10 Sep 2020 Corporate misconduct over federal loans shadowing top-tier financial institutions
JPMorgan is to investigate clients and staff over illegally obtained federal aid. The bank has nearly arranged $29bn of forgivable loans under the PPP, a business loan initiative established as part of the US $2.2tn economic stimulus package. It is difficult to believe that this happened without the top Management being aware of it, being it indicative of corporate culture and strong lobbying capabilities.
In a recent business memo, JPMorgan is to investigate clients and staff over illegally obtained federal aid. The largest US bank has nearly arranged $29bn of forgivable loans under the Paycheck Protection Program (PPP), a business loan initiative established as part of the $2.2 trillion economic stimulus package passed by US Congress on March 27.
SVI points out that it is difficult that this happened without the top Management being aware of it, being this indicative of corporate culture and strong lobbying capabilities.
The program is intended to provide loans to small and mid-size businesses to pay up to 8 weeks of payroll costs. Funds could also be used to pay interest on mortgages, rent, and utilities. Originally, under the PPP, only companies negatively affected by the pandemic with 500 or fewer employees were eligible for the relief package. However, much controversy has surrounded the program. News has emerged over big corporate names successfully securing funds, and criminal investigations are underway on allegedly fraudulent PPP applications, including claims for businesses that did not exist or did not operate when applications were made.
In a memo to employees, the bank did not detail specific instances but said it had found customer wrongdoing. “This includes instances of customers misusing Paycheck Protection Program loans, unemployment benefits and other government programs. Some employees have fallen short, too.” the memo said, without elaborating.
JPMorgan is not the only big bank facing controversy over the program. Plaintiff DNM Contracting Inc., a Houston-based general contractor, alleges in a lawsuit filed this spring that Wells Fargo Bank NA shafted many of its small-business customers earlier this year by prioritizing larger, more lucrative borrowers over smaller borrowers when processing applications for the coronavirus relief loan program.
Several banks, including JPMorgan and Citi Group have promised to donate profits made from the PPP. Wells Fargo, which was allowed to breach a regulatory limit on the size of its balance sheet to participate in the program, went further, vowing to donate the $400m in gross fees it received from arranging the loans.
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