Whenever trillions of dollars are being tossed around, you can be sure that the scammers and fraudsters will all be out in full force to glom onto as much of that loot as they can.  That should have been obvious to everyone when the special loan programs for the current virus crisis were rushed through Congress. 

Banks have been busy enticing everybody, whether they are eligible or not, to take out these loans and are even calling it “Free Money” because of the promise of tax free loan forgiveness. Banks have seen this as easy money for themselves, and it’s not just openly corrupt banks, such as Wells Fargo, that are doing this.  They have already received billions of dollars for processing these risk-free loans and are still trolling for more borrowers with bogus promises.

Here’s what I wrote as a reply to a client’s email, stating that his banker was encouraging him “to try and get some of the free money everybody else seems to be getting.”

I would be very very careful about taking part in these special loan programs that have been set up to combat the economic slowdown.  Bankers are making billions of dollars in fees for setting up these risk-free loans and are lying to borrowers as to the benefits, such as tax-free forgiveness. 

With all of this new money, people who are being egged on by fee-seeking bankers, are swarming to it like flies to a pile of poop.  This has not been missed by those in power and it is guaranteed that these loan applications and future requests to forgive the loans will be scrutinized even more closely than IRS does with tax returns.  If you were to apply for your loan to be forgiven, they will demand tight documentation of how the loan money was used

I just did a quick internet search and found some Forbes articles that I put into your Qbox folder on this issue.  There will be many more all over the media, as the government increases their examinations and prosecutions and publicizes those who are caught as a scare tactic. 

One big question: after a borrower is busted for illegally participating in one of these special loan programs, will the bankers who processed those loans also be charged with fraud?  My money is on a big fat “No.”  Too many congress-critters are on the banks’ payroll to allow such a thing to happen.  They will pass laws indemnifying all banks from any legal liability from these loans, if they haven’t already done so.  Just like everyone in Congress, I don’t have the time to read all of the legislation that they pass.