Following Wells Fargo's complaint that it was unable to fully participate in the SBA's Paycheck Protection Program, capping its small business bailout exposure to at most $10 billion, due to the Fed unprecedented 2018 enforcement action and restrictions on Wells Fargo's balance sheet as punishment for the bank's opening of millions of fake accounts which cost former CEO John Stumpf his job, it was only a matter of time before the Fed relented and eased the bank's restrictions as the NYT reported two days ago.
And indeed, this happened moments ago when the Fed announced that "due to the extraordinary disruptions from the coronavirus, that it will temporarily and narrowly modify the growth restriction on Wells Fargo so that it can provide additional support to small businesses."
Due to the extraordinary disruptions from the coronavirus, the Federal Reserve Board on Wednesday announced that it will temporarily and narrowly modify the growth restriction on Wells Fargo so that it can provide additional support to small businesses. The change will only allow the firm to make additional small business loans as part of the Paycheck Protection Program, or PPP, and the Federal Reserve's forthcoming Main Street Lending Program.
However, in a curious twist, the Board said it would require profits and benefits from Well's participation in the PPP and the Main Street Lending Program "to be transferred to the U.S. Treasury or to non-profit organizations approved by the Federal Reserve that support small businesses. The change will be in place as long as the facilities are active."
In other words, the Fed will remove incentives for the remaining criminals on Wells' staff to create fake bailout loans and profit from the Treasury's guaranteed funds.
Some more details:
The Board's growth restriction was implemented because of widespread compliance and operational breakdowns that resulted in harm to consumers and because the company's activities were ineffectively overseen by its board of directors. The growth restriction does not prevent the firm from engaging in any type of activity, including the PPP, the Main Street Lending Program, or accepting customer deposits. Rather, it provides an overall cap on the size of the firm's balance sheet. The change today provides additional support to small businesses hurt by the economic effects of the coronavirus by allowing activities from the PPP and the Main Street Lending Program to not count against the cap.
The Fed concludes that "the changes do not otherwise modify the Board's February 2018 enforcement action against Wells Fargo. The Board continues to hold the company accountable for successfully addressing the widespread breakdowns that resulted in harm to consumers identified as part of that action and for completing the requirements of the agreement."
The PPP program, while much needed by mainstreet businesses, will in the comingyears be revealed as an unprecedented criminal "free for all", as tens of billions in funds are funneled into illicit organizations and shady deals.