDAQ:), Apple (NASDAQ:) and Microsoft (NASDAQ:). Amazon.com (NASDAQ:) jumped 3%.

Elsewhere in tech, International Business Machines (NYSE:) fell 6% after reporting a third straight quarterly decline in revenue and keeping its guidance sidelined amid uncertainty from the ongoing pandemic.

Procter & Gamble (NYSE:) was up more than 0.5% after raising its guidance and reporting quarterly results that topped Wall Street estimates in the wake of a pandemic-led boost to demand for its household products.

In other news, cash-strapped move chain AMC Entertainment (NYSE:) slumped more than 12% after warning of possible bankruptcy as it continues to seek additional liquidity to plug the financial hole as a result of the pandemic.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Canada working on possible aid for the airlines and travel sector, says finance minister By Reuters

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© Reuters. Canada’s Deputy Prime Minister and Minister of Finance Chrystia Freeland takes part in a news conference on Parliament Hill in Ottawa

OTTAWA (Reuters) – The Canadian government is very aware of the challenges facing airlines and the travel sector during the coronavirus pandemic and is working on possible aid, Finance Minister Chrystia Freeland said on Tuesday.

Freeland said she had spoken to the heads of Canada’s major airlines and unions last week but did not give details. Carriers and travel industry executives have repeatedly urged Ottawa for assistance as passenger numbers slump.

“We are obviously aware of the particular challenges that the travel sector, the airlines are facing right now,” she told a news conference when asked about an aid package.

“It’s definitely an issue we are looking at closely and working on,” she said.

Airlines have already received more than C$1 billion ($763 million) from a wage subsidy program that Ottawa introduced to help businesses deal with the pandemic, she said.

Intergovernmental Affairs Minister Dominic LeBlanc told CTV on Sunday that Ottawa might take a stake in major airlines such as Air Canada and WestJet Airlines. Both carriers have suspended dozens of routes.

The Canadian branch of the International Association of Machinists and Aerospace Workers on Tuesday urged Freeland to consider partially or fully nationalizing Air Canada.

Earlier this month major labor unions said the aviation sector would suffer permanent damage unless Ottawa provided a C$7 billion 10-year low-interest loan to offset the effects of the pandemic.

($1=1.3113 Canadian dollars)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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