FRIEND. GRADY TRIMBLE FOLLOWING ALL OF
THAT.
THAT. CHARLIE GASPARINO AS YOU KNOW
HAS BEEN KEEPING LIKE A DOG WITH
A BONE ON THIS WHOLE PERSONAL
PROTECTION PROGRAM, CHECKS GOING
OUT TO A LOT OF FOLKS, NAMELY,
YOU MIGHT RECALL FOR SMALL
BUSINESSES AND A LOT OF OTHERS,
SORT OF GOT LOOPED INTO THIS, TO
THINK MAYBE THEY SHOULDN’T HAVE.
NOW IT IS GETTING A LITTLE
LEGALLY THORNY HERE.
CHARLIE WHAT IS THE LATEST?
>> IT LOOKS LIKE, THE FEDS ARE
DEFINITELY CRACKING DOWN ON
ABUSES IN THE PROGRAM.
SOME ARE INVOLVING BIG BANKS
WHETHER THEY DIDN’T HAND OUT
LOANS IN TIMELY FASHION.
MAYBE PICKING AND CHOOSING THEIR
CUSTOMERS.
CUSTOMERS. ALL BANKS ARE GETTING NOTICES
FROM CONGRESSIONAL COMMITTEES ON
THAT.
THAT. THE DOJ IS LOOKING AT IT AS
WELL.
WELL. HERE IS WHAT IS INTERESTING
ABOUT IT, THE DOJ AT LEAST IN
THEIR INITIAL FOCUS, I’M GETTING
THIS FROM SENIOR BANK
EXECUTIVES, PEOPLE HAVE BEEN IN
TOUCH WITH THE DOJ.
HERE IS WHAT THEY’RE TELLING ME,
THE CRACKDOWN IS FOCUSING ON
FRAUDULENT CLAIMS BY APPLICANTS,
AT LEAST RIGHT NOW.
WHAT THEY BELIEVE IS THAT THERE
WERE SIGNIFICANT FRAUD BY
APPLICANTS APPLYING FOR PPP
GOING TO SMALL BUSINESSES SO
THEY DON’T LAY PEOPLE OFF
ESSENTIALLY SURVIVE UNTIL THE
LOCKDOWNS ARE OVER, PANDEMIC
LOCKDOWNS ARE OVER.
FEDERAL GOVERNMENT BELIEVE, BANK
BELIEVE THERE WAS SIGNIFICANT
ABUSE BY THAT.
WHAT DO I MEAN ABUSE.
PEOPLE SHOWING UP THEY OWN SMALL
BUSINESSES WHEN THEY DIDN’T.
THEY OWNED A RESTAURANT WHEN
THEY REALLY DIDN’T.
THEY HAVE 50 EMPLOYEES WHEN THEY
HAD ZERO.
HAD ZERO. THAT IS THE TYPE OF STUFF THAT
FROM WHAT I UNDERSTAND, DOJ IS
LOOKING AT AS THEY TALK TO
BANKS.
BANKS. IRONICALLY THIS PART OF THE
PROBE IS LIKELY NOT TO IMPACT
THE BIG BANKS.
SO IF YOU OWN JPMORGAN STOCK I
DON’T THINK YOU HAVE TO WORRY
ABOUT IT OR B-OF-A OR THIS PART.
WHY IS THAT?
IRONICALLY WHAT THE BIG BANKS
GOT BEAT UP ON, KNOW YOUR
CUSTOMER RULES, BASICALLY
HANDING OUT LOANS TO THE KNOWN
CUSTOMERS FIRST BEFORE ANYBODY
ELSE.
ELSE. OBVIOUSLY THE LOAN MONEY RAN
OUT, THAT WILL PROBABLY SAVE
THEM FROM THIS BECAUSE THESE ARE
PEOPLE THAT BANKS FELT HAD TO
GET, JUST CAME, THEY APPLIED FOR
LOANS.
