Forgive and Forget
PPP, COVID Tests, Resumes, Judges, Ozy, and Mangoes
When Congress passed the Paycheck Protection Act, they told large, profitable companies not to use it to take out loans they didn’t need. And if they did, they certainly wouldn’t get them forgiven! Well:
But the tough talk hasn’t translated into action. Instead, a ProPublica review has found, the government gave out generous loans to companies that may not have needed them. And it has often forgiven the loans, despite having said that publicly traded companies would be unlikely to merit such generous treatment.
Of course. Surely it can’t have been that many companies, right?
The ProPublica analysis of Securities and Exchange Commission filings found at least 120 publicly traded companies that received loans of more than $500,000, grew their revenues last year and have been allowed to keep the money.
In addition, at least 30 companies announced plans to go public after receiving their loans, bringing in truckloads of investor cash that they often used to pay off other debts — but not the ones they owed to the federal government, all of which were forgiven.
Right, okay, great. When the PPP happened, things were desperate, and Congress was essentially shoveling money at companies to keep the economy going:
In the first round of the bailout, which was quickly depleted, companies did not have to prove that they had actually been impacted by COVID-19.
Instead, the application required them to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.”
The SBA later released guidance that warned public companies - who have access to capital via other means - that they probably didn’t qualify for PPP loans. But! It wasn’t a rule, it was more of a suggestion.
Then, in August, despite that guidance, the SBA started forgiving loans under $2 million dollars without making companies confirm the state of their finances:
It decided that all borrowers of less than $2 million would automatically be “deemed” truthful in their pledges that their loans were necessary.
Cool. Again, the government is well within its rights to simply shower money on companies during a global pandemic and financial crisis, but it should also follow its own rules? Maybe?
The problem with the way the PPP was administered, and with the large companies who took advantage of the essentially free cash from the government, was that it prevented smaller, needy businesses from getting critical cash. Because the PPP had a finite amount of money, those big loans to big companies meant there was a significantly diminished pot for everyone else. The Washington Post reported this last year:
More than half of the money from the Treasury Department’s coronavirus emergency fund for small businesses went to just 5 percent of the recipients, according to data on more than 5 million loans that was released by the government Tuesday evening in response to a Freedom of Information Act request and lawsuit.
Then, this spring, the NYT honed that down even further:
Detailed loan information released by the Small Business Administration late on Tuesday showed that a mere 1 percent of the program’s 5.2 million borrowers — those seeking $1.4 million and above — received more than a quarter of the $523 billion disbursed.
About 600 businesses — including powerful law firms like Boies Schiller Flexner, restaurants like the steakhouse chain started by Ted Turner, as well as the operator of New York’s biggest horse tracks — received the maximum loan amount of $10 million, according to the data.
Fantastic. These large firms had easy access to PPP loans, because they all had established relationships with the big banks who the government had overseeing the process. This, combined with all the fraud that the government’s loose requirements encouraged, meant the struggling small businesses the program was allegedly set up to help got little or nothing. The government forgiving the loans for companies who didn’t need them is really the icing on the cake.
Back when we cared about the pandemic, Congress required insurance companies to pay labs whatever “cash price” they listed for rapid tests. It’s worth noting that the government didn’t, you know, institute any sort of price controls, or guidance, or do much other than telling insurers they were on the hook for the cost of the tests. Free market, etc. For the most part, labs have priced their tests reasonably. For the most part:
At the drugstore, a rapid Covid test usually costs less than $20.
Across the country, over a dozen testing sites owned by the start-up company GS Labs regularly bill $380.
Hmm! I mean, it’s certainly shitty, but it’s shitty to health insurance companies, so is it really so bad? Well, the insurers are pissed:
Many health insurers have refused to pay GS Labs’ fees, some contending that the laboratory is price-gouging during a public health crisis.
Price gouging during a public health crisis is their job, not yours, you greedy testing labs! Apparently the loophole GS is taking advantage of is that they’re out-of-network:
The requirement that insurers pay the cash price applies only to out-of-network laboratories, meaning those that have not negotiated a price with the insurer.
There is something very funny about health insurers getting hit with exorbitant out-of-network costs and throwing a fit about it. GS Labs is a private company, trying to make money, so it’s using the law to charge insurance companies more money:
Health policy experts who reviewed the GS Labs prices said that, even with the company’s investment in its service, it was hard to understand why their tests should cost eight times the Medicare rate of $41.
