Reuters, November 24, Exclusive: U.S. watchdogs train sights on lender misconduct in pandemic aid program
U.S. federal agencies have begun scrutinizing lenders for potential misconduct when distributing $525 billion in pandemic aid to struggling small businesses, according to half a dozen people with knowledge of the matter, regulatory filings and statements. The sources told Reuters the scrutiny of banks’ roles in the Paycheck Protection Program (PPP) is preliminary and it was not yet clear if it would lead to formal probes.
Congressional investigators last month singled out some large PPP lenders for prioritizing their existing customers, disadvantaging women and minority-owned businesses.
Depending on the circumstances, policies that hurt such “protected” groups – even if inadvertently – can violate fair lending rules. A study this month by the National Community Reinvestment Coalition, a Washington-based non-profit, also found that Black women and Hispanic men posing as interested PPP borrowers at 47 lenders “were treated less favorably” compared with their White counterparts, despite having stronger finances.
