And JPMorgan says own digital currency being used commercially for the first time.
Banks that facilitated the US government’s Paycheck Protection Program at first saw the effort as a small revenue booster with a patriotic bonus, shepherding $525b in loans to businesses slammed by the fallout of the pandemic.
But as taxpayers begin to take on the cost of forgiving those loans, lenders like JPMorgan, Wells Fargo and Bank of America are girding for what is likely to be years of regulatory scrutiny for their role in doling out the money, according to industry insiders, securities filings and government watchdogs.
Fraud by borrowers popped up almost as quickly as the program, overseen by the Small Business Administration (SBA), began in April. The Department of Justice has so far brought charges against 82 individuals in 56 cases for around $250m in loans, according to a review by the Project On Government Oversight.
Goldman Sachs has said it was clawing back $174m in executive compensation and had agreed to pay $2.9b over its role in Malaysia’s 1MDB corruption scandal.
Under terms of the deal, Goldman agreed to pay a $2.3b fine for breaking anti-bribery laws and to disgorge $600m of ill-gotten gains as part of a deferred prosecution agreement, which also requires it to improve its compliance controls.
The bank also agreed for its Malaysian subsidiary to plead guilty in a US federal court, a win for prosecutors who rarely extract criminal guilty pleas from corporate entities.
JPMorgan has said that its digital currency, JPM Coin, is being used commercially for the first time this week by a large tech client to send payments around the world.
This turn of events persuaded JPMorgan to create a new business to house its blockchain and digital currency efforts called Onyx, said Takis Georgakopoulos, the bank’s global head of wholesale payments. The unit has more than 100 dedicated staffers, he added.
JPMorgan’s move could provide a boost to the broader blockchain and cryptocurrency industries, whose proponents believe that mainstream adoption is nearing.
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