Top US banks may shun small-business rescue plan on liability worries – By FOX News Staff (FOX News) / April 2 2020
Congress last week passed a $2 trillion stimulus package that includes $349 billion aimed at small firms
Top U.S. banks have threatened to give the federal government’s small-business rescue program a miss on concerns about taking on too much financial and legal risk, five people with direct knowledge of industry discussions told Reuters.
Seeking to help millions of small businesses whose operations have either shut down or have been dramatically curtailed by the coronavirus pandemic, Congress last week passed a $2 trillion stimulus package that includes $349 billion aimed at small firms.
Borrowers can apply for the loans through participating banks starting from Friday and until June 30. Trump administration officials have said they want the loans disbursed within days.
But representatives of some big lenders, in an industry conference call on Wednesday, expressed serious reservations about participating in the scheme in its current form.
Their main concern is that the Treasury Department has said it expects lenders to verify borrower eligibility, and take steps to prevent fraud, money laundering and protect customer information under the Bank Secrecy Act, sources said. Banks are worried they could face regulatory penalties or legal costs down the line if things go awry in the haste to get money out the door, or get blamed for not moving funds fast enough if they perform due diligence the way they would in ordinary times, the sources said.
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