Yeah, overcharging for supplies is totally out of character for the medical industry:
Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.” And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution.
Anyhow, a bunch of insurers are suing GS Labs, and a Senator has proposed a bill capping the price of tests at around $80, which is still four times what it costs to buy at a store, but hey, whatever, it’s fine.
You can throw a rock and hit an article about the labor market in the US - employers are struggling to fill millions of open jobs. Restaurants are offering generous benefits packages. Companies who rely on resumes or online applications to find candidates are dealing with another problem, bad software:
Employers today rely on increasing levels of automation to fill vacancies efficiently, deploying software to do everything from sourcing candidates and managing the application process to scheduling interviews and performing background checks. These systems do the job they are supposed to do. They also exclude more than 10 million workers from hiring discussions, according to a new Harvard Business School study released Saturday.’
We’ve talked a bit about bad algorithms and machine bias, and of course it’s present in the job screening process. Some of it can be attributed to poor software development, but some sounds like user error:
Lead Harvard researcher Joseph Fuller cited examples of hospitals scanning résumés of registered nurses for “computer programming” when what they need is someone who can enter patient data into a computer. Power companies, he said, scan for a customer-service background when hiring people to repair electric transmission lines. Some retail clerks won’t make it past a hiring system if they don’t have “floor-buffing” experience, Mr. Fuller said.
Not to point fingers at HR departments, but maybe someone needs to pay attention to the filters they’re using to screen job candidates? So, what do companies in desperate need of employees plan on doing?
Many company leaders—nearly nine out of 10 executives surveyed by Harvard—said they know the software they use to filter applicants prevents them from seeing good candidates. Firms such as Amazon.com Inc. and International Business Machines Corp. said they are studying these tools as well as other hiring methods to understand why they can’t find the workers they need. Some said the technology can be changed to serve them better, while others are turning to less-automated methods to find the right people.
I feel like if there was a software glitch causing Amazon’s shopping cart to malfunction it would be fixed immediately. A major, known bug in the software they use to hire and they’re going to “study” the tools and maybe use “less-automated” methods like, I don’t know, paying someone to read resumes?
There’s a lot of talk about how automation is going to take our jobs away, but I’m not sure they meant it like this.
It’s been awhile since we talked about judges, arguably one of the most important jobs in America. The WSJ has found more than 130 judges who improperly - illegally! - ruled on cases in which they or their family had a financial interest:
A Wall Street Journal investigation found that judges have improperly failed to disqualify themselves from 685 court cases around the nation since 2010.
About two-thirds of federal district judges disclosed holdings of individual stocks, and nearly one of every five who did heard at least one case involving those stocks.
When judges participated in such cases, about two-thirds of their rulings on motions that were contested came down in favor of their or their family’s financial interests.
Seems bad! Now, I find it unlikely that many of these judges went into cases thinking they were going to personally enrich themselves by making favorable rulings, but the numbers are pretty damning! There are many unconscious biases, and the judges may not realize what they are doing, or why. That said! There are rules, and laws, and they exist for a reason:
Nothing bars judges from owning stocks, but federal law since 1974 has prohibited judges from hearing cases that involve a party in which they, their spouses or their minor children have a “legal or equitable interest, however small.” That law and the Judicial Conference of the U.S., which is the federal courts’ policy-making body, require judges to avoid even the appearance of a conflict. Although most lawsuits don’t directly affect a company’s stock price, the Supreme Court in 1988 said the law’s purpose is to promote confidence in the judiciary.
To that end, at the time of writing 56 of the 130 judges in the article had directed their clerks to notify parties in 329 lawsuits. So, that’s good I guess? Oh, and you’ll never guess what may be to blame in some of the cases - software!
Judge Ramos, who oversaw the Exxon case, was unaware of his violation, said an official of the New York federal court, because his “recusal list”—a tally judges keep of parties they shouldn’t have in their courtrooms—listed only parent Exxon Mobil Corp. and not the unit, whose name includes the additional word “oil.” The official said the court conflict-screening software relied on exact matches.
Of course. This type of recusal is made more difficult by the fact that judges are generally wealthy - they are typically veteran lawyers, and make generous salaries on the federal bench. While it’s good to hold judges accountable to rules around financial disclosures, it’s also a reminder the people who interpret our laws are still mostly rich, mostly white, and mostly men.
