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Ties between a bank and Rep. Harold Rogers raise questions about PPP loans

Rogers, who receives dividends from shares, says he had no involvement in any loans made by the bank

A bank where Rep. Harold Rogers once served as a director provided millions to business owners as the economy cratered under coronavirus, according to a CQ Roll Call review of Paycheck Protection Program loans.

The Citizens National Bank of Somerset, Kentucky, which Rogers became a director of in 1970 and later director emeritus in 1991, provided at least $15 million through PPP to companies that vowed to save thousands of jobs in their communities.

The way the PPP rules were implemented, Rogers’ involvement with the bank does not appear to raise any legal concerns. But it does provide an example of how the program’s administration creates questions regarding businesses associated with lawmakers.

The Kentucky Republican’s spokeswoman, and several of the organizations, said Rogers had no involvement in any loans made by the bank.

Some of those loans went to groups and businesses with which he was familiar. They included a nonprofit Rogers helped found, his hometown church, several corporations that list a campaign donor as president or vice president, and a community association that holds a golf outing on its course in his name. Rogers continues to receive dividends of between $100,001 and $1 million from the stake he owns in the bank’s holding company, Citizens Bancshares, according to his annual financial disclosure.

“Congressman Rogers has not offered or provided any input or support for PPP applications from any entity, including Citizens National Bank,” Rogers’ communications director, Danielle Smoot, said in an email. She also said his “current status remains in accordance with all House Ethics Rules and the Code of Official Conduct.”

The bank’s website listed Rogers on its board of directors page as a director emeritus earlier this month, but it no longer appears on the site. Smoot did not respond to questions about Rogers’ current role.

A director emeritus is typically a title given to a former board member allowing them to continue in a nonvoting advisory role but not take up a spot on the board as a member.

The Kentucky Republican, first elected to the House in 1980, is serving his 20th term representing the state’s 5th District, in eastern Kentucky. The rural and heavily Republican district has one of the lower median household incomes in the country and consists mostly of small towns. One of its largest population centers, Middlesboro, has about 70,000 residents.

The U.S. Census Bureau estimates that Rogers’ home of Somerset has fewer than 12,000 residents, and in places with an everybody-knows-everybody environment, direct relationships are sometimes hard to avoid. It’s especially hard for people who have a decadeslong history in politics.

The relationship Rogers has with the bank likely will not rise to a violation of congressional ethics rules, Gabe Lezra, policy counsel at Citizens For Responsibility and Ethics in Washington, said in an email.

It does, however, “raise questions about whether the bank obtained some information, potentially through its entanglements with Rep. Rogers, that allowed the bank to be prepared to issue PPP loans at a time when similarly situated institutions were struggling to get their programs up and running.”

Blanket waiver

Banks under normal circumstances are required to complete a formal application that stipulates satisfactory standing with state and federal regulators in order to make Small Business Administration loans. However, Citizens National Bank would not have gone through that process.

“Citizens National Bank of Somerset is not an SBA Participant Lender and therefore made no SBA loans prior to the onset of the PPP program,” SBA district counsel Dave Higgs told CQ Roll Call in an email.

Any insured institutions, credit unions or farm credit system institutions not designated in “troubled condition” or subject to formal enforcement action by federal regulators were eligible to make PPP loans after filling out a form agreeing to comply with the program’s terms, Higgs said.

The bank was able to make all but 14 of its 251 PPP loans in April, making some as early as April 3, according to SBA data. That makes it one of the first to issue PPP loans. The loans were made to companies that vowed to preserve a combined 3,656 jobs, according to SBA data.

The PPP was created as part of a roughly $2 trillion sweeping coronavirus relief package passed in March. Its initial $349 billion allocation was tapped out within weeks, leading Congress to later add $310 billion to its coffers.

“Given the general experience of small non-SBA approved lenders at the beginning of the program, it seems unusual that a community institution without a preexisting SBA relationship would be prepared to make so many loans at such an early date,” Lezra said.

Thirty-three of the bank’s loans were over $150,000 and could be worth anywhere from about $8 million to about $20 million, SBA data show. Citizens made loans to businesses below the $150,000 threshold totaling an additional $7.4 million.

Those loans will generate lender fees for the bank, ranging from 1 percent for the highest loans over $2 million and 5 percent for loans under $350,000.

The bank made PPP loans of between $150,000 and $350,000 to the First Baptist Church of Somerset, Rogers’ hometown church, and the Woodson Bend Property Owners Association, which has held a “Hal Rogers Golf Outing” in years past at its golf course.

The bank made loans totaling at least $1.2 million to four businesses run by Bob Hutchison’s family, with him serving as either president or vice president. Hutchison contributed at least $16,500 to Rogers’ campaigns between 1992 and 2017, putting him near the top of individual donors to Rogers’ campaigns, according to federal elections records. Hutchison is also the 5th District chairman of the Republican Party of Kentucky.

The bank also made a PPP loan of $452,000 to the Center for Rural Development, which Rogers helped found. He has no daily involvement and no involvement regarding the applying for or obtaining of the loan, said Lonnie Lawson, the center’s president and CEO.

The loan helped keep the center, which is also a conference and convention hall, afloat while it cannot hold events during the pandemic. It helped keep 12 to 14 full-time employees working who would have otherwise been furloughed or laid off, Lawson said.

David Pendley, First Baptist Church’s administrator, said he learned about the PPP through the media and contacted the bank, which has had a relationship with the church for more than 30 years, he said. The loan helped the church offset “contribution shortfalls” and pay full- and part-time employees and utilities.

“At no time during this process did I speak with Congressman Rogers,” he said in a letter to CQ Roll Call.

Citizens National Bank and the companies with connections to Rogers did not respond to requests for comment before this article was published.

FiscalNote, parent company of CQ Roll Call, has received a loan under the Paycheck Protection Program.


Rogers’ involvement in a local bank isn’t unique. At least $13.7 million in COVID-19 relief funds went directly to businesses that are owned by members of Congress or employed them or their families, SBA data shows.

Rogers voted in May against a bill, rejected by the House, that would have required the SBA to publish information on all PPP loan recipients. The SBA ultimately released loan information and the names of all organizations and businesses that received amounts larger than $150,000. It withheld the names of businesses that received loans totaling less but did release information including the loan amounts and name of the bank that made the loans.

The average PPP loan totaled about $107,000, according to the SBA.

House Ethics rules prohibit members of the House from using their position for personal gain. The SBA’s decision to sidestep some ethical safeguards previously in place means we will likely never know for sure whether Rogers or other members of Congress were able to influence the lending process, said Josh Gotbaum, a Brookings Institution guest scholar who has worked in economic policy under presidents of both parties.

“Taxpayers are entitled to know that the rules are clear. And that there are no conflicts of interest. And that everybody plays by the same rules,” Gotbaum said. “The way the administration rolled out the Paycheck Protection Act, unfortunately, didn’t give us that confidence.”

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