Biden-Harris administration failed to recoup $200B in fraudulent COVID loans, House committee says

FIRST ON FOX: A new report from the House of Representatives is accusing the Biden administration of failing to recover some $200 billion in fraudulent COVID-19 pandemic loans.

The House Small Business Committee, led by Chairman Roger Williams, R-Texas, has been conducting a years-long investigation into how the Small Business Administration (SBA) has handled the emergency financial aid programs that sprung up when state governments shut down businesses across the country during the pandemic.

"In creating the COVID Lending Programs, Congress understood that the relief funds needed to be issued quickly to help businesses cope with the economic strain of the pandemic," a new report released by the committee said.

"The rush to get pandemic relief funding out quickly resulted in shortcuts being taken to deliver aid quickly to small businesses in hopes of recouping improper disbursements on the back end."

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President Biden's Small Business Administration is accused of failing to recover $200 billion in fraudulent COVID pandemic loans. (Getty Images)

The report also accused the SBA of making "numerous decisions that decreased the likelihood" the government would be able to recoup any money given under false pretenses.

"In total, it is likely that $200 billion from the COVID Lending Programs were disbursed to fraudulent recipients," the report said.

Out of roughly $5.5 trillion Congress approved for aid during the pandemic, roughly $1.2 trillion went to the SBA.

It was largely disbursed by two major pieces of legislation, the CARES Act, signed by former President Trump, and the American Rescue Plan, signed by President Biden.

President Biden and Vice President Kamala Harris (Tierney L. Cross)

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While making recommendations for reform across the entire COVID loan system, the report accused Democrats of devoting disproportionate attention to the Paycheck Protection Program (PPP), which accounted for roughly $64 billion in fraudulent loans, rather than the Economic Injury Disaster Loan (EIDL), which the report said saw $136 billion in fraud.

Written by staff for the committee’s Republican majority, the report acknowledged that the additional responsibility given by the Trump administration in 2020 strained its comparatively smaller federal agency infrastructure. 

Committee Chair Roger Williams has conducted a years-long investigation into the SBA. (Getty Images)

"In the days after Congress passed the initial COVID relief legislation, SBA employees worked night and day to craft the rules and policies for its new lending programs," the report said.

The SBA had already issued more money in the first 14 days of these programs than it had in the previous 14 years combined, the report said.

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It said SBA staff "did a remarkable job" setting them up, "but under the circumstances, these SBA employees did not have adequate support, staff, or time to design these programs to be fraud resistant."

The report accused the Biden administration of not doing enough to put in anti-fraud guardrails and failing to recover the funds lost after taking over the White House in January 2021.

The report also knocked the previous Democratic majority Congress for focusing on PPP, while the "fraud rate" for EIDL "was approximately four times higher."

It accused Democrats of focusing on PPP because of the involvement of private sector partners.

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"It is likely that this misplaced focus by Congressional Democrats, and their surrogates in the media, obscured the realities of fraud in these programs, at least to some degree," the report said. "While there should be investigations to ensure private companies are following the rules, Members of Congress and their staff should be careful to direct their efforts toward oversight that is beneficial to the American people, and not just part of a broader messaging push against an emerging industry."

Republicans noted that PPP needed "substantial changes" to be made more effective and less vulnerable to fraud.

Rep. Nydia Velázquez, D-N.Y., the top Democrat on the House Small Business Committee, pushed back on the report's conclusions.

"The vast majority of fraud in COVID-19 small business programs occurred in the first nine months of implementation under the Trump administration. The Biden administration inherited these programs and the controls in place at the time," Velázquez told Fox News Digital.

"Under the Biden administration, the SBA established strong controls to prevent future fraud and worked closely with [the inspector general's office] and [Government Accountability Office] to protect taxpayer dollars."

A spokesperson for the SBA told Fox News Digital, "While the Committee still has yet to share the report with the SBA, it bears repeating that 86% of the suspected fraud in the PPP and EIDL programs occurred under the Trump administration when, as the SBA Inspector General has often noted, the rush to get funds out led to unwise decisions to pull down anti-fraud guardrails – decisions that were later corrected by this administration."

The spokesperson said it was "standard investigations practice" to share probe results with the relevant agencies before release.