Sunday, June 23, 2024

An insider’s view of PPP from U.S. Rep. Patrick McHenry

Patrick McHenry was elected as the then-youngest member of Congress in 2004 at age 29. Eight terms later, he’s 44 and the ranking Republican member of the House Committee on Financial Services. It’s one of several party posts that have made him among the more influential representatives from North Carolina in many years. A Gastonia native who now lives in Lincoln County, he is a 1999 graduate of Belmont Abbey College, where, as a junior, he ran unsuccessfully for the N.C. House of Representatives. He held political jobs for three years in Washington, D.C., before returning to his home state, where he won a legislative race in 2002 and then his congressional seat two years later. His wife, Giulia, heads the Office of Economics and Analytics at the Federal Communications Commission. She has a Ph.D. from the University of Maryland.

He talked with Business North Carolina in early May.

What has prompted your ability to gain clout in Congress?

I didn’t start off as a wise legislator, but I’ve worked hard at getting better and being more responsive and focusing more deeply on what I’m about and how I can act and operate. It’s been quite a blessing to have the opportunity to represent North Carolina. I’m grateful that with enough time and trying to make fewer mistakes, I’ve been able to get in a position of leadership that is constructive for better outcomes.

How would you describe the current relationship between Congress, President Donald Trump and the Federal Reserve?

In a fairly broken Congress in which fairly little has gotten through the legislative logjam, what has happened in the last two months is almost unprecedented in history. We’ve moved rather quickly, and even with our partisan divide, we’ve come to terms on some complex areas of policy. I think that has benefited the American people and made this really awful time less awful.

I would give the Fed high marks in their decisive action. I credit Chairman Powell with their early and bold moves in trying to ensure that a health and economic crisis does not become a financial crisis.

Over the next five to 10 years, we’re going to have to figure out how to rein in these programs. At the moment, this is what we are facing. If the Fed is the fire department, they are using the full capacity to put out the flames. They can figure out how to build back and get our economy going again.

What do you think of the Paycheck Protection Program?

I give it high marks. It is working as Congress intended. It was intended to keep businesses afloat to give them relief on their overhead, primarily their mortgages or rent payments, utilities — basic functionality so the small business can stay afloat. And a grant for their payroll. The payroll was not to enrich anyone but to ensure that employees stay connected with their employer. When the economy reemerges and we get back to normal economic life, we can ensure that the businesses get going again quickly.

This after-the-fact, “gotcha” game around certain businesspeople and types of businesses getting loans isn’t the right approach. The thoughtful thing was to keep employees connected to their employers, so we can get back to normal economic life.

I’d describe the Small Business Administration’s technology as a 1964 Volkswagen Beetle. What the Treasury Department did was put enough duct tape around that sucker to make it roadworthy. It has not been without problems, but it has been able to deliver mainly because of the financial institutions that are doing it on the frontlines and also because of the Treasury providing enough duct tape.

Did your limited-government approach make it hard to favor PPP?

I’m a free-market conservative, and I believe in a limited form of government. However, government steps in when there is a market failure. When you see an act of God such as this virus or a natural disaster or an act of war, things change. You have to be willing and open to use the power of the government, so you don’t punish the people you seek to represent.

Unlike the last financial crisis, you don’t see malfeasance by individuals dealing with the virus, whether it’s front-line health care workers or the average person going to their job. They shouldn’t be punished because of some act of God outside of their control.

Will this crisis lead to bigger banks and less competition?

Cleary after the last crisis, the big banks got bigger. That is unquestionable in the statistics. We also have fewer community banks and credit unions than in generations. What I’ve seen in the past financial crisis is that financial regulations were expanded to a wider set of actors, and they have made it more difficult to be a small bank. I think that is problematic. My constituents and my friends and neighbors need more consumer choices when it comes to banking and credit unions. I want the proper regulations so they are safely capitalized and they can provide liquidity and consumer choice and leverage so they can keep people employed and small businesses growing.

Why have you shown interest in spurring financial-technology startups?
My passion is the experience of my dad. He started a lawn-mowing business in our backyard in the late ’70s. The way he was able to get his second piece of equipment was through a credit card. That was financial technology. My dad’s experience informs me.
That small business has become pretty good size. I’m very proud of what my father and my brothers were able to do with that business. That’s what I want more of.
But I’m seeing less of that risk-taking around people starting small businesses. I want to give people that innovative choice like my dad got out of a credit card when it was brand new and make sure people can do that.
The guy on a construction site often has a piece of equipment and a trailer in the back. That may not be the next Google or Facebook, but that truck and piece of equipment are how he provides for his family. I want more people to have those opportunities.

Being in the minority in Congress isn’t much fun, right?
In my career, I’ve been in the majority, then the minority, back to the majority and back to the minority. It’s night and day. In the minority, you get locked out of a lot of decisions. That was a signal to me that you need to have bipartisan relationships. You need to focus on policy rather than the fistfight of politics we are in right now. When I got in the majority, I didn’t stop having those relationships with Democrats. Now that I’m on the flip side, those longer-term relationships provide value not necessarily in power or perception but in effect.

Are Republicans in Congress more aligned with President Trump than previous presidents?
Yes. My people support him, and my people are his people. That connection between the people who elect me and our president is real. The strength of that relationship also reminds me when I’m home, I need to be working with him, not fighting him.
Look, I have an honest, open relationship with the president. I tell him my views. He will respond or not respond as he sees fit, but I’m able to have that open dialogue with him, and when I have criticism or criticisms, I pick up the phone or have a meeting and am able to convey to the White House staff directly. I haven’t been in the business of beating him up, nor was I doing that to previous presidents. ■

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at

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