this post was submitted on 31 Aug 2024
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Explain Like I'm Five
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It was really easy. The Paycheck Protection Program wasn't administered by the government directly. Instead, it authorized banks and financial institutions to issue PPP loans using government money. These institutions were told they wouldn't be found at fault if they gave money to a fraudulent applicant. So they were authorized to give out money that wasn't theirs and couldn't be found at fault even if they gave it to a fraudster. There was zero reason to check if the application was real or filled with fake information. It's estimated that, of the 21 million PPP loans issued, 10% were fraudulent.
This was called the minute they put the PPP loan idea together. Where's the oversight? How can fraudulent claims be avoided? The PPP loss still wasn't as big as the blank checks given to major corporations like airlines to keep the economy machine rolling. And in one sense I'm okay with government stepping in to avoid disaster, that's one of their jobs. It's just so many of these companies got free money that they really didn't need to stay alive, all because they smelled the opportunity...plus they took money that smaller businesses needed and no longer exist.
Another sleazy angle of this was that many of these large recipients somehow had their applications ready to submit literally the second the program became active. This means a lot of legitimate applicants who didn't have access to the forms until the program went live were shut out due to all the funds being used up by the aforementioned individuals.
Yeah, it's not that the fraudsters got past the red tape, there just wasn't any to begin with.
It was all honor system, and with billions of dollars at stake, honor is the first thing to go.
Trump also removed all the regulations around actually regulating it.
So instead of helping those in need it just became first come first serve
and people wonder why other people don't trust banks or institutions