How major banks really decided which businesses got stimulus money - Business Insider

The approach wasn't unusual, though — banks typically favored lending to existing customers that it already vetted and telling others to seek relief from a preexisting banking relationship.

Under anti-money laundering rules, banks have to adhere to "know your customer" protocols to ensure they're not being used as a conduit for corrupt or illicit activity — like when HSBCin 2012 and served a five-year probation over lapses that allowed Mexican drug cartels to launder hundreds of millions of dollars. Knowing your customer means vetting their identity and personal information, but also looking out for sanctioned or suspicious potential clients.

"I'm much more comfortable with them dealing with an existing customer," said Jeremy Rosenblum, a partner at law firm Ballard Spahr who has been advising banks on PPP "The SBA has made it clear they don't have to redo their AML processes for existing customers."still requires lenders to "perform a good faith review, in a reasonable time, of the borrower's calculations and supporting documents concerning average monthly payroll cost.

A lack of experience handling heavy volumes with E-Tran, coupled with new complicated rules for the untested program, presented challenges initially, according to a person familiar with the bank's PPP effort. Technology needed to be upgraded, or in some cases created from scratch, to assist in integrating DocuSign and payroll verification software, and the firm worked with fintech partners to custom build a digital platform for PPP lending.

But the bank was not yet able to accept applications, and other major banks like Chase and Bank of America were limiting access to customers with existing business account relationships.

The decision was delegated to the banks. The banks knew that they did not have enough to help everybody. They had to help their best customers first. The money ran out because $349 Billion for the 30 million small businesses at a maximum loan of $10 million each doesnt equate

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