Governance and Compliance in the Age of Coronavirus: PPP Loans, Main Street Loans, Etc.
The Rabbis of Orthodox have been hard at work learning about the Paycheck Protection Program, the Main Street Lending Program, and the flurry of other government initiatives around the US and world that are designed to soften the terrible blow of coronavirus.
This is a tricky business, worthy of the sages. The government is clearly trying to do a lot to support its businesses and citizens. Everyone is acting so very quickly. And that is at the heart of the problem. The Small Business Administration moved the goalposts (they might say they clarified the goalposts, but many people have been saying that they’ve been moving them, and we’d probably agree) at least three times in roughly as many weeks. That is understandable when Congress moves with historic speed with historic amounts of capital in a historically confusing time. After Congress enacts a law, it is usually left to the massive federal agencies to comprehend the directions, define some missing “implementation” rules, and then enforce the guidelines. When hugely important statutes are passed very quickly, and when there is great urgency to get funding into the economy, it is certainly understandable that the regulators may need a few cranks of the wheel to think through various implications of their draft and evolving rules. This is perhaps especially true when emotions run high and various parts of the American public have reasonable (and sometimes perhaps unreasonable) disagreement about who should be benefiting from these government programs.
Perhaps the biggest problem, from a governance perspective, for the CFOs and GCs, is that the authorities who enforce the rules later have the benefit of hindsight. Two, three, or five years from now, as civil and perhaps even criminal lawyers pore over documents and examine corporate behavior, they will be able to forget that “fog of war” moment in which so many business leaders have been operating for the past months. Add they can sometimes even cherry pick a stray email here or a corporate deck there and say, with a straight face, that “everyone knew on date X that, under the later understanding of the regulation, you didn’t adequately meet the standard for this type of government benefit.” To be clear, we’re not talking about cases of cruddy people engaging in obvious malfeasance. We’re talking here about something that could happen to just about any good person: when things move quickly in an enormously complicated time, it is all too easy to drop balls. Later on, the “good guys” can accuse you of something you really had no idea could come up, and one of those very accidentally dropped balls could lead to some major headaches or, G-d forbid, worse.
In this kind of moment, it is even more important than usual to make sure you have the tools you need to maximize your governance and compliance control. That is why we, the Rabbis of Orthodox, have been busy building and improving our suite so that you can have the dashboard you need to give maximum comfort to yourself, your colleagues, your shareholders, and your employees.