FOR IMMEDIATE RELEASE
Money trail shows banks financed climate change with funds meant for vulnerable small businesses; Small Tri Counties Bank identified as top PPP lender to oil and gas operations in California; Chase and Well Fargo identified as top national lenders.
LOS ANGELES, Aug. 2, 2023 — Banks distributed roughly $6 billion in loans to thousands of fossil fuel companies in the form of Paycheck Protection Program (PPP) dollars, according to findings in a new report released Thursday from Rise Economy, formerly the California Reinvestment Coalition.
The first-of-its-kind report titled, “Whose Paycheck Are We Protecting? The Role Banks Played in Funding Climate Change Through the Paycheck Protection Program,” offers a comprehensive look at how banks — ranging from Wall Street’s JP Morgan Chase and Wells Fargo to smaller banks like Frost and Zions banks — directed PPP loans away from small businesses and into the hands of oil and gas companies.
The top 25 lending banks are estimated to have brought in a total of $59 million in fee revenue from their support of oil and gas operations through PPP lending across the country. The report also finds that 29 banks originated nearly $114 million in PPP funds to 50 oil, gas and coal extraction companies that were private-equity backed. These PPP recipients all had access to private equity capital and therefore did not need to take advantage of the limited funds represented by the PPP.
Commenting on the significance of the research, Jamie Buell, Research Analyst at Rise Economy and lead on the report, said, “We’re excited to present the findings of this report as it is a prime example of why it’s critical to follow the money. While working families struggled to keep businesses open and pay their employees, oil and gas companies continue to earn record profits.”
Key takeaways from the report include:
- Banks made thousands of loans to fossil fuel companies, totaling nearly $6 billion in funding.
- Banks collected more than $178 million in fees paid out by the Small Business Administration.
- Tri Counties Bank dominated PPP lending to oil and gas operations in California, by both loan count and dollar volume.
- JP Morgan Chase and Wells Fargo banks led lending to oil and gas operations nationally.
- Twenty banks lent nearly $115 million to private equity-backed oil, gas and coal extraction companies.
“California has been plagued by extreme heat, flooding, fires and the retreat of insurance companies which promises further financial instability in recent years. We’re at an inflection point of a global climate crisis that is particularly burdensome for the most vulnerable of populations,” said Kevin Stein, Rise Economy’s Chief of Legal and Strategy. “Without swift and direct intervention by federal regulators, the climate crisis may slip too far from our control. The findings in this report make clear that we can’t let banks walk away unscathed from the impacts on communities of their fossil fuel finance.”
“Private equity-backed firms should not have been allowed to access limited federal funding, especially to conduct business that not only harms the environment, but also perpetuates environmental racism, gentrification, and displacement,” said Rabeya Sen, Director of Policy at Esperanza Community Housing. “Toxic industrial land use, such as neighborhood oil drilling, is fundamentally incompatible with human health and housing, creates a legacy of contamination, and disproportionately harms low-income communities of color. We can’t let banks and other bad actors get away with the harmful misuse of PPP funds.”
Additionally, the report calls on financial regulators to implement stronger policies and requirements for banks to reduce the harms of climate change. Among the recommendations:
- Halt all financing for new exploration, production or extraction of natural gas, oil, and coal projects.
- Increase funding of climate resiliency, renewable energy and environmental sustainability initiatives in BIPOC communities that exceed funding of oil and gas activities.
- And halt “blue-lining,” a practice where banks simultaneously fund oil and gas industry while denying or raising pricing on mortgages, small businesses, affordable housing or other loans because communities are deemed too climate-risky.
About Rise Economy
Rise Economy, formerly the California Reinvestment Coalition (CRC), is a member-led alliance focused on creating a more equitable society where Black, Indigenous, and People of Color have access to resources and opportunities to build generational wealth. As the largest statewide community reinvestment alliance in the country, Rise Economy advocates for policies and practices that promote racial and economic justice and that address the root causes of inequality, redlining, and systemic racism. Learn more about Rise Economy.