Last week we discussed the corruption and abuse inherent in the rollout of the Trump administration's $659 billion taxpayer-funded PPP program, where according to a report authored by House Democrats, more than $1 billion of the money went to applicants that triggered red flags. These included receiving multiple loans - in violation of the program’s rules - or receiving loans despite having been disciplined for a given transgression. $3 billion went to businesses that had been flagged as potentially problematic by the government.
Yet while it was easy to blame the administration for rushing to handout hundreds of billions (without which the US economy would still be in a depression), a key question is how and why did the private banks that were gatekeepers for all this capital, allow such abuse to take place.
It's apparently a question Jamie Dimon wants answered too because according to Bloomberg, JPMorgan has identified "instances in which Covid-relief funds were misused by customers and is probing employees’ involvement in the potentially illegal activities."
In a memo sent to staff from the bank’s senior leaders Tuesday, the largest US commercial bank said it has found that improper conduct includes "instances of customers misusing Paycheck Protection Program Loans, unemployment benefits and other government programs" and that some "employees have fallen short, too." The firm said the incidents don’t meet its principles "and may even be illegal."
"We are doing all we can to identify those instances and cooperating with law enforcement where appropriate," the memo also said according to Bloomberg. The bank asked workers to report any conduct that violates its policies. JPMorgan spokeswoman Trish Wexler declined to comment.
According to SBA data, JPMorgan issued about 280,000 loans totaling more than $29 billion, making it the top PPP lender in the country. JPMorgan has fallen in the government's cross sights as the DOJ has been pursuing cases of potential fraud in the emergency program. A congressional subcommittee found earlier this month that more than $1 billion in federal coronavirus relief went to U.S. small businesses that received multiple loans, according to a report that also raised red flags for potential fraud with thousands of other companies.