WASHINGTON — House Democrats opened an investigation on Monday into the distribution of more than $500 billion in small-business loans under a pandemic relief program, escalating a clash with the Trump administration as it resists oversight of trillions of dollars in coronavirus assistance funds.
The announcement from the seven Democrats on a committee created to scrutinize how the administration is spending pandemic relief money came as Steven Mnuchin, the Treasury secretary, abruptly pivoted under pressure from lawmakers and said he would work to disclose more about where government-backed money was going through the lending initiative, the Paycheck Protection Program.
It was the latest indication that, despite attempts by lawmakers to build layers of oversight into the largest stimulus program of its kind in modern history, an administration that has been hostile to congressional scrutiny continues to resist. In a letter to four congressional committees last week, the heads of an independent accountability panel created by the law alerted lawmakers that lawyers for the Treasury Department were interpreting the statute in a way to exempt more than $1 trillion from scrutiny.
“The administration should release the names of all P.P.P. borrowers — as the S.B.A. routinely does for similar loan programs,” the lawmakers wrote in a letter to the heads of the Treasury Department and the Small Business Administration, which jointly administer the program. It came days after Mr. Mnuchin told a Senate committee that information was “proprietary” and not public.
“Contrary to Secretary Mnuchin’s recent testimony, there is nothing ‘proprietary’ or ‘confidential’ about a business receiving millions of dollars appropriated by Congress, and taxpayers deserve to know how their money is being spent,” the Democrats wrote.
Since the $2.2 trillion economic stabilization package became law in March, lawmakers have struggled to establish oversight. With some funds yet to be spent, including about $100 billion in the Paycheck Protection Program, and with lawmakers contemplating negotiations over another relief package, the scope of the task will only expand in the coming months.
Lawmakers have pointed to the creation of multiple oversight panels and positions as evidence that there is relentless scrutiny of the trillions of dollars doled out across the country. In recent weeks, lawmakers have intensified demands for information about which businesses have benefited from the Paycheck Protection Program and what kind of loans they have received.
But implementing oversight has proved challenging, particularly as Congress adjusts to working during a pandemic. The five-person Congressional Oversight Commission does not yet have a leader. (Speaker Nancy Pelosi of California said on Thursday that she hoped that a pick jointly agreed to with Senator Mitch McConnell of Kentucky, the majority leader, “will be imminent.”)
And President Trump has scoffed at oversight, suggesting as he signed the stimulus law that he had the ability to decide what information a new inspector general named to oversee a separate corporate bailout fund could share with Congress. Mr. Trump also in effect ousted the head of a committee of inspectors general responsible for pandemic oversight, known as the Pandemic Response Accountability Committee, through a demotion.
Although Mr. Mnuchin promised on Twitter on Monday to work with lawmakers to “strike the appropriate balance for proper oversight of #ppploans and appropriate protection of small business information,” Treasury Department lawyers issued an opinion that would further curtail oversight of more than $1 trillion in aid, according to the letter sent to lawmakers last week, whose contents were first reported by The Washington Post.
Michael E. Horowitz, the acting chairman of the Pandemic Response Accountability Committee, and Robert A. Westbrooks, the committee’s executive director, warned that the Treasury lawyers’ interpretation would “present potentially significant transparency and oversight issues.” The section singled out included funds for tribal governments already embroiled in a series of lawsuits, aid for states, nearly $500 billion for corporations, funds for aviation companies and the Paycheck Protection Program.
The Paycheck Protection Program and its beneficiaries have received particular scrutiny from lawmakers amid reports that wealthier corporations and businesses benefited from the program, with several restaurant chains, some private schools and at least one professional basketball team returning the money they received.
Mr. Mnuchin’s declaration that the names and amounts of the Paycheck Protection Program loans were proprietary and confidential sparked further backlash from lawmakers, particularly after his March vow of “full transparency.” Instead, during Senate testimony, he suggested that some of that information could be made available to the Government Accountability Office for oversight purposes.
Mr. Mnuchin and Senator Marco Rubio, Republican of Florida, discussed on Monday how to make the information public and whether to implement a threshold loan amount for disclosure.
Mr. Rubio argued that some loans should be exempt from full disclosure. “There’s a lot of smaller-end businesses that are concerned about what that might reveal about their business model,” he said.
“There will be disclosure — it’s just a question of what is the differentiation between a $100,000 loan and a $5 million loan,” he said, adding: “If you have a big loan, there’s no avoiding it. We’re going to need to know who you are.”
An adviser to Mr. Trump suggested that the administration was mindful of the public’s need to know how taxpayer money was being spent, but was wary of divulging the financial information of private companies. Through the end of May, the Small Business Administration had approved about 4.5 million loans totaling $510 billion.
Earlier this month, Mr. Rubio and Senator Benjamin L. Cardin, Democrat of Maryland, sent a letter to Mr. Mnuchin and Jovita Carranza, the head of the Small Business Administration, calling on them to release detailed information about borrowers and their loans.
In letters on Monday to administration officials and eight national banks, including JPMorgan Chase & Company, Bank of America, Wells Fargo, and Citibank, House Democrats demanded details about the distribution of loan money, airing concerns that a “two-tiered system” for processing applications “may have diverted P.P.P. funds intended for vulnerable small-business owners in underserved and rural markets.”
Bank industry groups believed that the loan information would eventually be made public because most of the Small Business Administration’s small-business loans are subject to public records requests. The loan application form also indicates that the loans could be subject to such disclosures.
Monica Crowley, a spokeswoman for the Treasury Department, said on Monday that the department “is fully complying with all of the substantial oversight, transparency and reporting requirements” of the stimulus law.
Top officials at the department and the Office of Management and Budget had expressed “commitment to ensuring transparency, accountability and adherence to all statutory requirements,” Mr. Horowitz and Mr. Westbrooks of the Pandemic Response Accountability Committee wrote in their letter to lawmakers. But the two men also said they were writing in part to alert lawmakers to what they described as “possible ambiguity” that could be modified through future legislation.
At least one top Senate Republican signaled openness to including stronger language in another relief measure.
“I believe that American taxpayers ought to know where the money is spent, who gets money, and the oversight of all that is very important,” said Senator Richard C. Shelby of Alabama, the Republican who leads the Senate Appropriations Committee, signaling that he would support legislation if needed to clarify the scope of oversight. “We will follow up on that, no matter who it is, or what administration.”