Whose Paycheck Are We Protecting?
The Role Banks Played in Funding Climate Change through the Paycheck Protection Program
Jamie Buell and Kevin Stein, RISE Economy
First published August 2023
California communities have been ravaged by fires, flooding, extreme heat and paralyzing spring snowstorms. Big changes in public policy and corporate conduct are needed to solve the crisis of climate change. This report analyzes the Paycheck Protection Program (PPP), a public-private initiative created in 2020 to help alleviate financial pressures businesses experienced during the COVID-19 pandemic, and highlights the unexpected impacts the loan program has had on climate change. This first-of-its-kind analysis looks at all bank financing of oil, gas and coal companies under the PPP.
Here are some key takeaways from our analysis:
- Under the PPP, financial institutions made thousands of loans to fossil fuel companies, totaling nearly $6 billion in funding, and collecting more than $178 million in fees paid out by the Small Business Administration.
- Three of the nation’s largest banks – Wells Fargo, JP Morgan Chase and Bank of America – did a substantial amount of PPP lending to oil and gas companies nationally as well as in California.
- Certain smaller banks, like Frost, Zions and Prosperity, were also some of the top national lenders to oil and gas companies.
- Tri Counties Bank dominated PPP lending to oil and gas operations in California, by both loan count and dollar volume.
- The most popular oil and gas sub-sectors among banks’ PPP lending portfolios were “Support Activities for Oil and Gas Operations,” “Crude Petroleum Extraction,” “Drilling Oil and Gas Wells,” and “Natural Gas Extraction.”
- Twenty banks lent nearly $115 million to private equity-backed oil, gas and coal extraction companies. The PPP was designed to support small businesses that had no place else to turn to stay afloat. Private equity-backed firms should not have been allowed to jump the queue to access limited federal funding.