LOANS. THEY WOULD NOT PASS THE KNOW
YOUR CUSTOMER RULE AT A JPMORGAN
FOR EXAMPLE.
FOR EXAMPLE. THAT IS WHY THIS PROBE IN
PARTICULAR IS LIKELY TO FOCUS ON
MID-SIZED AND COMMUNITY BANKS
WHO, AS YOU KNOW, WERE UNDER
PRESSURE FROM THE FEDERAL
GOVERNMENT TO START LENDING,
THROWING MONEY AT THE PROBLEM.
THE GOVERNMENT WARRANTED MONEY
OUT FAST.
OUT FAST. THEY HAD VERY OBTUSE RULES ABOUT
LENDING.
LENDING. AND THEY WANTED IT OUT FAST,
THAT YOU COULDN’T REALLY DO THE
KNOW YOUR CUSTOMER DUE DILIGENCE
THAT THE BIG BANKS WERE DOING.
SO THAT IS WHERE WE ARE RIGHT
NOW.
NOW. IT IS FASCINATING THAT THE BANKS
GOT DINGED EARLY FOR NOT HANDING
OUT MONEY.
OUT MONEY. THEY PROBABLY SAVED THEMSELVES
AT LEAST SOME FRAUD CHARGES
BECAUSE IT LOOKS LIKE THE FRAUD
INVESTIGATIONS ARE GOING TO
FOCUS ON BANKS WHO HANDED OUT
MONEY WITHOUT DOING VERY GOOD
DUE DILIGENCE ON THEIR
CUSTOMERS.
CUSTOMERS. AND NEIL, I DON’T KNOW HOW MANY
OF THESE ARE OUT THERE, HOW MANY
FRAUDULENT LOANS ARE OUT THERE,
HOW MANY PEOPLE JUST MADE UP
THEIR EMPLOYEES, BUT IF YOU HEAR
FROM THE BANKS, AT LEAST, ONES
THAT ARE TALKING TO THE FEDS,
THERE IS, WHAT THEY WOULD TERM A
SIGNIFICANT AMOUNT OF LOANS.
I DON’T KNOW HOW YOU LIVE WITH
YOURSELF TAKING MONEY, MAKING
STUFF UP AND TAKING MONEY FROM
THE FEDERAL GOVERNMENT DURING
THIS TIME BUT APPARENTLY THAT
DID HAPPEN.
DID HAPPEN. SO WE’LL JUST HAVE TO SEE HOW
THIS PROGRESSES BUT AT LEAST THE
INITIAL FOCUS ON THE, ON THE
DOJ’S PART IS ON THE APPLICANT
FRAUD.
FRAUD. AS WE REPORTED BEFORE, NEIL,
THERE IS, THERE ARE MULTIPLE
INVESTIGATIONS IN CONGRESS AMONG
VARIOUS CONGRESSIONAL
VARIOUS CONGRESSIONAL COMMITTEES, BIPARTISAN INTO THE
BANKS AND THEIR HANDLING OF THE
PP LOAN PROGRAM.
ALL BANKS ARE GETTING NOTICES
FROM VARIOUS CONGRESSIONAL
COMMITTEES.
COMMITTEES. WELLS FARGO ESSENTIALLY
DISCLOSED THAT TODAY IN A FILING
BUT I CAN TELL YOU MY SOURCES AT
OTHER BANKS THEY’RE GETTING
SIMILAR INQUIRIES.
SIMILAR INQUIRIES. SO IT IS INTERESTING, THE
FINGERPOINTING HAS BEGUN.
THE DOJ, AT LEAST INITIALLY IS
FOCUSING ON APPLICANTS.
IF YOU LIED ON YOUR APPLICATION,
THEY’RE GOING TO WANT TO FIND
YOU, AND THEY WILL WANT TO
PROSECUTE YOU.
PROSECUTE YOU. NEIL, BACK TO YOU.