When you are a company trying to raise money, and you tell some investors you have a good relationship with another company, they will sometimes ask to talk to someone at that other company, to verify your claims. Your options at that point are:
1) Get on a conference call, let them sing your praises. Secure your funding.
2) If you’re not confident the other company will say good things, you find a new company who will say good things, and introduce them instead.
3) Back out of the deal, and find another source of funding.
What if there was a fourth option? One that is definitely not ethical or probably legal?
4) Have one of your executives impersonate an executive from the other company and say good things about you, using faulty voice software.
If you find yourself, the CEO of a media company trying to raise money from, I don’t know, Goldman Sachs, and you are thinking of trying option 4, I would strongly! advise! against! it!
That’s what the Zoom videoconference on Feb. 2 that Ozy arranged between the Goldman Sachs asset management division and YouTube was supposed to be about. The scheduled participants included Alex Piper, the head of unscripted programming for YouTube Originals.
As he spoke, however, the man’s voice began to sound strange to the Goldman Sachs team, as though it might have been digitally altered, the four people said.
After the meeting, someone on the Goldman Sachs side reached out to Mr. Piper, not through the Gmail address that was provided to participants before the meeting, but through Mr. Piper’s assistant at YouTube. That’s when things got weird.
A confused Mr. Piper told the Goldman Sachs investor that he had never spoken with her before. Someone else, it seemed, had been playing the part of Mr. Piper on the call with Ozy.
Right, okay. The Fake Piper was also the COO of Ozy, who the company claimed had a “mental health crisis” and took some time off work to, I guess, think about his actions? Ozy apologized to Goldman, and its board of directors “fully supports” the way the situation was handled, which was apparently to blame it all on one guy, say he had a mental health crisis, and then not fire him?
Two problems with this scenario are that it seems very unlikely the CEO, Carlos Watson, was not aware of this deception. Also, this may be the illegal sort of fraud, since Ozy was attempting to deceive Goldman to get money, and the law is not necessarily concerned with whether the investment actually took place.
Since the news broke, a few high profile people have left Ozy and it’s board, and the Feds may be investigating. It’s a good lesson for start-up founders who are seeking investment - it’s probably fine to fudge your numbers a bit, or tout deals that may or may not have happened yet, but don’t impersonate a YouTube executive on a conference call. That’s a bad idea.
In need of a palate cleanser? How about a Pakistani mango? Well, the bad news is they’re nearly impossible to get in the US, and Eater explains why:
That’s how I ended up driving two hours each way to and from the Detroit airport to pick up 12 boxes of irradiation-treated mangoes from Karachi, Pakistan. When I arrived at the airport, I pulled off on a side road I’d never been on before. The cargo facility’s waiting area was small, with only one attendant. I showed him my phone; a green WhatsApp message displayed the information for the package. “You’re here for the mangoes?” he asked.
Despite the article’s headline, Pakistani mangoes are actually legal in the US, but the many regulatory hurdles - they must be irradiated in special facilities, and the packaging must meet USDA standards - mean that only a few intrepid importers are able to get them here. Complex webs of freelance importers, resellers, and helpful aunties collaborate to get boxes of the sweet fruit to mango lovers stateside.
We talk a lot about weak and broken supply chains, but moving delicate fruit around the world really is a logistical challenge - these mangoes can go bad in a matter of days, so time is of the essence. I’ve never had a Pakistani mango, and Pakistan isn’t on my list of future travel plans, but after reading this article I’m tempted to go on an underground WhatsApp group to pay $7 dollars to taste one:
Whereas the supermarket mangoes I grew up eating are fibrous and weirdly crisp and have little discernible fragrance, Pakistan’s Anwar Ratol and Chaunsa mangoes — the kind I picked up from the Detroit airport’s cargo bay — smell strongly of flowers and have a custardlike creaminess that drips with sticky-sweet juice.
The Mainichi - “A 22-year-old former member of a Japanese boy band has been arrested on suspicion of swindling cash from a woman in her 20s as a "deposit" for the opportunity to "meet idol group members."”
Atlantic - “Facebook is not merely a website, or a platform, or a publisher, or a social network, or an online directory, or a corporation, or a utility. It is all of these things. But Facebook is also, effectively, a hostile foreign power.”
King 5 - “New documents obtained by KING 5 reveal a Seattle driving school sold fake passing grades for hundreds of dollars to at least 2,000 applicants. In some cases, the fraudulent tests sold for thousands of dollars.”
Tips, thoughts, or Pakistani mangoes to email@example.com